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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, 22 March 23
MARKET INSIGHT - INTERMODAL
The crude tanker market continues to gather momentum as we head towards the end of 1Q2023, against a backdrop of strong U.S. exports paired with a ...
Wednesday, 22 March 23
WILL LOWER GAS PRICES SPARK SWITCHING IN EUROPE AND ASIA?
Record high prices devastated demand for gas and LNG across Asia and Europe last year. But with prices falling, companies are starting to re-evalua ...
Monday, 20 March 23
NTPC MULLS 5.4 MILLION TONNES COAL IMPORT IN FIRST HALF OF 2023-24: PTI
State-run power giant NTPC is planning to import around 5.4 million tonnes of coal to meet the supply shortage during the first half 2023-24 fiscal ...
Monday, 20 March 23
S. AFRICA’S EXXARO RESOURCES SAYS COAL PRICES COOLING OFF - REUTERS
South Africa’s Exxaro Resources on Thursday posted a 28% jump in 2022 profit after seeing average coal prices surge more than 150%, but warne ...
Saturday, 18 March 23
RUSSIAN LNG EXPORTS TO EUROPE REMAIN HIGH - VESSELS VALUE
Russian LNG exports to Europe remained at very high levels in February at 3.6 million CBM, following a 13 month high in January of 4.1 million CBM. ...
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- Trasteel International SA, Italy
- Timah Investasi Mineral - Indoneisa
- IHS Mccloskey Coal Group - USA
- Parliament of New Zealand
- Kaltim Prima Coal - Indonesia
- CIMB Investment Bank - Malaysia
- Interocean Group of Companies - India
- Kumho Petrochemical, South Korea
- LBH Netherlands Bv - Netherlands
- Holcim Trading Pte Ltd - Singapore
- Bhatia International Limited - India
- Singapore Mercantile Exchange
- Edison Trading Spa - Italy
- ASAPP Information Group - India
- Iligan Light & Power Inc, Philippines
- Goldman Sachs - Singapore
- Rashtriya Ispat Nigam Limited - India
- IEA Clean Coal Centre - UK
- Sojitz Corporation - Japan
- Thiess Contractors Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- GVK Power & Infra Limited - India
- Indogreen Group - Indonesia
- Bayan Resources Tbk. - Indonesia
- Bhoruka Overseas - Indonesia
- Straits Asia Resources Limited - Singapore
- Bukit Baiduri Energy - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Latin American Coal - Colombia
- Ministry of Finance - Indonesia
- Coastal Gujarat Power Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Borneo Indobara - Indonesia
- Renaissance Capital - South Africa
- Georgia Ports Authority, United States
- Petron Corporation, Philippines
- Kapuas Tunggal Persada - Indonesia
- Toyota Tsusho Corporation, Japan
- Global Business Power Corporation, Philippines
- Planning Commission, India
- Metalloyd Limited - United Kingdom
- Rio Tinto Coal - Australia
- Chettinad Cement Corporation Ltd - India
- Merrill Lynch Commodities Europe
- Carbofer General Trading SA - India
- Power Finance Corporation Ltd., India
- Global Coal Blending Company Limited - Australia
- Gujarat Mineral Development Corp Ltd - India
- Price Waterhouse Coopers - Russia
- Central Java Power - Indonesia
- Minerals Council of Australia
- Star Paper Mills Limited - India
- Gujarat Electricity Regulatory Commission - India
- Miang Besar Coal Terminal - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Maheswari Brothers Coal Limited - India
- Energy Link Ltd, New Zealand
- Tamil Nadu electricity Board
- Indonesian Coal Mining Association
- Asmin Koalindo Tuhup - Indonesia
- Semirara Mining Corp, Philippines
- Indian Energy Exchange, India
- Pendopo Energi Batubara - Indonesia
- OPG Power Generation Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- Riau Bara Harum - Indonesia
- Aditya Birla Group - India
- Coalindo Energy - Indonesia
- Wood Mackenzie - Singapore
- Sakthi Sugars Limited - India
- Jaiprakash Power Ventures ltd
- Tata Chemicals Ltd - India
- Intertek Mineral Services - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Bharathi Cement Corporation - India
- Leighton Contractors Pty Ltd - Australia
- Coal and Oil Company - UAE
- GAC Shipping (India) Pvt Ltd
- Marubeni Corporation - India
- Neyveli Lignite Corporation Ltd, - India
- CNBM International Corporation - China
- Offshore Bulk Terminal Pte Ltd, Singapore
- Essar Steel Hazira Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Wilmar Investment Holdings
- Kartika Selabumi Mining - Indonesia
- Savvy Resources Ltd - HongKong
- Medco Energi Mining Internasional
- PTC India Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bukit Makmur.PT - Indonesia
