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