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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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Thursday, 06 February 20
CHINESE DEMAND KEY UNCERTAINTY FOR SEABORNE COAL MARKET IN 2020 - THE BRICS POST
Coal trader Noble Resources head of research Rodrigo Echeverri Cardozo had penciled in a 3 Mt drop in Chinese import demand for 2020, but it could ...
Wednesday, 05 February 20
CORONAVIRUS AND THE SHIPPING INDUSTRY - WATSON, FARLEY & WILLIAMS
The continued spread of Coronavirus and governmental measures to minimise the impact is likely to affect the shipping industry and supply chain.
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Wednesday, 05 February 20
INDONESIA'S COAL PRICE REFERENCE UP 1.46% IN FEBRUARY
COALspot.com: The Ministry of Energy and Mineral Resources of the Republic of Indonesia has revised up the benchmark price of Indonesian thermal co ...
Wednesday, 05 February 20
MARKET INSIGHT - INTERMODAL
The oil and gas industry benefitted from a strong and solid ground in the previous year. We witnessed a slow but steady increase in bunker’s ...
Wednesday, 05 February 20
RUSSIA EXPORTED 28.6 MLN TONNES OF LNG IN 2019 - REFINITIV
A lot of attention has been paid recently on the surge in LNG exports from the United States. However, another country which is seeing truly expone ...
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- Australian Coal Association
- Toyota Tsusho Corporation, Japan
- Eastern Coal Council - USA
- Deloitte Consulting - India
- Eastern Energy - Thailand
- Global Business Power Corporation, Philippines
- Sojitz Corporation - Japan
- Bhatia International Limited - India
- Petron Corporation, Philippines
- Rashtriya Ispat Nigam Limited - India
- Semirara Mining and Power Corporation, Philippines
- Indian Oil Corporation Limited
- Straits Asia Resources Limited - Singapore
- Baramulti Group, Indonesia
- Bharathi Cement Corporation - India
- VISA Power Limited - India
- Marubeni Corporation - India
- Banpu Public Company Limited - Thailand
- PTC India Limited - India
- Edison Trading Spa - Italy
- Ambuja Cements Ltd - India
- Energy Development Corp, Philippines
- Mercator Lines Limited - India
- Parry Sugars Refinery, India
- Economic Council, Georgia
- Kohat Cement Company Ltd. - Pakistan
- Makarim & Taira - Indonesia
- Bukit Baiduri Energy - Indonesia
- Sarangani Energy Corporation, Philippines
- Central Electricity Authority - India
- LBH Netherlands Bv - Netherlands
- Posco Energy - South Korea
- London Commodity Brokers - England
- Sakthi Sugars Limited - India
- Thai Mozambique Logistica
- Gujarat Sidhee Cement - India
- Altura Mining Limited, Indonesia
- AsiaOL BioFuels Corp., Philippines
- Asmin Koalindo Tuhup - Indonesia
- Rio Tinto Coal - Australia
- Xindia Steels Limited - India
- Samtan Co., Ltd - South Korea
- Ind-Barath Power Infra Limited - India
- Karaikal Port Pvt Ltd - India
- Vedanta Resources Plc - India
- Interocean Group of Companies - India
- Mercuria Energy - Indonesia
- Aditya Birla Group - India
- Directorate Of Revenue Intelligence - India
- Maharashtra Electricity Regulatory Commission - India
- Coalindo Energy - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Sindya Power Generating Company Private Ltd
- Holcim Trading Pte Ltd - Singapore
- Kapuas Tunggal Persada - Indonesia
- Antam Resourcindo - Indonesia
- Bulk Trading Sa - Switzerland
- Dalmia Cement Bharat India
- Karbindo Abesyapradhi - Indoneisa
- Australian Commodity Traders Exchange
- Alfred C Toepfer International GmbH - Germany
- Savvy Resources Ltd - HongKong
- GN Power Mariveles Coal Plant, Philippines
- International Coal Ventures Pvt Ltd - India
- Siam City Cement - Thailand
- Power Finance Corporation Ltd., India
- Indian Energy Exchange, India
- McConnell Dowell - Australia
- Sical Logistics Limited - India
- Wood Mackenzie - Singapore
- Petrochimia International Co. Ltd.- Taiwan
- The State Trading Corporation of India Ltd
- OPG Power Generation Pvt Ltd - India
- MS Steel International - UAE
- IEA Clean Coal Centre - UK
- European Bulk Services B.V. - Netherlands
- Bangladesh Power Developement Board
- Chettinad Cement Corporation Ltd - India
- Uttam Galva Steels Limited - India
- Cement Manufacturers Association - India
- Coal and Oil Company - UAE
- ICICI Bank Limited - India
- Grasim Industreis Ltd - India
- Agrawal Coal Company - India
- TNB Fuel Sdn Bhd - Malaysia
- SMG Consultants - Indonesia
- Parliament of New Zealand
- Goldman Sachs - Singapore
- Ministry of Mines - Canada
- Iligan Light & Power Inc, Philippines
- Price Waterhouse Coopers - Russia
- Bank of Tokyo Mitsubishi UFJ Ltd
- The Treasury - Australian Government
- Orica Australia Pty. Ltd.
