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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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Wednesday, 01 July 20
COLOMBIA'S COAL EXPORT VOLUMES HAVE STEADILY DECLINED IN RECENT YEARS - BANCHERO COSTA
Colombia is the world’s fifth largest seaborne exporter of coal, coming after Australia, Indonesia, Russia and the USA.
Export ...
Wednesday, 01 July 20
MARKET INSIGHT - INTERMODAL
It was beginning of 2020 – close to 6 months from now – when we first experienced the huge impact of the COVID 19 outbreak on Ship Repa ...
Monday, 29 June 20
INDONESIAN COAL AT THE MERCY OF THE DRAGON AND TIGER - GHEE PEH | IEEFA
Coal sector analysts have been busy in recent months mapping the negative impact of low coal prices from the COVID-19 pandemic on Indonesian coal c ...
Monday, 29 June 20
FALLING DEMAND IN CHINA AND INDIA SIGNAL TOUGH TIMES AHEAD FOR INDONESIAN EXPORTS - GHEE PEH | EEFA
Assessing the Impact on Indonesian Coal Companies
The bad news for Indonesia’s coal companies is that they are likely to have ...
Monday, 29 June 20
INDIA COAL IMPORT OUTLOOK: WEAK DEMAND, IMPORT SUBSTITUTION, EXPECT 20% YOY DECLINE - GHEE PEH | IEEFA
For India, the coal demand indicators have clearly turned negative.
According to Argus Media, since the government declared a ...
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- Manunggal Multi Energi - Indonesia
- Uttam Galva Steels Limited - India
- Krishnapatnam Port Company Ltd. - India
- Interocean Group of Companies - India
- Chettinad Cement Corporation Ltd - India
- Sakthi Sugars Limited - India
- India Bulls Power Limited - India
- Jindal Steel & Power Ltd - India
- Borneo Indobara - Indonesia
- Holcim Trading Pte Ltd - Singapore
- CIMB Investment Bank - Malaysia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Savvy Resources Ltd - HongKong
- Aditya Birla Group - India
- Singapore Mercantile Exchange
- Petrochimia International Co. Ltd.- Taiwan
- Maharashtra Electricity Regulatory Commission - India
- Semirara Mining Corp, Philippines
- PNOC Exploration Corporation - Philippines
- Bhoruka Overseas - Indonesia
- MS Steel International - UAE
- Kapuas Tunggal Persada - Indonesia
- Thai Mozambique Logistica
- Indo Tambangraya Megah - Indonesia
- Mercator Lines Limited - India
- Binh Thuan Hamico - Vietnam
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- LBH Netherlands Bv - Netherlands
- Independent Power Producers Association of India
- GN Power Mariveles Coal Plant, Philippines
- AsiaOL BioFuels Corp., Philippines
- Orica Mining Services - Indonesia
- Sojitz Corporation - Japan
- Neyveli Lignite Corporation Ltd, - India
- Merrill Lynch Commodities Europe
- Formosa Plastics Group - Taiwan
- Sinarmas Energy and Mining - Indonesia
- Siam City Cement - Thailand
- SMC Global Power, Philippines
- SMG Consultants - Indonesia
- VISA Power Limited - India
- Therma Luzon, Inc, Philippines
- Agrawal Coal Company - India
- Wood Mackenzie - Singapore
- Ministry of Finance - Indonesia
- Thiess Contractors Indonesia
- Parry Sugars Refinery, India
- Posco Energy - South Korea
- Standard Chartered Bank - UAE
- IEA Clean Coal Centre - UK
- Tamil Nadu electricity Board
- Lanco Infratech Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- London Commodity Brokers - England
- Simpson Spence & Young - Indonesia
- Global Coal Blending Company Limited - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Goldman Sachs - Singapore
- Antam Resourcindo - Indonesia
- Indonesian Coal Mining Association
- Bukit Asam (Persero) Tbk - Indonesia
- Meenaskhi Energy Private Limited - India
- Indian Oil Corporation Limited
- Planning Commission, India
- Power Finance Corporation Ltd., India
- Indika Energy - Indonesia
- Carbofer General Trading SA - India
- Heidelberg Cement - Germany
- Sical Logistics Limited - India
- GAC Shipping (India) Pvt Ltd
- Indogreen Group - Indonesia
- Larsen & Toubro Limited - India
- Kaltim Prima Coal - Indonesia
- GVK Power & Infra Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Aboitiz Power Corporation - Philippines
- Makarim & Taira - Indonesia
- Sree Jayajothi Cements Limited - India
- Energy Development Corp, Philippines
- European Bulk Services B.V. - Netherlands
- Iligan Light & Power Inc, Philippines
- Banpu Public Company Limited - Thailand
- Ceylon Electricity Board - Sri Lanka
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Riau Bara Harum - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Karaikal Port Pvt Ltd - India
- Parliament of New Zealand
- Marubeni Corporation - India
- Oldendorff Carriers - Singapore
- Petron Corporation, Philippines
- Globalindo Alam Lestari - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Essar Steel Hazira Ltd - India
- GMR Energy Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Anglo American - United Kingdom
- Mintek Dendrill Indonesia
- Bukit Makmur.PT - Indonesia
- Australian Coal Association
- Maheswari Brothers Coal Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Sarangani Energy Corporation, Philippines
- Latin American Coal - Colombia
- Africa Commodities Group - South Africa
- McConnell Dowell - Australia
- Rashtriya Ispat Nigam Limited - India
- Ambuja Cements Ltd - India
- Straits Asia Resources Limited - Singapore
- Billiton Holdings Pty Ltd - Australia
- Price Waterhouse Coopers - Russia
- Eastern Coal Council - USA
- Chamber of Mines of South Africa
- Cement Manufacturers Association - India
- Leighton Contractors Pty Ltd - Australia
- Ministry of Transport, Egypt
- Orica Australia Pty. Ltd.
