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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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- Pipit Mutiara Jaya. PT, Indonesia
- The Treasury - Australian Government
- Chettinad Cement Corporation Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Rashtriya Ispat Nigam Limited - India
- GAC Shipping (India) Pvt Ltd
- Karbindo Abesyapradhi - Indoneisa
- Global Green Power PLC Corporation, Philippines
- Global Business Power Corporation, Philippines
- Goldman Sachs - Singapore
- Price Waterhouse Coopers - Russia
- Standard Chartered Bank - UAE
- Larsen & Toubro Limited - India
- Borneo Indobara - Indonesia
- Kepco SPC Power Corporation, Philippines
- Sarangani Energy Corporation, Philippines
- Parry Sugars Refinery, India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Cigading International Bulk Terminal - Indonesia
- New Zealand Coal & Carbon
- Ind-Barath Power Infra Limited - India
- Metalloyd Limited - United Kingdom
- CNBM International Corporation - China
- Sakthi Sugars Limited - India
- Bhatia International Limited - India
- GVK Power & Infra Limited - India
- Indian Oil Corporation Limited
- Africa Commodities Group - South Africa
- Globalindo Alam Lestari - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Edison Trading Spa - Italy
- Straits Asia Resources Limited - Singapore
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Leighton Contractors Pty Ltd - Australia
- International Coal Ventures Pvt Ltd - India
- South Luzon Thermal Energy Corporation
- MS Steel International - UAE
- Bhushan Steel Limited - India
- Altura Mining Limited, Indonesia
- Dalmia Cement Bharat India
- Savvy Resources Ltd - HongKong
- Mintek Dendrill Indonesia
- Madhucon Powers Ltd - India
- PowerSource Philippines DevCo
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sojitz Corporation - Japan
- Wilmar Investment Holdings
- Kartika Selabumi Mining - Indonesia
- Ministry of Finance - Indonesia
- Petron Corporation, Philippines
- Energy Link Ltd, New Zealand
- Sical Logistics Limited - India
- Central Java Power - Indonesia
- ASAPP Information Group - India
- Holcim Trading Pte Ltd - Singapore
- Jaiprakash Power Ventures ltd
- Parliament of New Zealand
- Coastal Gujarat Power Limited - India
- Singapore Mercantile Exchange
- Bahari Cakrawala Sebuku - Indonesia
- Kaltim Prima Coal - Indonesia
- Central Electricity Authority - India
- Wood Mackenzie - Singapore
- Ambuja Cements Ltd - India
- McConnell Dowell - Australia
- Maheswari Brothers Coal Limited - India
- Heidelberg Cement - Germany
- Medco Energi Mining Internasional
- Directorate General of MIneral and Coal - Indonesia
- Eastern Energy - Thailand
- Jorong Barutama Greston.PT - Indonesia
- Kumho Petrochemical, South Korea
- Iligan Light & Power Inc, Philippines
- Rio Tinto Coal - Australia
- SMG Consultants - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Pendopo Energi Batubara - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Agrawal Coal Company - India
- Cement Manufacturers Association - India
- PetroVietnam Power Coal Import and Supply Company
- ICICI Bank Limited - India
- Marubeni Corporation - India
- Vizag Seaport Private Limited - India
- Deloitte Consulting - India
- Semirara Mining Corp, Philippines
- CIMB Investment Bank - Malaysia
- Riau Bara Harum - Indonesia
- Bukit Baiduri Energy - Indonesia
- London Commodity Brokers - England
- Sindya Power Generating Company Private Ltd
- Offshore Bulk Terminal Pte Ltd, Singapore
- The State Trading Corporation of India Ltd
- Trasteel International SA, Italy
- San Jose City I Power Corp, Philippines
- Ministry of Transport, Egypt
- GN Power Mariveles Coal Plant, Philippines
- Planning Commission, India
- Eastern Coal Council - USA
- Vijayanagar Sugar Pvt Ltd - India
- Economic Council, Georgia
- Xindia Steels Limited - India
- Videocon Industries ltd - India
- LBH Netherlands Bv - Netherlands
- Jindal Steel & Power Ltd - India
