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