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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, 06 September 24
REBOUND IN OIL DEMAND COULD LIFT MARKET IN LATTER HALF OF 2024 - BIMCO
Supply/demand
Based on a strong second half demand, the supply/balance is forecast to strengthen in 2024 but weaken slightly in 2025 as n ...
Friday, 06 September 24
GLOBAL SEABORNE LNG TRADE HAS CONTINUED TO INCREASE LAST YEAR - BANCHERO COSTA
Global seaborne LNG trade has continued to increase last year, helped also by the events in Ukraine which forced Europe to diversify away from Russ ...
Wednesday, 28 August 24
SEABORNE COAL IMPORTS INTO INDIA INCREASED BY +9.9% Y-O-Y TO 146.6 MLN T - BANCHERO COSTA
Global coal trade has really picked up pace over the past year, and is now fully back to pre-Covid levels said Banchero Costa Research in its lates ...
Tuesday, 06 August 24
EXERCISE CAUTION WITH AMMONIA SWITCH - BALTIC EXCHANGE
A new study from the Massachusetts Institute of Technology (MIT) has thrown a spanner into the plan to transition ships from diesel fuel to ammonia ...
Friday, 02 August 24
ENERGY MARKET DEVELOPMENTS: COAL AND NATURAL GAS PRICES REACH RECORD HIGHS - WORLD BANK
The recent surge in natural gas and coal prices has been so swift that the main benchmarks were roughly three times higher in 2022Q2 compared to a ...
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- Baramulti Group, Indonesia
- Central Electricity Authority - India
- Bhushan Steel Limited - India
- Vizag Seaport Private Limited - India
- Orica Mining Services - Indonesia
- International Coal Ventures Pvt Ltd - India
- Oldendorff Carriers - Singapore
- Sree Jayajothi Cements Limited - India
- Mercator Lines Limited - India
- Mjunction Services Limited - India
- Pendopo Energi Batubara - Indonesia
- Semirara Mining Corp, Philippines
- Minerals Council of Australia
- Xindia Steels Limited - India
- Riau Bara Harum - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Siam City Cement PLC, Thailand
- Coal and Oil Company - UAE
- Altura Mining Limited, Indonesia
- Meenaskhi Energy Private Limited - India
- Indian Oil Corporation Limited
- IHS Mccloskey Coal Group - USA
- Binh Thuan Hamico - Vietnam
- New Zealand Coal & Carbon
- VISA Power Limited - India
- Directorate General of MIneral and Coal - Indonesia
- India Bulls Power Limited - India
- GVK Power & Infra Limited - India
- Heidelberg Cement - Germany
- European Bulk Services B.V. - Netherlands
- Gujarat Mineral Development Corp Ltd - India
- Indika Energy - Indonesia
- Australian Coal Association
- PTC India Limited - India
- Bhatia International Limited - India
- Rio Tinto Coal - Australia
- Holcim Trading Pte Ltd - Singapore
- Jorong Barutama Greston.PT - Indonesia
- Bayan Resources Tbk. - Indonesia
- PNOC Exploration Corporation - Philippines
- Sindya Power Generating Company Private Ltd
- Bangladesh Power Developement Board
- Neyveli Lignite Corporation Ltd, - India
- LBH Netherlands Bv - Netherlands
- GN Power Mariveles Coal Plant, Philippines
- Kideco Jaya Agung - Indonesia
- Anglo American - United Kingdom
- Central Java Power - Indonesia
- Standard Chartered Bank - UAE
- TeaM Sual Corporation - Philippines
- Aboitiz Power Corporation - Philippines
- Siam City Cement - Thailand
- Jindal Steel & Power Ltd - India
- Bukit Baiduri Energy - Indonesia
- Sakthi Sugars Limited - India
- Thiess Contractors Indonesia
- Ministry of Finance - Indonesia
- Merrill Lynch Commodities Europe
- Makarim & Taira - Indonesia
- Ministry of Transport, Egypt
- SMC Global Power, Philippines
- Maheswari Brothers Coal Limited - India
- Mercuria Energy - Indonesia
- Iligan Light & Power Inc, Philippines
- Barasentosa Lestari - Indonesia
- Straits Asia Resources Limited - Singapore
- AsiaOL BioFuels Corp., Philippines
- Indonesian Coal Mining Association
- Energy Development Corp, Philippines
- Mintek Dendrill Indonesia
- Gujarat Electricity Regulatory Commission - India
- Salva Resources Pvt Ltd - India
- Romanian Commodities Exchange
- Posco Energy - South Korea
- Coastal Gujarat Power Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- CNBM International Corporation - China
- Toyota Tsusho Corporation, Japan
- SN Aboitiz Power Inc, Philippines
- Grasim Industreis Ltd - India
- Trasteel International SA, Italy
- Wilmar Investment Holdings
- Formosa Plastics Group - Taiwan
- Larsen & Toubro Limited - India
- Parry Sugars Refinery, India
- Indo Tambangraya Megah - Indonesia
- Latin American Coal - Colombia
- Renaissance Capital - South Africa
- Semirara Mining and Power Corporation, Philippines
