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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, 25 March 23
COAL INDIA HAS STRONG CASE TO INCREASE PRICES, TALKS ON: CMD AGRAWAL - BUSINESS STANDARD
Coal India (CIL) Chairman and Managing Director Pramod Agrawal said on Monday there is a “strong case” for increasing coal prices, and ...
Saturday, 25 March 23
ASIAN CRUDE PALM OIL WATCH 1Q23 - FITCH RATINGS
Malaysian benchmark crude palm oil (CPO) spot prices have averaged around USD915 per tonne (t) so far in 1Q23, sharply lower than the average of ar ...
Saturday, 25 March 23
INDONESIA’S COAL EXPORT INCREASED BY 21.0% YOY TO 388.4 MLN T IN 2022 - BANCHERO COSTA
After a slow start in the first quarter, global coal trade has really picked up pace last year, and is now fully back to pre-Covid levels. In the f ...
Saturday, 25 March 23
GLOBAL LNG-ASIA SPOT PRICES SLIP AS WEAK NORTHERN DEMAND REMAINS - REUTERS
Asian spot prices of liquefied natural gas (LNG) declined this week, falling to a 21-month low, as weak demand in the northeast Asia region continu ...
Wednesday, 22 March 23
OIL PRICE FALL SPECULATIVE, TO HIT $140 BY YEAR-END -ANDURAND: REUTERS
The recent fall in oil prices due to banking jitters is speculative and oil will hit $140 a barrel by the end of the year, hedge fund manager Pierr ...
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- Medco Energi Mining Internasional
- Salva Resources Pvt Ltd - India
- Semirara Mining Corp, Philippines
- Electricity Generating Authority of Thailand
- GVK Power & Infra Limited - India
- Bulk Trading Sa - Switzerland
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- PetroVietnam Power Coal Import and Supply Company
- Rio Tinto Coal - Australia
- MS Steel International - UAE
- Ambuja Cements Ltd - India
- Petron Corporation, Philippines
- White Energy Company Limited
- Videocon Industries ltd - India
- TeaM Sual Corporation - Philippines
- Kapuas Tunggal Persada - Indonesia
- Attock Cement Pakistan Limited
- PTC India Limited - India
- European Bulk Services B.V. - Netherlands
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Georgia Ports Authority, United States
- Africa Commodities Group - South Africa
- ASAPP Information Group - India
- Price Waterhouse Coopers - Russia
- Gujarat Mineral Development Corp Ltd - India
- Romanian Commodities Exchange
- Directorate General of MIneral and Coal - Indonesia
- VISA Power Limited - India
- The University of Queensland
- Orica Mining Services - Indonesia
- Essar Steel Hazira Ltd - India
- San Jose City I Power Corp, Philippines
- Port Waratah Coal Services - Australia
- AsiaOL BioFuels Corp., Philippines
- Thai Mozambique Logistica
- Kepco SPC Power Corporation, Philippines
- Bharathi Cement Corporation - India
- Kobexindo Tractors - Indoneisa
- Indian Energy Exchange, India
- Economic Council, Georgia
- Edison Trading Spa - Italy
- Standard Chartered Bank - UAE
- Kumho Petrochemical, South Korea
- Uttam Galva Steels Limited - India
- Indonesian Coal Mining Association
- Barasentosa Lestari - Indonesia
- Kaltim Prima Coal - Indonesia
- SN Aboitiz Power Inc, Philippines
- Ministry of Finance - Indonesia
- PNOC Exploration Corporation - Philippines
- Siam City Cement PLC, Thailand
- Sojitz Corporation - Japan
- Simpson Spence & Young - Indonesia
- Iligan Light & Power Inc, Philippines
- Dalmia Cement Bharat India
- Pipit Mutiara Jaya. PT, Indonesia
- Manunggal Multi Energi - Indonesia
- Star Paper Mills Limited - India
- McConnell Dowell - Australia
- LBH Netherlands Bv - Netherlands
- Sindya Power Generating Company Private Ltd
- Energy Development Corp, Philippines
- Larsen & Toubro Limited - India
- Sakthi Sugars Limited - India
- Aditya Birla Group - India
- Parry Sugars Refinery, India
- Petrochimia International Co. Ltd.- Taiwan
- Indika Energy - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Sree Jayajothi Cements Limited - India
- Mercuria Energy - Indonesia
- Eastern Coal Council - USA
- Sical Logistics Limited - India
- Independent Power Producers Association of India
- Ceylon Electricity Board - Sri Lanka
- Binh Thuan Hamico - Vietnam
- Alfred C Toepfer International GmbH - Germany
- Savvy Resources Ltd - HongKong
- Singapore Mercantile Exchange
- Vizag Seaport Private Limited - India
- Indian Oil Corporation Limited
- Jaiprakash Power Ventures ltd
- Wilmar Investment Holdings
- Meenaskhi Energy Private Limited - India
- International Coal Ventures Pvt Ltd - India
- Madhucon Powers Ltd - India
- Renaissance Capital - South Africa
- Agrawal Coal Company - India
- Eastern Energy - Thailand
