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