- Grasim Industreis Ltd - India
- Malabar Cements Ltd - India
- The University of Queensland
- Bangladesh Power Developement Board
- Pipit Mutiara Jaya. PT, Indonesia
- Toyota Tsusho Corporation, Japan
- Bhatia International Limited - India
- Mjunction Services Limited - India
- ICICI Bank Limited - India
- The Treasury - Australian Government
- Vijayanagar Sugar Pvt Ltd - India
- Electricity Generating Authority of Thailand
- PTC India Limited - India
- Salva Resources Pvt Ltd - India
- Coastal Gujarat Power Limited - India
- Star Paper Mills Limited - India
- Eastern Energy - Thailand
- Global Business Power Corporation, Philippines
- Edison Trading Spa - Italy
- International Coal Ventures Pvt Ltd - India
- Georgia Ports Authority, United States
- Kartika Selabumi Mining - Indonesia
- Ind-Barath Power Infra Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Miang Besar Coal Terminal - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- PowerSource Philippines DevCo
- Rio Tinto Coal - Australia
- Videocon Industries ltd - India
- Attock Cement Pakistan Limited
- Siam City Cement PLC, Thailand
- Altura Mining Limited, Indonesia
- Metalloyd Limited - United Kingdom
- Mercuria Energy - Indonesia
- Baramulti Group, Indonesia
- The State Trading Corporation of India Ltd
- White Energy Company Limited
- Bahari Cakrawala Sebuku - Indonesia
- Central Java Power - Indonesia
- CNBM International Corporation - China
- Bhushan Steel Limited - India
- Meralco Power Generation, Philippines
- IHS Mccloskey Coal Group - USA
- Vedanta Resources Plc - India
- Xindia Steels Limited - India
- New Zealand Coal & Carbon
- Bukit Baiduri Energy - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Australian Commodity Traders Exchange
- Coal and Oil Company - UAE
- Karbindo Abesyapradhi - Indoneisa
- Tata Chemicals Ltd - India
- Renaissance Capital - South Africa
- Wilmar Investment Holdings
- TeaM Sual Corporation - Philippines
- Pendopo Energi Batubara - Indonesia
- Barasentosa Lestari - Indonesia
- Kepco SPC Power Corporation, Philippines
- Commonwealth Bank - Australia
- Intertek Mineral Services - Indonesia
- Bayan Resources Tbk. - Indonesia
- Kideco Jaya Agung - Indonesia
- Vizag Seaport Private Limited - India
- Kumho Petrochemical, South Korea
- Sindya Power Generating Company Private Ltd
- Ministry of Mines - Canada
- Gujarat Sidhee Cement - India
- Semirara Mining and Power Corporation, Philippines
- San Jose City I Power Corp, Philippines
- Gujarat Electricity Regulatory Commission - India
- SN Aboitiz Power Inc, Philippines
- Coalindo Energy - Indonesia
- Timah Investasi Mineral - Indoneisa
- Deloitte Consulting - India
- Central Electricity Authority - India
- Gujarat Mineral Development Corp Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Romanian Commodities Exchange
- Samtan Co., Ltd - South Korea
- Kalimantan Lumbung Energi - Indonesia
- Madhucon Powers Ltd - India
- Dalmia Cement Bharat India
- ASAPP Information Group - India
- Global Green Power PLC Corporation, Philippines
- Bulk Trading Sa - Switzerland
- Bharathi Cement Corporation - India
- Kobexindo Tractors - Indoneisa
- Trasteel International SA, Italy
- Jaiprakash Power Ventures ltd
- Energy Link Ltd, New Zealand
- Electricity Authority, New Zealand
- Medco Energi Mining Internasional
- Port Waratah Coal Services - Australia
- South Luzon Thermal Energy Corporation
- Economic Council, Georgia
- OPG Power Generation Pvt Ltd - India
- Indian Energy Exchange, India
- Directorate Of Revenue Intelligence - India
- Minerals Council of Australia
- Alfred C Toepfer International GmbH - Germany
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