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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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Saturday, 11 September 21
CIL STEPS UP SUPPLY COAL TO POWER SECTOR; PER-DAY AVERAGE 20 PC HIGHER THAN LAST YEAR - PTI
State-owned CIL on Friday said it has stepped up the supply of coal to the power sector in the first eight days of the current month, with an avera ...
Saturday, 11 September 21
RECORD CHINESE COAL FUTURES SIGNAL NEED TO BOOST OUTPUT - REUTERS
China’s coal prices have climbed to a record high, signaling the need for more production in the short term, even as the government tries to ...
Saturday, 11 September 21
IN 2022, EIA EXPECTS U.S. COAL PRODUCTION TO INCREASE BY 47 MMST TO 648 MMST
U.S. Coal production accordng to EIA's forecast, totals 601 million short tons (MMst) in 2021, 66 MMst more than in 2020, EIA's Short-Term ...
Wednesday, 08 September 21
FITCH RATINGS RAISES THERMAL COAL PRICE ASSUMPTIONS ON TIGHT SUPPLY
Fitch Ratings has increased all its Qinhuangdao 5,500kcal/kg price assumptions and short- and medium-term Newcastle 6,000kcal/kg price assumptions ...
Wednesday, 08 September 21
COAL IS STILL KING; INDONESIAN COAL PRICE REFERENCE ABOVE $150 FOR FIRST TIME IN HISTORY
COALspot.com: The Indonesian Coal Price Reference rose dramatically from US$ 127.05 in February 2011, to a peak of US$ 150.03 in September 2021, be ...
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- Eastern Coal Council - USA
- Parliament of New Zealand
- Orica Mining Services - Indonesia
- Sindya Power Generating Company Private Ltd
- Lanco Infratech Ltd - India
- Kideco Jaya Agung - Indonesia
- Binh Thuan Hamico - Vietnam
- Mercator Lines Limited - India
- PowerSource Philippines DevCo
- Bank of Tokyo Mitsubishi UFJ Ltd
- Altura Mining Limited, Indonesia
- ICICI Bank Limited - India
- Therma Luzon, Inc, Philippines
- Metalloyd Limited - United Kingdom
- Banpu Public Company Limited - Thailand
- Carbofer General Trading SA - India
- Parry Sugars Refinery, India
- San Jose City I Power Corp, Philippines
- International Coal Ventures Pvt Ltd - India
- Vedanta Resources Plc - India
- Standard Chartered Bank - UAE
- Indian Energy Exchange, India
- Africa Commodities Group - South Africa
- Cigading International Bulk Terminal - Indonesia
- Makarim & Taira - Indonesia
- Economic Council, Georgia
- Commonwealth Bank - Australia
- Power Finance Corporation Ltd., India
- Tamil Nadu electricity Board
- Deloitte Consulting - India
- GAC Shipping (India) Pvt Ltd
- Indika Energy - Indonesia
- Indonesian Coal Mining Association
- Kaltim Prima Coal - Indonesia
- Bhatia International Limited - India
- Toyota Tsusho Corporation, Japan
- Central Electricity Authority - India
- AsiaOL BioFuels Corp., Philippines
- Ministry of Finance - Indonesia
- PNOC Exploration Corporation - Philippines
- Goldman Sachs - Singapore
- Siam City Cement PLC, Thailand
- LBH Netherlands Bv - Netherlands
- White Energy Company Limited
- Kumho Petrochemical, South Korea
- Kohat Cement Company Ltd. - Pakistan
- Xindia Steels Limited - India
- Sakthi Sugars Limited - India
- Baramulti Group, Indonesia
- Kepco SPC Power Corporation, Philippines
- Edison Trading Spa - Italy
- Dalmia Cement Bharat India
- Borneo Indobara - Indonesia
- Port Waratah Coal Services - Australia
- Bangladesh Power Developement Board
- Asmin Koalindo Tuhup - Indonesia
- Australian Coal Association
- Timah Investasi Mineral - Indoneisa
- Holcim Trading Pte Ltd - Singapore
- Jindal Steel & Power Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Bukit Makmur.PT - Indonesia
- Directorate Of Revenue Intelligence - India
- McConnell Dowell - Australia
- Coastal Gujarat Power Limited - India
- Australian Commodity Traders Exchange
- Iligan Light & Power Inc, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Bhushan Steel Limited - India
- Maheswari Brothers Coal Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Gujarat Mineral Development Corp Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Tata Chemicals Ltd - India
- Kartika Selabumi Mining - Indonesia
- Indo Tambangraya Megah - Indonesia
- Rio Tinto Coal - Australia
- Minerals Council of Australia
- Bharathi Cement Corporation - India
- Bulk Trading Sa - Switzerland
- Alfred C Toepfer International GmbH - Germany
- Gujarat Electricity Regulatory Commission - India
- Wilmar Investment Holdings
- Meenaskhi Energy Private Limited - India
- Mercuria Energy - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Central Java Power - Indonesia
- Wood Mackenzie - Singapore
- Miang Besar Coal Terminal - Indonesia
