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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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Wednesday, 24 November 21
WHY THIS MINING ANALYST IS UPBEAT ON THE IRON ORE PRICE FORECAST - MOTLEY FOOL
In many ways, 2021 can be called the year of the iron ore price. Much of the talk of the ASX town this year has revolved around this key economic m ...
Wednesday, 24 November 21
PRICE OF CHINA’S COAL FUTURE DROPS BY 60% AS NATIONWIDE DAILY OUTPUT REACHES OVER 12 MILLION TONS: NDRC - GLOBAL TIMES
China’s daily coal output has now stabilized after reaching over 12 million tons and the price of coal futures has declined to 800 yuan ($125 ...
Friday, 19 November 21
CHINA: COAL SUPPLIES TO STABILIZE FOR COMING COLD SEASON
China is capable of ensuring stable coal supplies this winter and next spring with the increase in coal production and the rising stockpiles at pow ...
Wednesday, 17 November 21
MARKET INSIGHT - INTERMODAL
It has been another declining week for the dry bulk market and evidently, we are seeing asset values gradually losing momentum as well. Following a ...
Tuesday, 16 November 21
EARNINGS RECOVERY IN INDONESIAN COAL TO CONTINUE THROUGH 2021, BUT SLOW IN 2022 - FITCH RATINGS
The recovery in the operating and financial performance of Indonesian coal miners and coal contractors is likely to slow in 2022, but coal prices s ...
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- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Indo Tambangraya Megah - Indonesia
- Renaissance Capital - South Africa
- Bhoruka Overseas - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Commonwealth Bank - Australia
- Gujarat Sidhee Cement - India
- European Bulk Services B.V. - Netherlands
- Kepco SPC Power Corporation, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Ambuja Cements Ltd - India
- Straits Asia Resources Limited - Singapore
- Iligan Light & Power Inc, Philippines
- San Jose City I Power Corp, Philippines
- Eastern Energy - Thailand
- Mercator Lines Limited - India
- Siam City Cement PLC, Thailand
- Vizag Seaport Private Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Alfred C Toepfer International GmbH - Germany
- Sarangani Energy Corporation, Philippines
- Meenaskhi Energy Private Limited - India
- Aboitiz Power Corporation - Philippines
- Anglo American - United Kingdom
- Star Paper Mills Limited - India
- Indogreen Group - Indonesia
- Trasteel International SA, Italy
- Petrochimia International Co. Ltd.- Taiwan
- Metalloyd Limited - United Kingdom
- Makarim & Taira - Indonesia
- Coastal Gujarat Power Limited - India
- Xindia Steels Limited - India
- Kapuas Tunggal Persada - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Barasentosa Lestari - Indonesia
- Kideco Jaya Agung - Indonesia
- Salva Resources Pvt Ltd - India
- International Coal Ventures Pvt Ltd - India
- Coalindo Energy - Indonesia
- Attock Cement Pakistan Limited
- PowerSource Philippines DevCo
- Wood Mackenzie - Singapore
- Chettinad Cement Corporation Ltd - India
- Bulk Trading Sa - Switzerland
- Cigading International Bulk Terminal - Indonesia
- Electricity Generating Authority of Thailand
- SN Aboitiz Power Inc, Philippines
- The Treasury - Australian Government
- Bukit Baiduri Energy - Indonesia
- Pendopo Energi Batubara - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Mercuria Energy - Indonesia
- Maheswari Brothers Coal Limited - India
- IEA Clean Coal Centre - UK
- Semirara Mining Corp, Philippines
- Tamil Nadu electricity Board
- Sical Logistics Limited - India
- Semirara Mining and Power Corporation, Philippines
- Australian Commodity Traders Exchange
- Kobexindo Tractors - Indoneisa
- Georgia Ports Authority, United States
- Mjunction Services Limited - India
- Carbofer General Trading SA - India
- Jorong Barutama Greston.PT - Indonesia
- Formosa Plastics Group - Taiwan
- OPG Power Generation Pvt Ltd - India
- Banpu Public Company Limited - Thailand
- Grasim Industreis Ltd - India
- GAC Shipping (India) Pvt Ltd
- Antam Resourcindo - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Latin American Coal - Colombia
- Energy Link Ltd, New Zealand
- South Luzon Thermal Energy Corporation
- PNOC Exploration Corporation - Philippines
- Rashtriya Ispat Nigam Limited - India
- Australian Coal Association
- Interocean Group of Companies - India
- Economic Council, Georgia
- Larsen & Toubro Limited - India
- Ind-Barath Power Infra Limited - India
- Agrawal Coal Company - India
- Ministry of Mines - Canada
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Karaikal Port Pvt Ltd - India
- Riau Bara Harum - Indonesia
- Wilmar Investment Holdings
