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Tuesday, 06 September 11
INDONESIAS PROPOSED COAL EXPORT BAN MAY HAVE IMPACT ON THE INDIAN POWER SECTOR - DIPESH DIPU
.jpg) COALspot.com - This is a special interview about Indonesian proposed coal export ban by 2014, with Mr. Dipesh Dipu, Director of Deloitte Touche Tohmatsu, India.
The Indonesian government is currently in the process of drafting a new regulation that could ban the export of low-grade coal by January 12, 2014. This is likely to apply to coal below 5700 kcal/kg on air dried basis in value.
As of now Indonesia is producing around 150 million tons of coal with calorific value below 5700 GAD (according to chairman of Indonesian coal mining association). However by 2014, there are possibilities the total production of below 5700 GAD coal may reach more than 200 million per annum.
Will Indonesian coal export ban impact on the Indian fuel requirements?
The earlier grade of coal that was being considered for proposed ban has GCV of 5100 kcal/kg of less (adb), which can be comparable to 3800-4200 kcal/kg (arb) domestic coal available in India. This grade of coal has found favor in India primarily due to likely price advantage but economics of power generation based on such grade of imported coal may be a suspect. This considering that such grades of coal from Indonesia typically have high moisture content, which makes transportation cost per unit of energy generated higher. The quantum of the low grade of coal (<5100 kcal/kg adb) procured from Indonesia is likely to remain relatively low.
However, if the new definition of low grade coal is applied (<5700 kcal/kg adb), it may be reasonable to believe that such a ban may have impact on the Indian power sector as volumes in this grade of coal are expected to rise in the proportion of coal exports to India. Several of the acquisitions made by Indian power generation companies in Indonesia have been in coal blocks that will produce coal of this grade, and a blanket ban on the exports can jeopardize power plant development in India.
On the other hand, the domestic Indonesian market may not be prepared to consume all the coal mined of this grade in view of the power generation capacity addition plans in Indonesia. In such a case, the coal mine development is likely to be deferred. The Indonesian law makers may need to reconsider domestic market demand, investment climate in coal sector and impact of the legislation on the export revenues.
What is the alternative source for Indian power industry if the proposed coal export ban come into effect by 2014?
Indian power generation companies have been forced to look out for coal assets abroad due to the investment and regulatory environment within the country. India boasts of more than 110 billion tonnes of coal reserves, which largely fall within a 300 meters of depth. If the regulatory and investment environment is amended to allow greater participation of private sector Indian dependence on imports will be reduced.
However, for imports, India will continue to look at Indonesia, South Africa, Australia and newer destinations like Mozambique and Columbia. But these sources also have constraints, domestic demands in South Africa is likely to restrict quantum jump in exports out of South Africa. Indonesia has also proposed domestic market obligations. Mozambique may have infrastructure constraints for large volumes of coal being transported from Tete province to ports of Maputo, Ncala or Beira. Australian coal is of high quality but may have higher costs of mining and transport.
What would be the additional cost if Indian consumers switch their sourcing origin from Indonesia?
Indonesia has competitive advantage due to its geographical closeness. However, on a per tonne basis, assuming comparable quality, costs of transport may make marginal difference when compared with South Africa and Mozambique.
When compared to Australian coal, due to the high quality, cost of energy may well be comparable even though shipping costs are higher. Between Indonesian coal (5500 kcal/kg adb priced at USD 90 per tonne) and Australian coal (6500 kcal/kg adb priced at USD 120 per tonne), indicative variable cost difference of power generation may be about Indian Rupees 0.20 to 0.30 per kWh (electricity unit) in favor of Indonesian coal.
Will it affect Indian economy growth or this coal export ban is ignorable as India can easily identify alternative sources of fuel?
The magnitude of growth in power generation in India will necessarily mean that coal will remain the mainstay. Natural gas has had issues of availability. Nuclear plant development is facing socio-political challenge in view of the risks of technology failure. Development of hydel power has also faced issues of land acquisition, rehabilitation & resettlement apart from the technical issues of hydro-geological features. Renewable sources such as solar and wind generation are still projected to constitute a small portion of India power generation mix. Identifying an alternative source that can match coal in its accessibility, availability and affordability in the context of scale of capacity addition required in India is a challenge.
