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