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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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Saturday, 07 December 19
CHINA'S BENCHMARK POWER COAL PRICE DROPS SLIGHTLY - XINHUA
China’s benchmark power coal price dropped slightly during the past week.
The Bohai-Rim Steam-Coal Price Index (BSPI), a gauge ...
Saturday, 07 December 19
SOUTH AFRICAN COAL PRICE SURGE, WHILE OTHERS LANGUISH, IS TROUBLING - REUTERS
Coal prices around the world are gently sliding as demand from top importers such as China, India and even Europe remains subdued amid a so far mil ...
Saturday, 07 December 19
SUPRAMAX: OVERALL, THE BALTIC SUPRAMAX INDEX REMAINED IN POSITIVE MODE, DESPITE SOME AREAS LACKING FRESH ACTIVITY - BALTIC BRIEFING
Capesize
This week the Capesize market maintained healthy earnings, as an end of year surge took the Capesize 5TC back up to $25,202 by mid-wee ...
Friday, 06 December 19
INDONESIA COAL BENCHMARK PRICE FOR DECEMBER INCREASES BY US 3 CENTS MOM
COALspot.com: The Ministry of Energy and Mineral Resources of the Republic of Indonesia has revised up the benchmark price of Indonesian thermal co ...
Thursday, 05 December 19
IMO 2020 IS ABOUT TO GET REAL - GAVIN THOMPSON
As I write this edition of the APAC Energy Buzz from my desk in Singapore I can see ships. Lots of ships. No surprise given that Singapore is among ...
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- CIMB Investment Bank - Malaysia
- Sarangani Energy Corporation, Philippines
- Bayan Resources Tbk. - Indonesia
- PTC India Limited - India
- PNOC Exploration Corporation - Philippines
- Energy Development Corp, Philippines
- Sojitz Corporation - Japan
- Bhatia International Limited - India
- Global Business Power Corporation, Philippines
- Wilmar Investment Holdings
- Maharashtra Electricity Regulatory Commission - India
- PetroVietnam Power Coal Import and Supply Company
- Manunggal Multi Energi - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- San Jose City I Power Corp, Philippines
- Africa Commodities Group - South Africa
- Malabar Cements Ltd - India
- Simpson Spence & Young - Indonesia
- AsiaOL BioFuels Corp., Philippines
- PowerSource Philippines DevCo
- Binh Thuan Hamico - Vietnam
- Thiess Contractors Indonesia
- Australian Commodity Traders Exchange
- Renaissance Capital - South Africa
- Independent Power Producers Association of India
- Kaltim Prima Coal - Indonesia
- Bukit Baiduri Energy - Indonesia
- Sinarmas Energy and Mining - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Parry Sugars Refinery, India
- Indian Oil Corporation Limited
- Bulk Trading Sa - Switzerland
- Bukit Asam (Persero) Tbk - Indonesia
- Ministry of Mines - Canada
- Thai Mozambique Logistica
- Indian Energy Exchange, India
- Ministry of Transport, Egypt
- Global Green Power PLC Corporation, Philippines
- Toyota Tsusho Corporation, Japan
- Petrochimia International Co. Ltd.- Taiwan
- Kepco SPC Power Corporation, Philippines
- Siam City Cement PLC, Thailand
- TeaM Sual Corporation - Philippines
- Oldendorff Carriers - Singapore
- Petron Corporation, Philippines
- Wood Mackenzie - Singapore
- Georgia Ports Authority, United States
- Jaiprakash Power Ventures ltd
- Power Finance Corporation Ltd., India
- Goldman Sachs - Singapore
- Indo Tambangraya Megah - Indonesia
- Sindya Power Generating Company Private Ltd
- Standard Chartered Bank - UAE
- Aboitiz Power Corporation - Philippines
- GMR Energy Limited - India
- Mercuria Energy - Indonesia
- Trasteel International SA, Italy
- Sical Logistics Limited - India
- Iligan Light & Power Inc, Philippines
- Baramulti Group, Indonesia
- Salva Resources Pvt Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Holcim Trading Pte Ltd - Singapore
- Attock Cement Pakistan Limited
- Posco Energy - South Korea
- SMC Global Power, Philippines
- Price Waterhouse Coopers - Russia
- Bharathi Cement Corporation - India
- Bhoruka Overseas - Indonesia
- Carbofer General Trading SA - India
- McConnell Dowell - Australia
- Kartika Selabumi Mining - Indonesia
- Pendopo Energi Batubara - Indonesia
- Vizag Seaport Private Limited - India
- Kapuas Tunggal Persada - Indonesia
- Parliament of New Zealand
- South Luzon Thermal Energy Corporation
- Alfred C Toepfer International GmbH - Germany
- Commonwealth Bank - Australia
- Gujarat Electricity Regulatory Commission - India
- Bhushan Steel Limited - India
- Anglo American - United Kingdom
- IHS Mccloskey Coal Group - USA
- Siam City Cement - Thailand
- Medco Energi Mining Internasional
- Mjunction Services Limited - India