- Kohat Cement Company Ltd. - Pakistan
- Ministry of Transport, Egypt
- Commonwealth Bank - Australia
- Ministry of Mines - Canada
- Pendopo Energi Batubara - Indonesia
- Tamil Nadu electricity Board
- Marubeni Corporation - India
- Carbofer General Trading SA - India
- Mintek Dendrill Indonesia
- Tata Chemicals Ltd - India
- Maheswari Brothers Coal Limited - India
- Wood Mackenzie - Singapore
- Posco Energy - South Korea
- Chettinad Cement Corporation Ltd - India
- Oldendorff Carriers - Singapore
- Xindia Steels Limited - India
- Sarangani Energy Corporation, Philippines
- Leighton Contractors Pty Ltd - Australia
- Krishnapatnam Port Company Ltd. - India
- Bhushan Steel Limited - India
- Borneo Indobara - Indonesia
- Jindal Steel & Power Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Malabar Cements Ltd - India
- Power Finance Corporation Ltd., India
- Sinarmas Energy and Mining - Indonesia
- Planning Commission, India
- Bayan Resources Tbk. - Indonesia
- Global Business Power Corporation, Philippines
- Bukit Makmur.PT - Indonesia
- Directorate Of Revenue Intelligence - India
- Asmin Koalindo Tuhup - Indonesia
- Thiess Contractors Indonesia
- CIMB Investment Bank - Malaysia
- Trasteel International SA, Italy
- ICICI Bank Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Therma Luzon, Inc, Philippines
- Antam Resourcindo - Indonesia
- Kideco Jaya Agung - Indonesia
- Interocean Group of Companies - India
- Australian Commodity Traders Exchange
- Global Green Power PLC Corporation, Philippines
- CNBM International Corporation - China
- Orica Australia Pty. Ltd.
- Coastal Gujarat Power Limited - India
- Mercator Lines Limited - India
- Bhatia International Limited - India
- Minerals Council of Australia
- Coalindo Energy - Indonesia
- Holcim Trading Pte Ltd - Singapore
- South Luzon Thermal Energy Corporation
- GN Power Mariveles Coal Plant, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Cement Manufacturers Association - India
- Metalloyd Limited - United Kingdom
- GAC Shipping (India) Pvt Ltd
- Baramulti Group, Indonesia
- Global Coal Blending Company Limited - Australia
- Vedanta Resources Plc - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- The Treasury - Australian Government
- Gujarat Electricity Regulatory Commission - India
- Latin American Coal - Colombia
- Anglo American - United Kingdom
- PowerSource Philippines DevCo
- Timah Investasi Mineral - Indoneisa
- The State Trading Corporation of India Ltd
- Bank of Tokyo Mitsubishi UFJ Ltd
- Karaikal Port Pvt Ltd - India
- Mjunction Services Limited - India
- Meralco Power Generation, Philippines
- Goldman Sachs - Singapore
- Indo Tambangraya Megah - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Australian Coal Association
- Bukit Asam (Persero) Tbk - Indonesia
- Lanco Infratech Ltd - India
- Banpu Public Company Limited - Thailand
- Indogreen Group - Indonesia
- Kartika Selabumi Mining - Indonesia
- IEA Clean Coal Centre - UK
- Intertek Mineral Services - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Globalindo Alam Lestari - Indonesia
- Toyota Tsusho Corporation, Japan
- Makarim & Taira - Indonesia
- Coal and Oil Company - UAE
- Cigading International Bulk Terminal - Indonesia
- Aboitiz Power Corporation - Philippines
- London Commodity Brokers - England
- Heidelberg Cement - Germany
- OPG Power Generation Pvt Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Straits Asia Resources Limited - Singapore
- Parliament of New Zealand
- Bukit Baiduri Energy - Indonesia
- Grasim Industreis Ltd - India
- Riau Bara Harum - Indonesia
- Gujarat Sidhee Cement - India
- Energy Link Ltd, New Zealand
- Merrill Lynch Commodities Europe
- SMC Global Power, Philippines
- Samtan Co., Ltd - South Korea
- Rashtriya Ispat Nigam Limited - India
- Central Electricity Authority - India
- IHS Mccloskey Coal Group - USA
- Formosa Plastics Group - Taiwan
- Bhoruka Overseas - Indonesia
- Siam City Cement - Thailand
- Deloitte Consulting - India
- Ind-Barath Power Infra Limited - India
- Chamber of Mines of South Africa
- New Zealand Coal & Carbon
- Bahari Cakrawala Sebuku - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- India Bulls Power Limited - India
- Billiton Holdings Pty Ltd - Australia
- GMR Energy Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Electricity Authority, New Zealand
- SMG Consultants - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Altura Mining Limited, Indonesia
- Bangladesh Power Developement Board
- TNB Fuel Sdn Bhd - Malaysia
- Central Java Power - Indonesia
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