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