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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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Friday, 04 November 22
CHINA EXPANDS COAL TERM CONTRACTS TO ALL MINES TO STABILIZE MARKET - REUTERS
China has expanded long-term thermal coal supply contracts for 2023 to all coal mines and asked power utilities to source more of their demand thro ...
Thursday, 03 November 22
HANDYSIZE VALUES MOVING UP IN OCTOBER, WHILE LNG VALUES SKYROCKET - VESSELSVALUE
Handysize values have increased this month across most ages, following a period of decline. Values for generic 10 year old Handysizes have moved up ...
Thursday, 03 November 22
EUROPEAN GAS SUPPLY SURPLUS, NOVEMBER HBA DOWN TO US$ 308.2 PER TON - ESDM
European gas supply conditions have a major influence in determining fluctuations in the Reference Coal Price (HBA). The November 2022 HBA recorded ...
Wednesday, 02 November 22
MARKET INSIGHT - INTERMODAL
Only five weeks before western sanctions’ full effect, uncertainty over energy has markets and governments on the edge. What was initially th ...
Tuesday, 01 November 22
CHINA COAL TRADE DISRUPTED BY COVID OUTBREAKS AS WINTER LOOMS - REUTERS
China’s strict COVID-19 policy is constraining coal supplies and pushing up prices, industry officials and traders say, just weeks before the ...
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- AsiaOL BioFuels Corp., Philippines
- Siam City Cement - Thailand
- Orica Mining Services - Indonesia
- Central Electricity Authority - India
- SN Aboitiz Power Inc, Philippines
- Minerals Council of Australia
- VISA Power Limited - India
- Sarangani Energy Corporation, Philippines
- Kaltim Prima Coal - Indonesia
- Salva Resources Pvt Ltd - India
- Aditya Birla Group - India
- Chettinad Cement Corporation Ltd - India
- Mercator Lines Limited - India
- Intertek Mineral Services - Indonesia
- Therma Luzon, Inc, Philippines
- Lanco Infratech Ltd - India
- GAC Shipping (India) Pvt Ltd
- Semirara Mining Corp, Philippines
- Marubeni Corporation - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bukit Makmur.PT - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Xindia Steels Limited - India
- Africa Commodities Group - South Africa
- Mercuria Energy - Indonesia
- Karaikal Port Pvt Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- IHS Mccloskey Coal Group - USA
- Bhushan Steel Limited - India
- Trasteel International SA, Italy
- Semirara Mining and Power Corporation, Philippines
- Madhucon Powers Ltd - India
- Edison Trading Spa - Italy
- Simpson Spence & Young - Indonesia
- Sindya Power Generating Company Private Ltd
- New Zealand Coal & Carbon
- Indonesian Coal Mining Association
- Holcim Trading Pte Ltd - Singapore
- Petron Corporation, Philippines
- Formosa Plastics Group - Taiwan
- Port Waratah Coal Services - Australia
- Cement Manufacturers Association - India
- Eastern Coal Council - USA
- Pendopo Energi Batubara - Indonesia
- Economic Council, Georgia
- Gujarat Electricity Regulatory Commission - India
- Siam City Cement PLC, Thailand
- Indogreen Group - Indonesia
- Jindal Steel & Power Ltd - India
- Bharathi Cement Corporation - India
- Karbindo Abesyapradhi - Indoneisa
- Makarim & Taira - Indonesia
- SMG Consultants - Indonesia
- Price Waterhouse Coopers - Russia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Gujarat Sidhee Cement - India
- Grasim Industreis Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- GN Power Mariveles Coal Plant, Philippines
- Samtan Co., Ltd - South Korea
- Petrochimia International Co. Ltd.- Taiwan
- ASAPP Information Group - India
- Energy Link Ltd, New Zealand
- Interocean Group of Companies - India
- International Coal Ventures Pvt Ltd - India
- Thai Mozambique Logistica
- TNB Fuel Sdn Bhd - Malaysia
- Ceylon Electricity Board - Sri Lanka
- Tamil Nadu electricity Board
- GVK Power & Infra Limited - India
- Agrawal Coal Company - India
- Ambuja Cements Ltd - India
- Global Business Power Corporation, Philippines
- CNBM International Corporation - China
- Merrill Lynch Commodities Europe
- Timah Investasi Mineral - Indoneisa
- Kohat Cement Company Ltd. - Pakistan
- Eastern Energy - Thailand
- Cigading International Bulk Terminal - Indonesia
- Larsen & Toubro Limited - India
- Dalmia Cement Bharat India
- Miang Besar Coal Terminal - Indonesia
- Meralco Power Generation, Philippines
- Bulk Trading Sa - Switzerland
- Australian Coal Association
- Kumho Petrochemical, South Korea
- Electricity Generating Authority of Thailand
- Bukit Asam (Persero) Tbk - Indonesia
- Oldendorff Carriers - Singapore
- Kideco Jaya Agung - Indonesia
- Kepco SPC Power Corporation, Philippines
- Antam Resourcindo - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Rio Tinto Coal - Australia
- Heidelberg Cement - Germany
- Global Green Power PLC Corporation, Philippines
- Indian Oil Corporation Limited
- The University of Queensland
- Kapuas Tunggal Persada - Indonesia
- San Jose City I Power Corp, Philippines
- Ind-Barath Power Infra Limited - India
- Aboitiz Power Corporation - Philippines
- Anglo American - United Kingdom
- Latin American Coal - Colombia
- Singapore Mercantile Exchange
- Sree Jayajothi Cements Limited - India
- PowerSource Philippines DevCo
- Indo Tambangraya Megah - Indonesia
- Bhatia International Limited - India
- Georgia Ports Authority, United States
- Standard Chartered Bank - UAE
- Manunggal Multi Energi - Indonesia
- Jaiprakash Power Ventures ltd
- Vizag Seaport Private Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Indian Energy Exchange, India
- Orica Australia Pty. Ltd.
