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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, 26 November 21
CHINA FINDS COMPLIANCE PROBLEMS IN COAL PRICE INDEX PROBE - REUTERS
China’s state planner on Wednesday said it had discovered some “noncompliant” behaviour among coal price index providers as it an ...
Thursday, 25 November 21
SE ASIA POWER DEMAND TO RISE AS STATE SUPPORT MITIGATES COVID-19 IMPACT - FITCH RATINGS
Electricity demand in south-east Asia is likely to increase in 2021, following slow growth or contraction in 2020, thanks to state support that has ...
Thursday, 25 November 21
FITCH RATINGS INCREASES MOST GLOBAL METALS AND MINING PRICE ASSUMPTIONS - FITCH RATINGS
Fitch Ratings has increased most metals and mining price assumptions, particularly those that benefit from increased longer-term demand due to glob ...
Thursday, 25 November 21
CHINA'S COAL PRICE DROPS IN MID-NOVEMBER AMID GOVERNMENT’S SWEEPING MEASURES - GLOBAL TIMES
China’s coal prices have dropped significantly in mid-November compared with the beginning of the month, with the price of coking coal and co ...
Wednesday, 24 November 21
MARKET INSIGHT - INTERMODAL
Inflation is the word that has dominated the meetings of foreign leaders and finance ministers in recent weeks, as rising energy costs, supply chai ...
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- Ministry of Transport, Egypt
- Kaltim Prima Coal - Indonesia
- Indo Tambangraya Megah - Indonesia
- VISA Power Limited - India
- Manunggal Multi Energi - Indonesia
- Marubeni Corporation - India
- Ministry of Finance - Indonesia
- European Bulk Services B.V. - Netherlands
- Alfred C Toepfer International GmbH - Germany
- Merrill Lynch Commodities Europe
- Semirara Mining Corp, Philippines
- Georgia Ports Authority, United States
- Larsen & Toubro Limited - India
- MS Steel International - UAE
- Bhushan Steel Limited - India
- Central Electricity Authority - India
- Global Coal Blending Company Limited - Australia
- Heidelberg Cement - Germany
- Sakthi Sugars Limited - India
- The Treasury - Australian Government
- The State Trading Corporation of India Ltd
- Siam City Cement PLC, Thailand
- South Luzon Thermal Energy Corporation
- Port Waratah Coal Services - Australia
- CIMB Investment Bank - Malaysia
- Aditya Birla Group - India
- Electricity Authority, New Zealand
- Dalmia Cement Bharat India
- Central Java Power - Indonesia
- Samtan Co., Ltd - South Korea
- Metalloyd Limited - United Kingdom
- GMR Energy Limited - India
- Bukit Baiduri Energy - Indonesia
- Maheswari Brothers Coal Limited - India
- Simpson Spence & Young - Indonesia
- Bangladesh Power Developement Board
- San Jose City I Power Corp, Philippines
- Thai Mozambique Logistica
- Semirara Mining and Power Corporation, Philippines
- Globalindo Alam Lestari - Indonesia
- Power Finance Corporation Ltd., India
- Neyveli Lignite Corporation Ltd, - India
- Energy Development Corp, Philippines
- AsiaOL BioFuels Corp., Philippines
- Altura Mining Limited, Indonesia
- Mercator Lines Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Tamil Nadu electricity Board
- Carbofer General Trading SA - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Miang Besar Coal Terminal - Indonesia
- Orica Mining Services - Indonesia
- Agrawal Coal Company - India
- Medco Energi Mining Internasional
- Indian Oil Corporation Limited
- Uttam Galva Steels Limited - India
- Price Waterhouse Coopers - Russia
- PetroVietnam Power Coal Import and Supply Company
- Leighton Contractors Pty Ltd - Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Energy Link Ltd, New Zealand
- Kohat Cement Company Ltd. - Pakistan
- Kartika Selabumi Mining - Indonesia
- Standard Chartered Bank - UAE
- Savvy Resources Ltd - HongKong
- SMC Global Power, Philippines
- Sinarmas Energy and Mining - Indonesia
- Chamber of Mines of South Africa
- Rio Tinto Coal - Australia
- Holcim Trading Pte Ltd - Singapore
- Pendopo Energi Batubara - Indonesia
- CNBM International Corporation - China
- Deloitte Consulting - India
- GAC Shipping (India) Pvt Ltd
- Jaiprakash Power Ventures ltd
- Trasteel International SA, Italy
- Ambuja Cements Ltd - India
- Edison Trading Spa - Italy
- Essar Steel Hazira Ltd - India
- SN Aboitiz Power Inc, Philippines
- Bulk Trading Sa - Switzerland
- Mercuria Energy - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Ceylon Electricity Board - Sri Lanka
- India Bulls Power Limited - India
- Bukit Makmur.PT - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Orica Australia Pty. Ltd.