- Banpu Public Company Limited - Thailand
- Bukit Asam (Persero) Tbk - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Mintek Dendrill Indonesia
- Sree Jayajothi Cements Limited - India
- Central Electricity Authority - India
- Ministry of Transport, Egypt
- Posco Energy - South Korea
- Jorong Barutama Greston.PT - Indonesia
- Grasim Industreis Ltd - India
- Deloitte Consulting - India
- Chamber of Mines of South Africa
- Bhushan Steel Limited - India
- Semirara Mining and Power Corporation, Philippines
- PowerSource Philippines DevCo
- Simpson Spence & Young - Indonesia
- Heidelberg Cement - Germany
- Siam City Cement PLC, Thailand
- Krishnapatnam Port Company Ltd. - India
- Directorate Of Revenue Intelligence - India
- Ind-Barath Power Infra Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Makarim & Taira - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Thai Mozambique Logistica
- Binh Thuan Hamico - Vietnam
- Ambuja Cements Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Baramulti Group, Indonesia
- Mjunction Services Limited - India
- Madhucon Powers Ltd - India
- Indika Energy - Indonesia
- Port Waratah Coal Services - Australia
- Sindya Power Generating Company Private Ltd
- The Treasury - Australian Government
- European Bulk Services B.V. - Netherlands
- Directorate General of MIneral and Coal - Indonesia
- Larsen & Toubro Limited - India
- PetroVietnam Power Coal Import and Supply Company
- White Energy Company Limited
- Meenaskhi Energy Private Limited - India
- Kepco SPC Power Corporation, Philippines
- Dalmia Cement Bharat India
- Kalimantan Lumbung Energi - Indonesia
- Anglo American - United Kingdom
- Petrochimia International Co. Ltd.- Taiwan
- Romanian Commodities Exchange
- Siam City Cement - Thailand
- Uttam Galva Steels Limited - India
- Samtan Co., Ltd - South Korea
- TNB Fuel Sdn Bhd - Malaysia
- Manunggal Multi Energi - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- TeaM Sual Corporation - Philippines
- Standard Chartered Bank - UAE
- Gujarat Sidhee Cement - India
- Videocon Industries ltd - India
- McConnell Dowell - Australia
- Xindia Steels Limited - India
- Jindal Steel & Power Ltd - India
- Formosa Plastics Group - Taiwan
- Global Green Power PLC Corporation, Philippines
- Electricity Authority, New Zealand
- Australian Coal Association
- Commonwealth Bank - Australia
- India Bulls Power Limited - India
- MS Steel International - UAE
- Cigading International Bulk Terminal - Indonesia
- Ministry of Mines - Canada
- Economic Council, Georgia
- Orica Mining Services - Indonesia
- Kideco Jaya Agung - Indonesia
- Attock Cement Pakistan Limited
- AsiaOL BioFuels Corp., Philippines
- Vizag Seaport Private Limited - India
- Kobexindo Tractors - Indoneisa
- VISA Power Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- SN Aboitiz Power Inc, Philippines
- Sinarmas Energy and Mining - Indonesia
- Electricity Generating Authority of Thailand
- Karbindo Abesyapradhi - Indoneisa
- Aboitiz Power Corporation - Philippines
- London Commodity Brokers - England
- Altura Mining Limited, Indonesia
- The State Trading Corporation of India Ltd
- International Coal Ventures Pvt Ltd - India
- Cement Manufacturers Association - India
- Mercator Lines Limited - India
- Indo Tambangraya Megah - Indonesia
- Eastern Coal Council - USA
- Karaikal Port Pvt Ltd - India
- The University of Queensland
- Ceylon Electricity Board - Sri Lanka
- South Luzon Thermal Energy Corporation
- Sarangani Energy Corporation, Philippines
- Oldendorff Carriers - Singapore
- Parry Sugars Refinery, India
- Sical Logistics Limited - India
- Barasentosa Lestari - Indonesia
- SMC Global Power, Philippines
- Salva Resources Pvt Ltd - India
- Globalindo Alam Lestari - Indonesia
- PNOC Exploration Corporation - Philippines
- Agrawal Coal Company - India
- Energy Development Corp, Philippines
- Bangladesh Power Developement Board
- New Zealand Coal & Carbon
- Indian Oil Corporation Limited
- SMG Consultants - Indonesia
- GMR Energy Limited - India
- Eastern Energy - Thailand
- Vedanta Resources Plc - India
- San Jose City I Power Corp, Philippines
- Orica Australia Pty. Ltd.
- ICICI Bank Limited - India
- Australian Commodity Traders Exchange
- Malabar Cements Ltd - India
- Mercuria Energy - Indonesia
- Antam Resourcindo - Indonesia
- Therma Luzon, Inc, Philippines
- Africa Commodities Group - South Africa
- Meralco Power Generation, Philippines
- Lanco Infratech Ltd - India
- Independent Power Producers Association of India
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