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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, 21 January 22
CHINA'S POWER TRADING TARIFFS TO RISE IN 2022 - FITCH RATINGS
Rising trading volume and higher-than-benchmark tariffs in the 2022 bilateral contracts signed between Chinese power generation companies (gencos) ...
Thursday, 20 January 22
CHINESE COAL JUMPS OVER 6% ON PRE-HOLIDAY SUPPLY WORRY - REUTERS
China’s thermal coal futures soared more than 6% on Wednesday, hitting a level last seen in late November as investors grew concerned over ti ...
Thursday, 20 January 22
VIETNAM: COAL SECTOR SEES POSITIVE PROSPECT IN 2022 - VNA
With many signs of rising demand for coal in various economic sectors in 2022, the Vietnam National Coal – Mineral Industries Group (Vinacomi ...
Wednesday, 19 January 22
MARKET INSIGHT - INTERMODAL
Since the beginning of the year, we have been witnessing the BDI correcting downwards with sizable drops across all segments. Latest similar levels ...
Sunday, 09 January 22
INDONESIA MINISTER SAYS 'EMERGENCY OVER' ON COAL SUPPLY CRUNCH - REUTERS
Indonesia’s power emergency which has triggered a coal export ban is over but the government will still continue to discuss policies in this ...
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- Electricity Authority, New Zealand
- TNB Fuel Sdn Bhd - Malaysia
- Globalindo Alam Lestari - Indonesia
- GAC Shipping (India) Pvt Ltd
- Edison Trading Spa - Italy
- Vizag Seaport Private Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Merrill Lynch Commodities Europe
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Attock Cement Pakistan Limited
- Ambuja Cements Ltd - India
- SMC Global Power, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Eastern Energy - Thailand
- Chettinad Cement Corporation Ltd - India
- Directorate Of Revenue Intelligence - India
- TeaM Sual Corporation - Philippines
- Georgia Ports Authority, United States
- Electricity Generating Authority of Thailand
- Australian Commodity Traders Exchange
- Therma Luzon, Inc, Philippines
- Iligan Light & Power Inc, Philippines
- Marubeni Corporation - India
- Ind-Barath Power Infra Limited - India
- PTC India Limited - India
- India Bulls Power Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Carbofer General Trading SA - India
- IHS Mccloskey Coal Group - USA
- The Treasury - Australian Government
- Central Electricity Authority - India
- Agrawal Coal Company - India
- Coal and Oil Company - UAE
- IEA Clean Coal Centre - UK
- Manunggal Multi Energi - Indonesia
- McConnell Dowell - Australia
- Cement Manufacturers Association - India
- New Zealand Coal & Carbon
- Baramulti Group, Indonesia
- Global Business Power Corporation, Philippines
- Global Green Power PLC Corporation, Philippines
- Dalmia Cement Bharat India
- Samtan Co., Ltd - South Korea
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Larsen & Toubro Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Economic Council, Georgia
- Thiess Contractors Indonesia
- OPG Power Generation Pvt Ltd - India
- Kepco SPC Power Corporation, Philippines
- Wood Mackenzie - Singapore
- Gujarat Mineral Development Corp Ltd - India
- SN Aboitiz Power Inc, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Orica Mining Services - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Mercator Lines Limited - India
- Simpson Spence & Young - Indonesia
- The University of Queensland
- Tata Chemicals Ltd - India
- Videocon Industries ltd - India
- Sarangani Energy Corporation, Philippines
- Formosa Plastics Group - Taiwan
- PNOC Exploration Corporation - Philippines
- Trasteel International SA, Italy
- Leighton Contractors Pty Ltd - Australia
- Bayan Resources Tbk. - Indonesia
- CNBM International Corporation - China
- Aboitiz Power Corporation - Philippines
- Bukit Baiduri Energy - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Semirara Mining Corp, Philippines
- Sojitz Corporation - Japan
- Mintek Dendrill Indonesia
- Standard Chartered Bank - UAE
- Timah Investasi Mineral - Indoneisa
- South Luzon Thermal Energy Corporation
- Bharathi Cement Corporation - India
- Orica Australia Pty. Ltd.