- Kumho Petrochemical, South Korea
- Jindal Steel & Power Ltd - India
- Iligan Light & Power Inc, Philippines
- Interocean Group of Companies - India
- Karbindo Abesyapradhi - Indoneisa
- Meenaskhi Energy Private Limited - India
- Bayan Resources Tbk. - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Bhatia International Limited - India
- Billiton Holdings Pty Ltd - Australia
- OPG Power Generation Pvt Ltd - India
- Independent Power Producers Association of India
- Parliament of New Zealand
- Antam Resourcindo - Indonesia
- Australian Commodity Traders Exchange
- Bukit Asam (Persero) Tbk - Indonesia
- Mjunction Services Limited - India
- Lanco Infratech Ltd - India
- Kepco SPC Power Corporation, Philippines
- Renaissance Capital - South Africa
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Borneo Indobara - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Ministry of Mines - Canada
- Grasim Industreis Ltd - India
- Straits Asia Resources Limited - Singapore
- Xindia Steels Limited - India
- White Energy Company Limited
- Kapuas Tunggal Persada - Indonesia
- Sojitz Corporation - Japan
- Eastern Coal Council - USA
- London Commodity Brokers - England
- Madhucon Powers Ltd - India
- Riau Bara Harum - Indonesia
- Therma Luzon, Inc, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Banpu Public Company Limited - Thailand
- TNB Fuel Sdn Bhd - Malaysia
- Planning Commission, India
- The University of Queensland
- Economic Council, Georgia
- Siam City Cement - Thailand
- Eastern Energy - Thailand
- Oldendorff Carriers - Singapore
- Thiess Contractors Indonesia
- Karaikal Port Pvt Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Latin American Coal - Colombia
- Toyota Tsusho Corporation, Japan
- Vizag Seaport Private Limited - India
- Barasentosa Lestari - Indonesia
- Goldman Sachs - Singapore
- Attock Cement Pakistan Limited
- Gujarat Mineral Development Corp Ltd - India
- Tata Chemicals Ltd - India
- Aboitiz Power Corporation - Philippines
- Wood Mackenzie - Singapore
- Gujarat Sidhee Cement - India
- Krishnapatnam Port Company Ltd. - India
- GVK Power & Infra Limited - India
- IEA Clean Coal Centre - UK
- Star Paper Mills Limited - India
- McConnell Dowell - Australia
- Bhoruka Overseas - Indonesia
- Timah Investasi Mineral - Indoneisa
- Meralco Power Generation, Philippines
- Commonwealth Bank - Australia
- Anglo American - United Kingdom
- Vedanta Resources Plc - India
- Baramulti Group, Indonesia
- Indogreen Group - Indonesia
- Petron Corporation, Philippines
- Intertek Mineral Services - Indonesia
- Parry Sugars Refinery, India
- Sindya Power Generating Company Private Ltd
- Australian Coal Association
- Posco Energy - South Korea
- Ind-Barath Power Infra Limited - India
- PNOC Exploration Corporation - Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Rashtriya Ispat Nigam Limited - India
- IHS Mccloskey Coal Group - USA
- Binh Thuan Hamico - Vietnam
- SMG Consultants - Indonesia
- Indian Energy Exchange, India
- Directorate General of MIneral and Coal - Indonesia
- Bharathi Cement Corporation - India
- Salva Resources Pvt Ltd - India
- Videocon Industries ltd - India
- ASAPP Information Group - India
- ICICI Bank Limited - India
- Coalindo Energy - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Global Green Power PLC Corporation, Philippines
- International Coal Ventures Pvt Ltd - India
- Chettinad Cement Corporation Ltd - India
- PTC India Limited - India
- Global Business Power Corporation, Philippines
- Coal and Oil Company - UAE
- Jorong Barutama Greston.PT - Indonesia
- LBH Netherlands Bv - Netherlands
- Indonesian Coal Mining Association
- Kideco Jaya Agung - Indonesia
- Makarim & Taira - Indonesia
- Wilmar Investment Holdings
- Sarangani Energy Corporation, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Sree Jayajothi Cements Limited - India
- Singapore Mercantile Exchange
- Africa Commodities Group - South Africa
- Romanian Commodities Exchange
- Formosa Plastics Group - Taiwan
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- New Zealand Coal & Carbon
- Directorate Of Revenue Intelligence - India
- TeaM Sual Corporation - Philippines
- Coastal Gujarat Power Limited - India
- Mintek Dendrill Indonesia
- Malabar Cements Ltd - India
- Minerals Council of Australia
- Electricity Generating Authority of Thailand
- Indika Energy - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sical Logistics Limited - India
- PowerSource Philippines DevCo
- Kobexindo Tractors - Indoneisa
- Cement Manufacturers Association - India
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