- Leighton Contractors Pty Ltd - Australia
- Electricity Generating Authority of Thailand
- Essar Steel Hazira Ltd - India
- Karaikal Port Pvt Ltd - India
- Energy Link Ltd, New Zealand
- Semirara Mining Corp, Philippines
- Kalimantan Lumbung Energi - Indonesia
- CNBM International Corporation - China
- Ind-Barath Power Infra Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Meralco Power Generation, Philippines
- European Bulk Services B.V. - Netherlands
- Coastal Gujarat Power Limited - India
- Larsen & Toubro Limited - India
- White Energy Company Limited
- International Coal Ventures Pvt Ltd - India
- Economic Council, Georgia
- OPG Power Generation Pvt Ltd - India
- Edison Trading Spa - Italy
- Mercator Lines Limited - India
- Port Waratah Coal Services - Australia
- Grasim Industreis Ltd - India
- Makarim & Taira - Indonesia
- Samtan Co., Ltd - South Korea
- Central Electricity Authority - India
- Planning Commission, India
- Aditya Birla Group - India
- Directorate Of Revenue Intelligence - India
- Videocon Industries ltd - India
- Gujarat Sidhee Cement - India
- Barasentosa Lestari - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Minerals Council of Australia
- Kohat Cement Company Ltd. - Pakistan
- Altura Mining Limited, Indonesia
- Central Java Power - Indonesia
- Electricity Authority, New Zealand
- Tata Chemicals Ltd - India
- Madhucon Powers Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- MS Steel International - UAE
- Vijayanagar Sugar Pvt Ltd - India
- Borneo Indobara - Indonesia
- Savvy Resources Ltd - HongKong
- Rio Tinto Coal - Australia
- Semirara Mining and Power Corporation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Chettinad Cement Corporation Ltd - India
- SMG Consultants - Indonesia
- Indonesian Coal Mining Association
- Bangladesh Power Developement Board
- London Commodity Brokers - England
- ICICI Bank Limited - India
- Deloitte Consulting - India
- Timah Investasi Mineral - Indoneisa
- Offshore Bulk Terminal Pte Ltd, Singapore
- Latin American Coal - Colombia
- Kumho Petrochemical, South Korea
- GAC Shipping (India) Pvt Ltd
- Therma Luzon, Inc, Philippines
- The Treasury - Australian Government
- Eastern Coal Council - USA
- Ambuja Cements Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Interocean Group of Companies - India
- Eastern Energy - Thailand
- Sakthi Sugars Limited - India
- Merrill Lynch Commodities Europe
- Kideco Jaya Agung - Indonesia
- LBH Netherlands Bv - Netherlands
- Jorong Barutama Greston.PT - Indonesia
- Indogreen Group - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Tamil Nadu electricity Board
- Uttam Galva Steels Limited - India
- Sree Jayajothi Cements Limited - India
- Romanian Commodities Exchange
- Orica Australia Pty. Ltd.
- IEA Clean Coal Centre - UK
- Riau Bara Harum - Indonesia
- Agrawal Coal Company - India
- Krishnapatnam Port Company Ltd. - India
- Dalmia Cement Bharat India
- VISA Power Limited - India
- Cigading International Bulk Terminal - Indonesia
- Coalindo Energy - Indonesia
- Maheswari Brothers Coal Limited - India
- SN Aboitiz Power Inc, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Mintek Dendrill Indonesia
- Marubeni Corporation - India
- Chamber of Mines of South Africa
- Orica Mining Services - Indonesia
- GVK Power & Infra Limited - India
- Singapore Mercantile Exchange
- Lanco Infratech Ltd - India
- Intertek Mineral Services - Indonesia
- Indika Energy - Indonesia
- New Zealand Coal & Carbon
- Bukit Makmur.PT - Indonesia
- Heidelberg Cement - Germany
- Ministry of Finance - Indonesia
- Cement Manufacturers Association - India
- The University of Queensland
- Banpu Public Company Limited - Thailand
- Bank of Tokyo Mitsubishi UFJ Ltd
- Karbindo Abesyapradhi - Indoneisa
- Global Coal Blending Company Limited - Australia
- Kobexindo Tractors - Indoneisa
- Star Paper Mills Limited - India
- India Bulls Power Limited - India
- Metalloyd Limited - United Kingdom
- The State Trading Corporation of India Ltd
- Pipit Mutiara Jaya. PT, Indonesia
- Antam Resourcindo - Indonesia
- Formosa Plastics Group - Taiwan
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Meenaskhi Energy Private Limited - India
- Coal and Oil Company - UAE
- Xindia Steels Limited - India
- Jindal Steel & Power Ltd - India
- Australian Coal Association
- Vedanta Resources Plc - India
- Globalindo Alam Lestari - Indonesia
- Straits Asia Resources Limited - Singapore
- ASAPP Information Group - India
- Miang Besar Coal Terminal - Indonesia
- Neyveli Lignite Corporation Ltd, - India
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