- Riau Bara Harum - Indonesia
- Coal and Oil Company - UAE
- Sinarmas Energy and Mining - Indonesia
- PTC India Limited - India
- Videocon Industries ltd - India
- Parliament of New Zealand
- PNOC Exploration Corporation - Philippines
- Electricity Authority, New Zealand
- Vedanta Resources Plc - India
- Ministry of Mines - Canada
- Alfred C Toepfer International GmbH - Germany
- Ministry of Transport, Egypt
- Global Coal Blending Company Limited - Australia
- ICICI Bank Limited - India
- LBH Netherlands Bv - Netherlands
- Bahari Cakrawala Sebuku - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Ministry of Finance - Indonesia
- Central Java Power - Indonesia
- Posco Energy - South Korea
- Deloitte Consulting - India
- Maharashtra Electricity Regulatory Commission - India
- CIMB Investment Bank - Malaysia
- Wood Mackenzie - Singapore
- Parry Sugars Refinery, India
- Krishnapatnam Port Company Ltd. - India
- Sakthi Sugars Limited - India
- South Luzon Thermal Energy Corporation
- Sojitz Corporation - Japan
- Coastal Gujarat Power Limited - India
- London Commodity Brokers - England
- Energy Development Corp, Philippines
- Tata Chemicals Ltd - India
- Star Paper Mills Limited - India
- Commonwealth Bank - Australia
- Binh Thuan Hamico - Vietnam
- Kartika Selabumi Mining - Indonesia
- Borneo Indobara - Indonesia
- Banpu Public Company Limited - Thailand
- Attock Cement Pakistan Limited
- Bukit Baiduri Energy - Indonesia
- Medco Energi Mining Internasional
- The Treasury - Australian Government
- Carbofer General Trading SA - India
- Australian Commodity Traders Exchange
- Renaissance Capital - South Africa
- OPG Power Generation Pvt Ltd - India
- Malabar Cements Ltd - India
- Maheswari Brothers Coal Limited - India
- Metalloyd Limited - United Kingdom
- Bangladesh Power Developement Board
- Bayan Resources Tbk. - Indonesia
- Uttam Galva Steels Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Toyota Tsusho Corporation, Japan
- Barasentosa Lestari - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Romanian Commodities Exchange
- Independent Power Producers Association of India
- Goldman Sachs - Singapore
- Baramulti Group, Indonesia
- Thiess Contractors Indonesia
- European Bulk Services B.V. - Netherlands
- Rashtriya Ispat Nigam Limited - India
- Wilmar Investment Holdings
- Sical Logistics Limited - India
- SMC Global Power, Philippines
- Planning Commission, India
- Power Finance Corporation Ltd., India
- Mjunction Services Limited - India
- Chamber of Mines of South Africa
- Iligan Light & Power Inc, Philippines
- Straits Asia Resources Limited - Singapore
- Billiton Holdings Pty Ltd - Australia
- Savvy Resources Ltd - HongKong
- TeaM Sual Corporation - Philippines
- Leighton Contractors Pty Ltd - Australia
- The State Trading Corporation of India Ltd
- Kobexindo Tractors - Indoneisa
- Mintek Dendrill Indonesia
- Globalindo Alam Lestari - Indonesia
- Indika Energy - Indonesia
- Coalindo Energy - Indonesia
- White Energy Company Limited
- India Bulls Power Limited - India
- GMR Energy Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Bhoruka Overseas - Indonesia
- IEA Clean Coal Centre - UK
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- MS Steel International - UAE
- Asmin Koalindo Tuhup - Indonesia
- McConnell Dowell - Australia
- Essar Steel Hazira Ltd - India
- Meenaskhi Energy Private Limited - India
- Altura Mining Limited, Indonesia
- Directorate Of Revenue Intelligence - India
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