What is the Indian government's role on this issue, whether government has to come out with the solution such as easing Indian mining and environment law, open up mining for foreigners, G2G arrangement, etc…?
There is a need to look at domestic sources with pro-active and constructive approach and make all necessary legal and statutory amendments that make the resources available and mineable. Easing the regulations may not be one of such measures but making those regulations work in sync with each other in a time bound and predictable manner must certainly be.
There is certainly a case for opening the domestic coal sector for private participation, including independent miners, and for foreign participation so that newer technology and enhanced scale of operations are implemented in India. The regulation also needs to permit risk capital to come in for prospecting and exploration.
For imports the G2G relations can be leveraged to secure coal assets. India has good relationship with Indonesia and has also signed a tax treaty with Mozambique in 2010 which will facilitate investments. Government may also engage with these countries to ease exports to India and extend fiscal support to coal mining companies investing in mining and associated infrastructure development.
About Dipesh Dipu
Dipesh Dipu works as Director with Deloitte Touche Tohmatsu India Pvt. Ltd in the Energy and Resources consulting practice of the firm and anchors the Firm’s initiative in the mining and metals sectors.
He is a mining engineering graduate from Indian School of Mines and is a Chartered Financial Analyst (CFA). He has also done executive program in business management from Indian Institute of Management Calcutta. Dipesh has recently been awarded the Abheraj Baldota Gold Medal for the Young Mining Engineer of the Year 2007 by the Mining Engineers’ Association of India in recognition of his contributions in the improvement of mining industry in India.
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Tuesday, 18 February 20
ADARO REMAINS POSITIVE ON THE LONG-TERM FUNDAMENTALS OF COAL MARKET SUPPORTED BY THE SOUTHEAST ASIA AND SOUTH ASIA REGION
The global seaborne thermal coal market in 2019 was faced with macro and industry challenges which pushed international coa ...
Tuesday, 18 February 20
CORONAVIRUS AND ITS IMPACT ON YOUR CONTRACT - CAN YOU RELY ON 'FORCE MAJEURE'? - INCE
KNOWLEDGE TO ELEVATE
On 30 January 2020, the World Health Organization (WHO) declared that the outbreak of the Novel Coronavirus (officially t ...
Monday, 17 February 20
IMO-2020 SULPHUR CAP - ISSUES TO CONSIDER PRIOR TO THE IMPLEMENTATION OF THE CARRIAGE BAN ON 1 MARCH 2020 - STANDARD CLUB
With the IMO 2020 global sulphur cap now in force, members should bear in mind another significant date in relation to the ‘carriage ban&rsqu ...
Monday, 17 February 20
COVID-19: THE EFFECT OF THIS PUBLIC HEALTH EMERGENCY ON CHARTERPARTY TERMS - GARD
KNOWLEDGE TO ELEVATE
Is it useful to compare the COVID-19 with earlier disease outbreaks?
A comparison with the Ebola outbreak ...
Saturday, 15 February 20
CHINA'S BENCHMARK POWER COAL PRICE EDGES UP - REUTERS
China’s benchmark power coal price rose slightly during the past week.
The Bohai-Rim Steam-Coal Price Index (BSPI), a gauge of ...
