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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, 07 July 22
COAL INDIA'S PRODUCTION SETS RECORD INCREASE OF 29% YOY AT 36 MT IN Q1FY23 - IIFL SECURITIES
Coal India Limited (CIL) has ended April-June quarter FY’23 capping a historic high of 29% yoy output growth, compared to same quarter FY&rsq ...
Wednesday, 06 July 22
MARKET INSIGHT - INTERMODAL
Following the 3rd Decarbonizing Shipping Forum, held in Hamburg on June 2022, there has been a meaningful resurgence of discussions within the ship ...
Tuesday, 05 July 22
WHY ARE VLSFO PRICES SO HIGH, ESPECIALLY IN SINGAPORE? - STEVE CHRISTY, INTEGR8 FUELS
Tightness in products still trumps talks of recession
Last month we wrote about the fears of recession versus the tightness in product markets ...
Tuesday, 05 July 22
ADANI ENTERPRISES LOWEST BIDDER IN COAL INDIA'S IMPORT TENDER: REPORT - BUSINESS STANDARD
Coal India Ltd floated its first import tender on behalf of power companies, where Adani Enterprises Ltd came out to be the lowest bidder, a report ...
Tuesday, 05 July 22
CHINA POLICY KEY FOR IRON ORE OUTLOOK - ING
China’s covid lockdowns and recessionary risks hit iron ore
Iron ore prices have fallen significantly from their year-to-date high of US$ ...
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- Semirara Mining and Power Corporation, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Ind-Barath Power Infra Limited - India
- The State Trading Corporation of India Ltd
- Mjunction Services Limited - India
- The Treasury - Australian Government
- Straits Asia Resources Limited - Singapore
- Videocon Industries ltd - India
- Deloitte Consulting - India
- Aditya Birla Group - India
- TNB Fuel Sdn Bhd - Malaysia
- Wood Mackenzie - Singapore
- Indian Oil Corporation Limited
- Maharashtra Electricity Regulatory Commission - India
- Latin American Coal - Colombia
- Toyota Tsusho Corporation, Japan
- AsiaOL BioFuels Corp., Philippines
- Sindya Power Generating Company Private Ltd
- Cigading International Bulk Terminal - Indonesia
- MS Steel International - UAE
- The University of Queensland
- South Luzon Thermal Energy Corporation
- Iligan Light & Power Inc, Philippines
- Holcim Trading Pte Ltd - Singapore
- Heidelberg Cement - Germany
- Samtan Co., Ltd - South Korea
- Coalindo Energy - Indonesia
- Malabar Cements Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Bulk Trading Sa - Switzerland
- Commonwealth Bank - Australia
- Sree Jayajothi Cements Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Interocean Group of Companies - India
- Parliament of New Zealand
- Medco Energi Mining Internasional
- SMG Consultants - Indonesia
- TeaM Sual Corporation - Philippines
- Leighton Contractors Pty Ltd - Australia
- Billiton Holdings Pty Ltd - Australia
- Sojitz Corporation - Japan
- Power Finance Corporation Ltd., India
- Port Waratah Coal Services - Australia
- Edison Trading Spa - Italy
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- ASAPP Information Group - India
- Energy Link Ltd, New Zealand
- Baramulti Group, Indonesia
- Aboitiz Power Corporation - Philippines
- Merrill Lynch Commodities Europe
- Mercuria Energy - Indonesia
- GVK Power & Infra Limited - India
- Makarim & Taira - Indonesia
- Ministry of Finance - Indonesia
- Salva Resources Pvt Ltd - India
- Attock Cement Pakistan Limited
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Krishnapatnam Port Company Ltd. - India
- Pipit Mutiara Jaya. PT, Indonesia
- Vizag Seaport Private Limited - India
- Directorate Of Revenue Intelligence - India
- IHS Mccloskey Coal Group - USA
- Banpu Public Company Limited - Thailand
- Georgia Ports Authority, United States
- Madhucon Powers Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Chettinad Cement Corporation Ltd - India
- Ambuja Cements Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Maheswari Brothers Coal Limited - India
- India Bulls Power Limited - India
- Karaikal Port Pvt Ltd - India
- Ministry of Transport, Egypt
- LBH Netherlands Bv - Netherlands
- Sarangani Energy Corporation, Philippines
- Gujarat Electricity Regulatory Commission - India
- International Coal Ventures Pvt Ltd - India
- Minerals Council of Australia
- New Zealand Coal & Carbon
- OPG Power Generation Pvt Ltd - India
- Metalloyd Limited - United Kingdom
- Riau Bara Harum - Indonesia
- Siam City Cement PLC, Thailand
- ICICI Bank Limited - India
- Independent Power Producers Association of India
- Standard Chartered Bank - UAE
- Romanian Commodities Exchange