- Chamber of Mines of South Africa
- Planning Commission, India
- Bukit Asam (Persero) Tbk - Indonesia
- Metalloyd Limited - United Kingdom
- IHS Mccloskey Coal Group - USA
- Bayan Resources Tbk. - Indonesia
- Meralco Power Generation, Philippines
- Globalindo Alam Lestari - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Renaissance Capital - South Africa
- Siam City Cement PLC, Thailand
- GAC Shipping (India) Pvt Ltd
- Minerals Council of Australia
- Mintek Dendrill Indonesia
- Timah Investasi Mineral - Indoneisa
- Lanco Infratech Ltd - India
- Ceylon Electricity Board - Sri Lanka
- PetroVietnam Power Coal Import and Supply Company
- Jaiprakash Power Ventures ltd
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Energy Link Ltd, New Zealand
- Anglo American - United Kingdom
- Pipit Mutiara Jaya. PT, Indonesia
- Vizag Seaport Private Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Attock Cement Pakistan Limited
- India Bulls Power Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Star Paper Mills Limited - India
- Billiton Holdings Pty Ltd - Australia
- Kalimantan Lumbung Energi - Indonesia
- ASAPP Information Group - India
- Electricity Authority, New Zealand
- Madhucon Powers Ltd - India
- Indo Tambangraya Megah - Indonesia
- Africa Commodities Group - South Africa
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Borneo Indobara - Indonesia
- Kobexindo Tractors - Indoneisa
- Maheswari Brothers Coal Limited - India
- Jindal Steel & Power Ltd - India
- Sree Jayajothi Cements Limited - India
- Electricity Generating Authority of Thailand
- Indonesian Coal Mining Association
- Gujarat Mineral Development Corp Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- SN Aboitiz Power Inc, Philippines
- Manunggal Multi Energi - Indonesia
- Simpson Spence & Young - Indonesia
- Tata Chemicals Ltd - India
- Kartika Selabumi Mining - Indonesia
- Kumho Petrochemical, South Korea
- PNOC Exploration Corporation - Philippines
- Merrill Lynch Commodities Europe
- Thiess Contractors Indonesia
- Trasteel International SA, Italy
- Port Waratah Coal Services - Australia
- Singapore Mercantile Exchange
- Malabar Cements Ltd - India
- Essar Steel Hazira Ltd - India
- SMC Global Power, Philippines
- Oldendorff Carriers - Singapore
- Latin American Coal - Colombia
- White Energy Company Limited
- Ministry of Finance - Indonesia
- Aboitiz Power Corporation - Philippines
- Therma Luzon, Inc, Philippines
- Intertek Mineral Services - Indonesia
- Ministry of Transport, Egypt
- Semirara Mining Corp, Philippines
- CIMB Investment Bank - Malaysia
- Barasentosa Lestari - Indonesia
- Orica Mining Services - Indonesia
- GVK Power & Infra Limited - India
- Heidelberg Cement - Germany
- Georgia Ports Authority, United States
- Bhushan Steel Limited - India
- Medco Energi Mining Internasional
- New Zealand Coal & Carbon
- Wilmar Investment Holdings
- GMR Energy Limited - India
- Miang Besar Coal Terminal - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- The University of Queensland
- Global Green Power PLC Corporation, Philippines
- Kepco SPC Power Corporation, Philippines
- San Jose City I Power Corp, Philippines
- Krishnapatnam Port Company Ltd. - India
- Kideco Jaya Agung - Indonesia
- Carbofer General Trading SA - India
- Binh Thuan Hamico - Vietnam
- PowerSource Philippines DevCo
- Sinarmas Energy and Mining - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Bukit Makmur.PT - Indonesia
- Indogreen Group - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Pendopo Energi Batubara - Indonesia
- Riau Bara Harum - Indonesia
- Independent Power Producers Association of India
- Standard Chartered Bank - UAE
- Salva Resources Pvt Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Indika Energy - Indonesia
- Videocon Industries ltd - India
- Global Coal Blending Company Limited - Australia
- Larsen & Toubro Limited - India
- South Luzon Thermal Energy Corporation
- Gujarat Electricity Regulatory Commission - India
- Meenaskhi Energy Private Limited - India
- Tamil Nadu electricity Board
- Mjunction Services Limited - India
- Cigading International Bulk Terminal - Indonesia
- Commonwealth Bank - Australia
- TeaM Sual Corporation - Philippines
- CNBM International Corporation - China
- Bhoruka Overseas - Indonesia
- Formosa Plastics Group - Taiwan
- Romanian Commodities Exchange
- Central Java Power - Indonesia
- Kaltim Prima Coal - Indonesia
- Coastal Gujarat Power Limited - India
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