- Madhucon Powers Ltd - India
- Kumho Petrochemical, South Korea
- Deloitte Consulting - India
- Binh Thuan Hamico - Vietnam
- Minerals Council of Australia
- Chamber of Mines of South Africa
- Petron Corporation, Philippines
- CIMB Investment Bank - Malaysia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Sindya Power Generating Company Private Ltd
- GMR Energy Limited - India
- Holcim Trading Pte Ltd - Singapore
- Mintek Dendrill Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bhatia International Limited - India
- Power Finance Corporation Ltd., India
- Cement Manufacturers Association - India
- Pipit Mutiara Jaya. PT, Indonesia
- Directorate Of Revenue Intelligence - India
- Sakthi Sugars Limited - India
- The State Trading Corporation of India Ltd
- Maharashtra Electricity Regulatory Commission - India
- Global Business Power Corporation, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Videocon Industries ltd - India
- Sinarmas Energy and Mining - Indonesia
- Tata Chemicals Ltd - India
- Posco Energy - South Korea
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bukit Makmur.PT - Indonesia
- Meralco Power Generation, Philippines
- Edison Trading Spa - Italy
- GN Power Mariveles Coal Plant, Philippines
- Central Java Power - Indonesia
- PTC India Limited - India
- Oldendorff Carriers - Singapore
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bhushan Steel Limited - India
- Ceylon Electricity Board - Sri Lanka
- Timah Investasi Mineral - Indoneisa
- Heidelberg Cement - Germany
- Karbindo Abesyapradhi - Indoneisa
- Gujarat Mineral Development Corp Ltd - India
- The University of Queensland
- Toyota Tsusho Corporation, Japan
- Savvy Resources Ltd - HongKong
- Independent Power Producers Association of India
- Romanian Commodities Exchange
- Leighton Contractors Pty Ltd - Australia
- Thiess Contractors Indonesia
- Vedanta Resources Plc - India
- Singapore Mercantile Exchange
- Bukit Asam (Persero) Tbk - Indonesia
- Sree Jayajothi Cements Limited - India
- Coal and Oil Company - UAE
- Planning Commission, India
- Dalmia Cement Bharat India
- Goldman Sachs - Singapore
- AsiaOL BioFuels Corp., Philippines
- Bangladesh Power Developement Board
- Intertek Mineral Services - Indonesia
- CNBM International Corporation - China
- Central Electricity Authority - India
- Sojitz Corporation - Japan
- Bayan Resources Tbk. - Indonesia
- Parliament of New Zealand
- Lanco Infratech Ltd - India
- IHS Mccloskey Coal Group - USA
- Altura Mining Limited, Indonesia
- VISA Power Limited - India
- Medco Energi Mining Internasional
- ASAPP Information Group - India
- MS Steel International - UAE
- Manunggal Multi Energi - Indonesia
- Kaltim Prima Coal - Indonesia
- LBH Netherlands Bv - Netherlands
- India Bulls Power Limited - India
- Global Coal Blending Company Limited - Australia
- Energy Development Corp, Philippines
- Port Waratah Coal Services - Australia
- Siam City Cement - Thailand
- Price Waterhouse Coopers - Russia
- Indika Energy - Indonesia
- Globalindo Alam Lestari - Indonesia
- Marubeni Corporation - India
- ICICI Bank Limited - India
- Ministry of Transport, Egypt
- Aditya Birla Group - India
- Bharathi Cement Corporation - India
- Orica Mining Services - Indonesia
- Kartika Selabumi Mining - Indonesia
- Orica Australia Pty. Ltd.
- Jaiprakash Power Ventures ltd
- Bahari Cakrawala Sebuku - Indonesia
- Baramulti Group, Indonesia
- Global Green Power PLC Corporation, Philippines
- Therma Luzon, Inc, Philippines
- London Commodity Brokers - England
- Parry Sugars Refinery, India
- Standard Chartered Bank - UAE
- Vijayanagar Sugar Pvt Ltd - India
- Electricity Authority, New Zealand
- McConnell Dowell - Australia
- Miang Besar Coal Terminal - Indonesia
- Uttam Galva Steels Limited - India
- Kalimantan Lumbung Energi - Indonesia
- White Energy Company Limited
- Indonesian Coal Mining Association
- Jindal Steel & Power Ltd - India
- Indian Energy Exchange, India
- Borneo Indobara - Indonesia
- SMC Global Power, Philippines
- SMG Consultants - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Merrill Lynch Commodities Europe
- Essar Steel Hazira Ltd - India
- Simpson Spence & Young - Indonesia
- New Zealand Coal & Carbon
- Malabar Cements Ltd - India
- GVK Power & Infra Limited - India
- Gujarat Electricity Regulatory Commission - India
- Thai Mozambique Logistica
- Indian Oil Corporation Limited
- Samtan Co., Ltd - South Korea
- Ministry of Finance - Indonesia
- Africa Commodities Group - South Africa
- Eastern Coal Council - USA
- Billiton Holdings Pty Ltd - Australia
- TeaM Sual Corporation - Philippines
- Rio Tinto Coal - Australia
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