- Pendopo Energi Batubara - Indonesia
- Global Business Power Corporation, Philippines
- Miang Besar Coal Terminal - Indonesia
- Binh Thuan Hamico - Vietnam
- PetroVietnam Power Coal Import and Supply Company
- Bayan Resources Tbk. - Indonesia
- Renaissance Capital - South Africa
- IEA Clean Coal Centre - UK
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Economic Council, Georgia
- Star Paper Mills Limited - India
- Cement Manufacturers Association - India
- Marubeni Corporation - India
- European Bulk Services B.V. - Netherlands
- Kaltim Prima Coal - Indonesia
- Gujarat Sidhee Cement - India
- Planning Commission, India
- White Energy Company Limited
- PNOC Exploration Corporation - Philippines
- Alfred C Toepfer International GmbH - Germany
- Indian Energy Exchange, India
- Rio Tinto Coal - Australia
- SN Aboitiz Power Inc, Philippines
- Trasteel International SA, Italy
- Orica Mining Services - Indonesia
- Larsen & Toubro Limited - India
- Semirara Mining Corp, Philippines
- Price Waterhouse Coopers - Russia
- CIMB Investment Bank - Malaysia
- Coal and Oil Company - UAE
- Carbofer General Trading SA - India
- Savvy Resources Ltd - HongKong
- Simpson Spence & Young - Indonesia
- Thiess Contractors Indonesia
- Eastern Coal Council - USA
- GN Power Mariveles Coal Plant, Philippines
- Siam City Cement - Thailand
- Manunggal Multi Energi - Indonesia
- Oldendorff Carriers - Singapore
- Parry Sugars Refinery, India
- Grasim Industreis Ltd - India
- Kobexindo Tractors - Indoneisa
- Chamber of Mines of South Africa
- Vijayanagar Sugar Pvt Ltd - India
- Posco Energy - South Korea
- Bhoruka Overseas - Indonesia
- Sakthi Sugars Limited - India
- Intertek Mineral Services - Indonesia
- Borneo Indobara - Indonesia
- Formosa Plastics Group - Taiwan
- Xindia Steels Limited - India
- Meralco Power Generation, Philippines
- Barasentosa Lestari - Indonesia
- McConnell Dowell - Australia
- Indika Energy - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Bharathi Cement Corporation - India
- Petron Corporation, Philippines
- Kideco Jaya Agung - Indonesia
- Kumho Petrochemical, South Korea
- Jorong Barutama Greston.PT - Indonesia
- Essar Steel Hazira Ltd - India
- Australian Coal Association
- San Jose City I Power Corp, Philippines
- Jaiprakash Power Ventures ltd
- Lanco Infratech Ltd - India
- Australian Commodity Traders Exchange
- Bhatia International Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Bukit Baiduri Energy - Indonesia
- Timah Investasi Mineral - Indoneisa
- Altura Mining Limited, Indonesia
- Coastal Gujarat Power Limited - India
- PowerSource Philippines DevCo
- Sinarmas Energy and Mining - Indonesia
- Vedanta Resources Plc - India
- Mintek Dendrill Indonesia
- Eastern Energy - Thailand
- Kalimantan Lumbung Energi - Indonesia
- Central Java Power - Indonesia
- Goldman Sachs - Singapore
- Indonesian Coal Mining Association
- Electricity Authority, New Zealand
- Therma Luzon, Inc, Philippines
- GMR Energy Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Bukit Makmur.PT - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Indo Tambangraya Megah - Indonesia
- Thai Mozambique Logistica
- Antam Resourcindo - Indonesia
- Jindal Steel & Power Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Wilmar Investment Holdings
- Central Electricity Authority - India
- Africa Commodities Group - South Africa
- Energy Development Corp, Philippines
- Anglo American - United Kingdom
- Meenaskhi Energy Private Limited - India
- Bangladesh Power Developement Board
- Bukit Asam (Persero) Tbk - Indonesia
- Global Coal Blending Company Limited - Australia
- Tamil Nadu electricity Board
- Globalindo Alam Lestari - Indonesia
- Sical Logistics Limited - India
- London Commodity Brokers - England
- CNBM International Corporation - China
- VISA Power Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- GAC Shipping (India) Pvt Ltd
- Bhushan Steel Limited - India
- Electricity Generating Authority of Thailand
- Ministry of Mines - Canada
- Tata Chemicals Ltd - India
- Dalmia Cement Bharat India
- Orica Australia Pty. Ltd.
- Indogreen Group - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Mercator Lines Limited - India
- Uttam Galva Steels Limited - India
- Agrawal Coal Company - India
- PTC India Limited - India
- Global Green Power PLC Corporation, Philippines
- Singapore Mercantile Exchange
- SMC Global Power, Philippines
- Kepco SPC Power Corporation, Philippines
- Kartika Selabumi Mining - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
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