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- Kohat Cement Company Ltd. - Pakistan
- OPG Power Generation Pvt Ltd - India
- Metalloyd Limited - United Kingdom
- Maheswari Brothers Coal Limited - India
- Minerals Council of Australia
- Videocon Industries ltd - India
- Sarangani Energy Corporation, Philippines
- South Luzon Thermal Energy Corporation
- IEA Clean Coal Centre - UK
- Barasentosa Lestari - Indonesia
- Savvy Resources Ltd - HongKong
- CNBM International Corporation - China
- Simpson Spence & Young - Indonesia
- Medco Energi Mining Internasional
- Latin American Coal - Colombia
- Ministry of Mines - Canada
- Leighton Contractors Pty Ltd - Australia
- Kepco SPC Power Corporation, Philippines
- Malabar Cements Ltd - India
- Baramulti Group, Indonesia
- Holcim Trading Pte Ltd - Singapore
- Iligan Light & Power Inc, Philippines
- Meenaskhi Energy Private Limited - India
- Electricity Generating Authority of Thailand
- SMG Consultants - Indonesia
- Kumho Petrochemical, South Korea
- New Zealand Coal & Carbon
- Therma Luzon, Inc, Philippines
- International Coal Ventures Pvt Ltd - India
- Chamber of Mines of South Africa
- Maharashtra Electricity Regulatory Commission - India
- Jindal Steel & Power Ltd - India
- Xindia Steels Limited - India
- Bulk Trading Sa - Switzerland
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kaltim Prima Coal - Indonesia
- Orica Mining Services - Indonesia
- MS Steel International - UAE
- San Jose City I Power Corp, Philippines
- Trasteel International SA, Italy
- Bayan Resources Tbk. - Indonesia
- Larsen & Toubro Limited - India
- Indian Oil Corporation Limited
- Lanco Infratech Ltd - India
- Renaissance Capital - South Africa
- Petron Corporation, Philippines
- Commonwealth Bank - Australia
- Coastal Gujarat Power Limited - India
- Georgia Ports Authority, United States
- Globalindo Alam Lestari - Indonesia
- Planning Commission, India
- Global Coal Blending Company Limited - Australia
- AsiaOL BioFuels Corp., Philippines
- PNOC Exploration Corporation - Philippines
- Indian Energy Exchange, India
- Formosa Plastics Group - Taiwan
- Africa Commodities Group - South Africa
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Binh Thuan Hamico - Vietnam
- The State Trading Corporation of India Ltd
- Vijayanagar Sugar Pvt Ltd - India
- ICICI Bank Limited - India
- ASAPP Information Group - India
- Anglo American - United Kingdom
- Gujarat Electricity Regulatory Commission - India
- Borneo Indobara - Indonesia
- Pendopo Energi Batubara - Indonesia
- Edison Trading Spa - Italy
- Semirara Mining and Power Corporation, Philippines
- Miang Besar Coal Terminal - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Eastern Coal Council - USA
- Antam Resourcindo - Indonesia
- GMR Energy Limited - India
- Rashtriya Ispat Nigam Limited - India
- LBH Netherlands Bv - Netherlands
- Central Electricity Authority - India
- Wilmar Investment Holdings
- Mercator Lines Limited - India
- Kideco Jaya Agung - Indonesia
- Merrill Lynch Commodities Europe
- Indika Energy - Indonesia
- Banpu Public Company Limited - Thailand
- The University of Queensland
- Kobexindo Tractors - Indoneisa
- Parry Sugars Refinery, India
- Madhucon Powers Ltd - India
- Ministry of Finance - Indonesia
- Sojitz Corporation - Japan
- Cigading International Bulk Terminal - Indonesia
- India Bulls Power Limited - India
- GVK Power & Infra Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Electricity Authority, New Zealand
- Sical Logistics Limited - India
- Energy Link Ltd, New Zealand
- Uttam Galva Steels Limited - India
- Posco Energy - South Korea
- Deloitte Consulting - India
- Pipit Mutiara Jaya. PT, Indonesia
- Wood Mackenzie - Singapore
- Meralco Power Generation, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Oldendorff Carriers - Singapore
- Alfred C Toepfer International GmbH - Germany
- Krishnapatnam Port Company Ltd. - India
- Global Green Power PLC Corporation, Philippines
