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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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Monday, 08 March 21
MARCH 2021 INDONESIA COAL PRICE REFERENCE SETTLES LOWER
COALspot.com: The Indonesia coal price reference for March 2021 settles at US$ 84.49 per ton FOB vessel.
The Indonesia coal pr ...
Saturday, 06 March 21
AUSTRALIAN COAL: SOME WEAKNESS COULD MATERIALIZE AFTER THE WINTER - ING
Newcastle coal prices remain well supported for now, however as we move out of the winter months we would expect prices to come under pressure. Mea ...
Saturday, 06 March 21
ASIA SEABORNE COAL PRICES START TO RETREAT, CHINA-AUSTRALIA DISPUTE LINGERS - REUTERS
There are signs that the price and demand surge for coal during the recent colder-than-expected winter across North Asia is starting to ease, even ...
Thursday, 04 March 21
HEAD OF JBIC SAYS THE JAPANESE BANK WILL NOT FUND NEW COAL PLANT DEVELOPMENT - NHK NEWS
The governor of the Japan Bank for International Cooperation has said that the government-owned financial institution will stop funding new coal-fi ...
Wednesday, 03 March 21
MARKET INSIGHT - INTERMODAL
Following the recent rally to multi year highs of metal-based commodities, amid an unprecedented global economic stimulus, discussions of an emergi ...
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- Manunggal Multi Energi - Indonesia
- Meenaskhi Energy Private Limited - India
- Aditya Birla Group - India
- Interocean Group of Companies - India
- New Zealand Coal & Carbon
- San Jose City I Power Corp, Philippines
- VISA Power Limited - India
- Samtan Co., Ltd - South Korea
- Maharashtra Electricity Regulatory Commission - India
- OPG Power Generation Pvt Ltd - India
- Petron Corporation, Philippines
- Kobexindo Tractors - Indoneisa
- Kaltim Prima Coal - Indonesia
- Karaikal Port Pvt Ltd - India
- Indo Tambangraya Megah - Indonesia
- Coastal Gujarat Power Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Mercator Lines Limited - India
- Essar Steel Hazira Ltd - India
- Posco Energy - South Korea
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Planning Commission, India
- Mintek Dendrill Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Directorate General of MIneral and Coal - Indonesia
- Chamber of Mines of South Africa
- South Luzon Thermal Energy Corporation
- Orica Mining Services - Indonesia
- Chettinad Cement Corporation Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Deloitte Consulting - India
- London Commodity Brokers - England
- Singapore Mercantile Exchange
- Anglo American - United Kingdom
- Edison Trading Spa - Italy
- Sinarmas Energy and Mining - Indonesia
- Sical Logistics Limited - India
- Oldendorff Carriers - Singapore
- Global Coal Blending Company Limited - Australia
- IHS Mccloskey Coal Group - USA
- Wilmar Investment Holdings
- Directorate Of Revenue Intelligence - India
- Economic Council, Georgia
- Tata Chemicals Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Carbofer General Trading SA - India
- LBH Netherlands Bv - Netherlands
- Parry Sugars Refinery, India
- Kartika Selabumi Mining - Indonesia
- Ministry of Transport, Egypt
- Pipit Mutiara Jaya. PT, Indonesia
- Sojitz Corporation - Japan
- TNB Fuel Sdn Bhd - Malaysia
- ICICI Bank Limited - India
- The Treasury - Australian Government
- Coalindo Energy - Indonesia
- Wood Mackenzie - Singapore
- Siam City Cement PLC, Thailand
- Kapuas Tunggal Persada - Indonesia
- Indonesian Coal Mining Association
- Neyveli Lignite Corporation Ltd, - India
- Videocon Industries ltd - India
- McConnell Dowell - Australia
- Minerals Council of Australia
- Alfred C Toepfer International GmbH - Germany
- GMR Energy Limited - India
- Merrill Lynch Commodities Europe
- Gujarat Mineral Development Corp Ltd - India
- IEA Clean Coal Centre - UK
- Australian Commodity Traders Exchange
- Goldman Sachs - Singapore
- Parliament of New Zealand
- PowerSource Philippines DevCo
- AsiaOL BioFuels Corp., Philippines
- Attock Cement Pakistan Limited
- PTC India Limited - India
- Therma Luzon, Inc, Philippines
- Indian Energy Exchange, India
- Sindya Power Generating Company Private Ltd
- Rio Tinto Coal - Australia
- European Bulk Services B.V. - Netherlands
- Maheswari Brothers Coal Limited - India
- Siam City Cement - Thailand
- Tamil Nadu electricity Board
- Sree Jayajothi Cements Limited - India
- CNBM International Corporation - China
- Riau Bara Harum - Indonesia
- Xindia Steels Limited - India
- Eastern Energy - Thailand
- Bank of Tokyo Mitsubishi UFJ Ltd