- Africa Commodities Group - South Africa
- Kapuas Tunggal Persada - Indonesia
- Thai Mozambique Logistica
- Manunggal Multi Energi - Indonesia
- GAC Shipping (India) Pvt Ltd
- Georgia Ports Authority, United States
- Miang Besar Coal Terminal - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Savvy Resources Ltd - HongKong
- Eastern Energy - Thailand
- Bharathi Cement Corporation - India
- Cement Manufacturers Association - India
- Global Green Power PLC Corporation, Philippines
- Bukit Makmur.PT - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Intertek Mineral Services - Indonesia
- Agrawal Coal Company - India
- MS Steel International - UAE
- McConnell Dowell - Australia
- Malabar Cements Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Petron Corporation, Philippines
- Kepco SPC Power Corporation, Philippines
- Timah Investasi Mineral - Indoneisa
- Pipit Mutiara Jaya. PT, Indonesia
- Eastern Coal Council - USA
- Port Waratah Coal Services - Australia
- Ministry of Mines - Canada
- Bhoruka Overseas - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Uttam Galva Steels Limited - India
- Videocon Industries ltd - India
- Krishnapatnam Port Company Ltd. - India
- Kobexindo Tractors - Indoneisa
- Deloitte Consulting - India
- Lanco Infratech Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Aditya Birla Group - India
- Karaikal Port Pvt Ltd - India
- Australian Commodity Traders Exchange
- Power Finance Corporation Ltd., India
- Indogreen Group - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- ASAPP Information Group - India
- San Jose City I Power Corp, Philippines
- Kartika Selabumi Mining - Indonesia
- Essar Steel Hazira Ltd - India
- Global Business Power Corporation, Philippines
- Dalmia Cement Bharat India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- The State Trading Corporation of India Ltd
- Samtan Co., Ltd - South Korea
- Indian Energy Exchange, India
- Sinarmas Energy and Mining - Indonesia
- Kumho Petrochemical, South Korea
- Electricity Generating Authority of Thailand
- Directorate Of Revenue Intelligence - India
- Edison Trading Spa - Italy
- Gujarat Sidhee Cement - India
- Economic Council, Georgia
- Globalindo Alam Lestari - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Simpson Spence & Young - Indonesia
- The University of Queensland
- Ind-Barath Power Infra Limited - India
- Sojitz Corporation - Japan
- Planning Commission, India
- Meralco Power Generation, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Therma Luzon, Inc, Philippines
- Chamber of Mines of South Africa
- Alfred C Toepfer International GmbH - Germany
- Attock Cement Pakistan Limited
- Banpu Public Company Limited - Thailand
- Cigading International Bulk Terminal - Indonesia
- IEA Clean Coal Centre - UK
- SMG Consultants - Indonesia
- CIMB Investment Bank - Malaysia
- Marubeni Corporation - India
- South Luzon Thermal Energy Corporation
- OPG Power Generation Pvt Ltd - India
- Orica Australia Pty. Ltd.
- Billiton Holdings Pty Ltd - Australia
- Wood Mackenzie - Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- Madhucon Powers Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- White Energy Company Limited
- Vedanta Resources Plc - India
- Sarangani Energy Corporation, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Independent Power Producers Association of India
- Kaltim Prima Coal - Indonesia
- The Treasury - Australian Government
- Parliament of New Zealand
- ICICI Bank Limited - India
- Global Coal Blending Company Limited - Australia
- Goldman Sachs - Singapore
- PowerSource Philippines DevCo
- Kohat Cement Company Ltd. - Pakistan
- Tamil Nadu electricity Board
- Sical Logistics Limited - India
- Borneo Indobara - Indonesia
- Coalindo Energy - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Electricity Authority, New Zealand
- Carbofer General Trading SA - India
- Jaiprakash Power Ventures ltd
- Commonwealth Bank - Australia
- Bulk Trading Sa - Switzerland
- Price Waterhouse Coopers - Russia
- Singapore Mercantile Exchange
- Interocean Group of Companies - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- London Commodity Brokers - England
- Ambuja Cements Ltd - India
- Metalloyd Limited - United Kingdom
- Energy Link Ltd, New Zealand
- Medco Energi Mining Internasional
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Chettinad Cement Corporation Ltd - India
- Tata Chemicals Ltd - India
- Star Paper Mills Limited - India
- GMR Energy Limited - India
- Antam Resourcindo - Indonesia
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