- Vedanta Resources Plc - India
- Eastern Energy - Thailand
- Salva Resources Pvt Ltd - India
- TeaM Sual Corporation - Philippines
- Samtan Co., Ltd - South Korea
- Sree Jayajothi Cements Limited - India
- Mercuria Energy - Indonesia
- London Commodity Brokers - England
- Star Paper Mills Limited - India
- GAC Shipping (India) Pvt Ltd
- SN Aboitiz Power Inc, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Australian Commodity Traders Exchange
- Romanian Commodities Exchange
- Heidelberg Cement - Germany
- Sindya Power Generating Company Private Ltd
- Directorate Of Revenue Intelligence - India
- Billiton Holdings Pty Ltd - Australia
- TNB Fuel Sdn Bhd - Malaysia
- Marubeni Corporation - India
- Mintek Dendrill Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Singapore Mercantile Exchange
- Agrawal Coal Company - India
- Ind-Barath Power Infra Limited - India
- Indogreen Group - Indonesia
- Standard Chartered Bank - UAE
- Tata Chemicals Ltd - India
- Coal and Oil Company - UAE
- Thai Mozambique Logistica
- Price Waterhouse Coopers - Russia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Altura Mining Limited, Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- The Treasury - Australian Government
- PetroVietnam Power Coal Import and Supply Company
- Ministry of Transport, Egypt
- Gujarat Sidhee Cement - India
- Indonesian Coal Mining Association
- Bahari Cakrawala Sebuku - Indonesia
- Global Business Power Corporation, Philippines
- Manunggal Multi Energi - Indonesia
- Rio Tinto Coal - Australia
- Directorate General of MIneral and Coal - Indonesia
- Karaikal Port Pvt Ltd - India
- Intertek Mineral Services - Indonesia
- Bhoruka Overseas - Indonesia
- Kartika Selabumi Mining - Indonesia
- Indo Tambangraya Megah - Indonesia
- Riau Bara Harum - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Interocean Group of Companies - India
- PowerSource Philippines DevCo
- Port Waratah Coal Services - Australia
- Australian Coal Association
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Carbofer General Trading SA - India
- Bhatia International Limited - India
- Dalmia Cement Bharat India
- Tamil Nadu electricity Board
- Gujarat Mineral Development Corp Ltd - India
- IHS Mccloskey Coal Group - USA
- Coalindo Energy - Indonesia
- PTC India Limited - India
- Central Java Power - Indonesia
- Sakthi Sugars Limited - India
- Parliament of New Zealand
- Ceylon Electricity Board - Sri Lanka
- Independent Power Producers Association of India
- Goldman Sachs - Singapore
- SMC Global Power, Philippines
- European Bulk Services B.V. - Netherlands
- Cement Manufacturers Association - India
- Straits Asia Resources Limited - Singapore
- Economic Council, Georgia
- Petrochimia International Co. Ltd.- Taiwan
- Energy Development Corp, Philippines
- VISA Power Limited - India
- Sinarmas Energy and Mining - Indonesia
- Orica Australia Pty. Ltd.
- Semirara Mining Corp, Philippines
- Makarim & Taira - Indonesia
- Essar Steel Hazira Ltd - India
- Bangladesh Power Developement Board
- Timah Investasi Mineral - Indoneisa
- Karbindo Abesyapradhi - Indoneisa
- Ambuja Cements Ltd - India
- Bhushan Steel Limited - India
- Mjunction Services Limited - India
- Aditya Birla Group - India
- White Energy Company Limited
- Kalimantan Lumbung Energi - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Aboitiz Power Corporation - Philippines
- Toyota Tsusho Corporation, Japan
- Thiess Contractors Indonesia
- Vizag Seaport Private Limited - India
- CIMB Investment Bank - Malaysia
- Attock Cement Pakistan Limited
- Power Finance Corporation Ltd., India
- Bharathi Cement Corporation - India
- McConnell Dowell - Australia
- Siam City Cement - Thailand
- Bukit Makmur.PT - Indonesia
- Jaiprakash Power Ventures ltd
- Siam City Cement PLC, Thailand
- Chettinad Cement Corporation Ltd - India
- Bukit Baiduri Energy - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Grasim Industreis Ltd - India
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