- Indian Oil Corporation Limited
- Heidelberg Cement - Germany
- Larsen & Toubro Limited - India
- Indogreen Group - Indonesia
- Ministry of Finance - Indonesia
- Pendopo Energi Batubara - Indonesia
- ASAPP Information Group - India
- Independent Power Producers Association of India
- Vizag Seaport Private Limited - India
- Cement Manufacturers Association - India
- TeaM Sual Corporation - Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Savvy Resources Ltd - HongKong
- Thiess Contractors Indonesia
- Energy Development Corp, Philippines
- Bhatia International Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Bukit Baiduri Energy - Indonesia
- Africa Commodities Group - South Africa
- Star Paper Mills Limited - India
- Sarangani Energy Corporation, Philippines
- Renaissance Capital - South Africa
- SMG Consultants - Indonesia
- Bangladesh Power Developement Board
- Jindal Steel & Power Ltd - India
- Medco Energi Mining Internasional
- Timah Investasi Mineral - Indoneisa
- SN Aboitiz Power Inc, Philippines
- Electricity Authority, New Zealand
- Bukit Asam (Persero) Tbk - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Energy Link Ltd, New Zealand
- Bahari Cakrawala Sebuku - Indonesia
- Thai Mozambique Logistica
- CIMB Investment Bank - Malaysia
- Global Business Power Corporation, Philippines
- Metalloyd Limited - United Kingdom
- PetroVietnam Power Coal Import and Supply Company
- International Coal Ventures Pvt Ltd - India
- Bukit Makmur.PT - Indonesia
- White Energy Company Limited
- The University of Queensland
- Kepco SPC Power Corporation, Philippines
- GVK Power & Infra Limited - India
- Ambuja Cements Ltd - India
- Gujarat Sidhee Cement - India
- SMC Global Power, Philippines
- Lanco Infratech Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Kideco Jaya Agung - Indonesia
- Kumho Petrochemical, South Korea
- Eastern Coal Council - USA
- Iligan Light & Power Inc, Philippines
- India Bulls Power Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Central Java Power - Indonesia
- Agrawal Coal Company - India
- Gujarat Electricity Regulatory Commission - India
- Bhoruka Overseas - Indonesia
- Marubeni Corporation - India
- Semirara Mining and Power Corporation, Philippines
- Ind-Barath Power Infra Limited - India
- Grasim Industreis Ltd - India
- Malabar Cements Ltd - India
- Bhushan Steel Limited - India
- Port Waratah Coal Services - Australia
- Standard Chartered Bank - UAE
- Latin American Coal - Colombia
- GAC Shipping (India) Pvt Ltd
- Baramulti Group, Indonesia
- Trasteel International SA, Italy
- Formosa Plastics Group - Taiwan
- Bayan Resources Tbk. - Indonesia
- Ministry of Mines - Canada
- Georgia Ports Authority, United States
- Holcim Trading Pte Ltd - Singapore
- Straits Asia Resources Limited - Singapore
- Karbindo Abesyapradhi - Indoneisa
- Krishnapatnam Port Company Ltd. - India
- Jorong Barutama Greston.PT - Indonesia
- Commonwealth Bank - Australia
- Electricity Generating Authority of Thailand
- Altura Mining Limited, Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Borneo Indobara - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Miang Besar Coal Terminal - Indonesia
- Global Green Power PLC Corporation, Philippines
- Vedanta Resources Plc - India
- Mjunction Services Limited - India
- Orica Australia Pty. Ltd.
- PNOC Exploration Corporation - Philippines
- Ceylon Electricity Board - Sri Lanka
- Simpson Spence & Young - Indonesia
- Jaiprakash Power Ventures ltd
- Power Finance Corporation Ltd., India
- Sakthi Sugars Limited - India
- Binh Thuan Hamico - Vietnam
- Price Waterhouse Coopers - Russia
- Toyota Tsusho Corporation, Japan
- Aboitiz Power Corporation - Philippines
- Madhucon Powers Ltd - India
- Dalmia Cement Bharat India
- Australian Coal Association
- Semirara Mining Corp, Philippines
- Romanian Commodities Exchange
- MS Steel International - UAE
- Barasentosa Lestari - Indonesia
- Antam Resourcindo - Indonesia
- Uttam Galva Steels Limited - India
- Coal and Oil Company - UAE
- Banpu Public Company Limited - Thailand
- Meralco Power Generation, Philippines
- Mercuria Energy - Indonesia
- Intertek Mineral Services - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Salva Resources Pvt Ltd - India
- Indika Energy - Indonesia
- Makarim & Taira - Indonesia
- Bulk Trading Sa - Switzerland
- Globalindo Alam Lestari - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Central Electricity Authority - India
- Bharathi Cement Corporation - India
- The State Trading Corporation of India Ltd
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