- The University of Queensland
- Coalindo Energy - Indonesia
- Banpu Public Company Limited - Thailand
- Meralco Power Generation, Philippines
- Port Waratah Coal Services - Australia
- Attock Cement Pakistan Limited
- GMR Energy Limited - India
- White Energy Company Limited
- TNB Fuel Sdn Bhd - Malaysia
- Thai Mozambique Logistica
- IHS Mccloskey Coal Group - USA
- Minerals Council of Australia
- Electricity Generating Authority of Thailand
- Renaissance Capital - South Africa
- VISA Power Limited - India
- Bukit Makmur.PT - Indonesia
- Commonwealth Bank - Australia
- Samtan Co., Ltd - South Korea
- Formosa Plastics Group - Taiwan
- Georgia Ports Authority, United States
- Kideco Jaya Agung - Indonesia
- Mjunction Services Limited - India
- Interocean Group of Companies - India
- Manunggal Multi Energi - Indonesia
- Romanian Commodities Exchange
- Salva Resources Pvt Ltd - India
- Orica Mining Services - Indonesia
- Vedanta Resources Plc - India
- Independent Power Producers Association of India
- Semirara Mining and Power Corporation, Philippines
- Bayan Resources Tbk. - Indonesia
- Lanco Infratech Ltd - India
- Barasentosa Lestari - Indonesia
- OPG Power Generation Pvt Ltd - India
- Toyota Tsusho Corporation, Japan
- Thiess Contractors Indonesia
- Essar Steel Hazira Ltd - India
- Coal and Oil Company - UAE
- Indonesian Coal Mining Association
- Power Finance Corporation Ltd., India
- Bukit Asam (Persero) Tbk - Indonesia
- Star Paper Mills Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- SMC Global Power, Philippines
- Meenaskhi Energy Private Limited - India
- Indogreen Group - Indonesia
- Ministry of Mines - Canada
- Oldendorff Carriers - Singapore
- AsiaOL BioFuels Corp., Philippines
- Tamil Nadu electricity Board
- Ceylon Electricity Board - Sri Lanka
- Alfred C Toepfer International GmbH - Germany
- Carbofer General Trading SA - India
- European Bulk Services B.V. - Netherlands
- Anglo American - United Kingdom
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Baramulti Group, Indonesia
- Siam City Cement - Thailand
- Directorate Of Revenue Intelligence - India
- IEA Clean Coal Centre - UK
- Indika Energy - Indonesia
- Aditya Birla Group - India
- Chamber of Mines of South Africa
- PTC India Limited - India
- Tata Chemicals Ltd - India
- Indo Tambangraya Megah - Indonesia
- Simpson Spence & Young - Indonesia
- PNOC Exploration Corporation - Philippines
- Energy Development Corp, Philippines
- Uttam Galva Steels Limited - India
- Binh Thuan Hamico - Vietnam
- Global Coal Blending Company Limited - Australia
- TeaM Sual Corporation - Philippines
- Bangladesh Power Developement Board
- Sinarmas Energy and Mining - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Siam City Cement PLC, Thailand
- Asmin Koalindo Tuhup - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Posco Energy - South Korea
- Intertek Mineral Services - Indonesia
- Timah Investasi Mineral - Indoneisa
- Electricity Authority, New Zealand
- Grasim Industreis Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Antam Resourcindo - Indonesia
- Australian Coal Association
- Bharathi Cement Corporation - India
- Bhoruka Overseas - Indonesia
- Kobexindo Tractors - Indoneisa
- Aboitiz Power Corporation - Philippines
- Sree Jayajothi Cements Limited - India
- Latin American Coal - Colombia
- Australian Commodity Traders Exchange
- Gujarat Sidhee Cement - India
- Malabar Cements Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Kapuas Tunggal Persada - Indonesia
- Merrill Lynch Commodities Europe
- Therma Luzon, Inc, Philippines
- Indian Energy Exchange, India
- Makarim & Taira - Indonesia
- Mercator Lines Limited - India
- Mercuria Energy - Indonesia
- India Bulls Power Limited - India
- Bulk Trading Sa - Switzerland
- Kohat Cement Company Ltd. - Pakistan
- Karaikal Port Pvt Ltd - India
- Orica Australia Pty. Ltd.
- SN Aboitiz Power Inc, Philippines
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