- Ministry of Finance - Indonesia
- Straits Asia Resources Limited - Singapore
- Planning Commission, India
- Chamber of Mines of South Africa
- Altura Mining Limited, Indonesia
- Meenaskhi Energy Private Limited - India
- Parliament of New Zealand
- Goldman Sachs - Singapore
- Parry Sugars Refinery, India
- Binh Thuan Hamico - Vietnam
- Holcim Trading Pte Ltd - Singapore
- SMG Consultants - Indonesia
- Eastern Coal Council - USA
- Kohat Cement Company Ltd. - Pakistan
- Rashtriya Ispat Nigam Limited - India
- Aditya Birla Group - India
- Independent Power Producers Association of India
- Uttam Galva Steels Limited - India
- Bhushan Steel Limited - India
- Ministry of Transport, Egypt
- Energy Link Ltd, New Zealand
- European Bulk Services B.V. - Netherlands
- Jorong Barutama Greston.PT - Indonesia
- Kideco Jaya Agung - Indonesia
- London Commodity Brokers - England
- Renaissance Capital - South Africa
- Anglo American - United Kingdom
- Bangladesh Power Developement Board
- Jaiprakash Power Ventures ltd
- Krishnapatnam Port Company Ltd. - India
- Bukit Asam (Persero) Tbk - Indonesia
- Xindia Steels Limited - India
- Vedanta Resources Plc - India
- Indian Oil Corporation Limited
- Malabar Cements Ltd - India
- Central Java Power - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Antam Resourcindo - Indonesia
- Medco Energi Mining Internasional
- Miang Besar Coal Terminal - Indonesia
- Mercuria Energy - Indonesia
- Global Coal Blending Company Limited - Australia
- Indika Energy - Indonesia
- Wilmar Investment Holdings
- Cigading International Bulk Terminal - Indonesia
- Jindal Steel & Power Ltd - India
- Bhatia International Limited - India
- Coalindo Energy - Indonesia
- Romanian Commodities Exchange
- Sakthi Sugars Limited - India
- Toyota Tsusho Corporation, Japan
- Savvy Resources Ltd - HongKong
- Karaikal Port Pvt Ltd - India
- Singapore Mercantile Exchange
- CIMB Investment Bank - Malaysia
- Sinarmas Energy and Mining - Indonesia
- Kartika Selabumi Mining - Indonesia
- White Energy Company Limited
- MS Steel International - UAE
- Coastal Gujarat Power Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Lanco Infratech Ltd - India
- Minerals Council of Australia
- Petron Corporation, Philippines
- Star Paper Mills Limited - India
- International Coal Ventures Pvt Ltd - India
- Indogreen Group - Indonesia
- Grasim Industreis Ltd - India
- Pendopo Energi Batubara - Indonesia
- Siam City Cement PLC, Thailand
- GVK Power & Infra Limited - India
- Tamil Nadu electricity Board
- Borneo Indobara - Indonesia
- Power Finance Corporation Ltd., India
- Energy Development Corp, Philippines
- Heidelberg Cement - Germany
- Intertek Mineral Services - Indonesia
- VISA Power Limited - India
- San Jose City I Power Corp, Philippines
- Indo Tambangraya Megah - Indonesia
- Price Waterhouse Coopers - Russia
- Vijayanagar Sugar Pvt Ltd - India
- Madhucon Powers Ltd - India
- Kaltim Prima Coal - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Siam City Cement - Thailand
- Thai Mozambique Logistica
- Barasentosa Lestari - Indonesia
- Makarim & Taira - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Kumho Petrochemical, South Korea
- Maheswari Brothers Coal Limited - India
- Meralco Power Generation, Philippines
- Bhoruka Overseas - Indonesia
- Semirara Mining and Power Corporation, Philippines
- AsiaOL BioFuels Corp., Philippines
- Posco Energy - South Korea
- Kobexindo Tractors - Indoneisa
- PowerSource Philippines DevCo
- Indonesian Coal Mining Association
- Riau Bara Harum - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Africa Commodities Group - South Africa
- Oldendorff Carriers - Singapore
- Gujarat Electricity Regulatory Commission - India
- The State Trading Corporation of India Ltd
- Essar Steel Hazira Ltd - India
- Bukit Makmur.PT - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Ministry of Mines - Canada
- Australian Coal Association
- Banpu Public Company Limited - Thailand
- GMR Energy Limited - India
- Salva Resources Pvt Ltd - India
- Interocean Group of Companies - India
- Sree Jayajothi Cements Limited - India
- Latin American Coal - Colombia
- Rio Tinto Coal - Australia
- Sical Logistics Limited - India
- Port Waratah Coal Services - Australia
- PetroVietnam Power Coal Import and Supply Company
- Billiton Holdings Pty Ltd - Australia
- Indian Energy Exchange, India
- Maharashtra Electricity Regulatory Commission - India
- Pipit Mutiara Jaya. PT, Indonesia
- Commonwealth Bank - Australia
- Deloitte Consulting - India
- Metalloyd Limited - United Kingdom
- LBH Netherlands Bv - Netherlands
- Neyveli Lignite Corporation Ltd, - India
- Sindya Power Generating Company Private Ltd
- ASAPP Information Group - India
- ICICI Bank Limited - India
- Gujarat Sidhee Cement - India
- Kapuas Tunggal Persada - Indonesia
- Bulk Trading Sa - Switzerland
- Mjunction Services Limited - India
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