- Oldendorff Carriers - Singapore
- SMC Global Power, Philippines
- Videocon Industries ltd - India
- Global Green Power PLC Corporation, Philippines
- Indogreen Group - Indonesia
- Barasentosa Lestari - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Ind-Barath Power Infra Limited - India
- Star Paper Mills Limited - India
- Kapuas Tunggal Persada - Indonesia
- Eastern Energy - Thailand
- CNBM International Corporation - China
- India Bulls Power Limited - India
- ASAPP Information Group - India
- Semirara Mining and Power Corporation, Philippines
- Ceylon Electricity Board - Sri Lanka
- Thai Mozambique Logistica
- Bukit Asam (Persero) Tbk - Indonesia
- Chettinad Cement Corporation Ltd - India
- Posco Energy - South Korea
- Essar Steel Hazira Ltd - India
- Georgia Ports Authority, United States
- The Treasury - Australian Government
- The State Trading Corporation of India Ltd
- Electricity Generating Authority of Thailand
- Offshore Bulk Terminal Pte Ltd, Singapore
- Latin American Coal - Colombia
- Bhoruka Overseas - Indonesia
- Aditya Birla Group - India
- Grasim Industreis Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Indian Oil Corporation Limited
- Malabar Cements Ltd - India
- Bukit Baiduri Energy - Indonesia
- Mjunction Services Limited - India
- Krishnapatnam Port Company Ltd. - India
- Semirara Mining Corp, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- GMR Energy Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Trasteel International SA, Italy
- TeaM Sual Corporation - Philippines
- Petron Corporation, Philippines
- Medco Energi Mining Internasional
- Kobexindo Tractors - Indoneisa
- Orica Australia Pty. Ltd.
- Vizag Seaport Private Limited - India
- European Bulk Services B.V. - Netherlands
- Sarangani Energy Corporation, Philippines
- Sojitz Corporation - Japan
- Madhucon Powers Ltd - India
- Uttam Galva Steels Limited - India
- Cement Manufacturers Association - India
- Formosa Plastics Group - Taiwan
- MS Steel International - UAE
- Price Waterhouse Coopers - Russia
- Sree Jayajothi Cements Limited - India
- Merrill Lynch Commodities Europe
- New Zealand Coal & Carbon
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- SMG Consultants - Indonesia
- Energy Development Corp, Philippines
- Sical Logistics Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Samtan Co., Ltd - South Korea
- Global Coal Blending Company Limited - Australia
- Rashtriya Ispat Nigam Limited - India
- Thiess Contractors Indonesia
- Singapore Mercantile Exchange
- VISA Power Limited - India
- Marubeni Corporation - India
- London Commodity Brokers - England
- South Luzon Thermal Energy Corporation
- Ministry of Transport, Egypt
- PTC India Limited - India
- Aboitiz Power Corporation - Philippines
- Heidelberg Cement - Germany
- Riau Bara Harum - Indonesia
- Anglo American - United Kingdom
- IEA Clean Coal Centre - UK
- Attock Cement Pakistan Limited
- Energy Link Ltd, New Zealand
- Manunggal Multi Energi - Indonesia
- Romanian Commodities Exchange
- Chamber of Mines of South Africa
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- SN Aboitiz Power Inc, Philippines
- Pendopo Energi Batubara - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Agrawal Coal Company - India
- Coal and Oil Company - UAE
- Antam Resourcindo - Indonesia
- Larsen & Toubro Limited - India
- The University of Queensland
- Independent Power Producers Association of India
- Globalindo Alam Lestari - Indonesia
- Global Business Power Corporation, Philippines
- Karaikal Port Pvt Ltd - India
- Renaissance Capital - South Africa
- Meralco Power Generation, Philippines
- Coalindo Energy - Indonesia
- Gujarat Sidhee Cement - India
- Mintek Dendrill Indonesia
- IHS Mccloskey Coal Group - USA
- Bayan Resources Tbk. - Indonesia
- Siam City Cement - Thailand
- Ambuja Cements Ltd - India
- Interocean Group of Companies - India
- Planning Commission, India
- Neyveli Lignite Corporation Ltd, - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- CIMB Investment Bank - Malaysia
- Intertek Mineral Services - Indonesia
- Straits Asia Resources Limited - Singapore
- Billiton Holdings Pty Ltd - Australia
- Directorate General of MIneral and Coal - Indonesia
- OPG Power Generation Pvt Ltd - India
- GVK Power & Infra Limited - India
- Sinarmas Energy and Mining - Indonesia
- Ministry of Mines - Canada
- Electricity Authority, New Zealand
- Savvy Resources Ltd - HongKong
- Bahari Cakrawala Sebuku - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Salva Resources Pvt Ltd - India
- Simpson Spence & Young - Indonesia
- Jaiprakash Power Ventures ltd
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