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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, 18 March 23
HEDGE TO OFFSET LNG VOLATILITY, TRADERS TOLD - BALTIC EXCHANGE
A shift in imports from Asia to Europe led to significant volatility in liquefied natural gas shipping last year, prompting industry experts to urg ...
Friday, 17 March 23
INDONESIAN COAL PRICE REFERENCE UP AROUND 2.17% IN MARCH 2023
COALspot.com: Indonesian Coal Price Reference up around 2.17% in March 2023.
According to the new HBA regulation No. 41.K/MB.0 ...
Saturday, 11 March 23
MARKET INSIGHT - INTERMODAL
Uncertainty over the recovery of Chinese demand, demand destruction in Europe, as well as weather conditions will pivot the LNG market this summer. ...
Wednesday, 08 March 23
INDONESIAN COAL REFERENCE PRICE FORMULA HAS OFFICIALLY CHANGED
Indonesian Minister of Energy and Mineral Resources has officially changed the guideline for determining the benchmark price for the sale of coal c ...
Thursday, 02 March 23
INDIA'S SEABORNE CRUDE OIL IMPORTS IN 2022 INCREASED BY 11.5% YOY - BANCHERO COSTA
2022 has turned out to be a very positive year for crude oil trade, despite the surging oil prices and risks of economic recession, Banchero Costa ...
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- Jaiprakash Power Ventures ltd
- Electricity Generating Authority of Thailand
- Petrochimia International Co. Ltd.- Taiwan
- Bayan Resources Tbk. - Indonesia
- Globalindo Alam Lestari - Indonesia
- Videocon Industries ltd - India
- SMG Consultants - Indonesia
- Altura Mining Limited, Indonesia
- Grasim Industreis Ltd - India
- Edison Trading Spa - Italy
- ASAPP Information Group - India
- Sojitz Corporation - Japan
- Timah Investasi Mineral - Indoneisa
- India Bulls Power Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Romanian Commodities Exchange
- GAC Shipping (India) Pvt Ltd
- Mintek Dendrill Indonesia
- Vizag Seaport Private Limited - India
- PTC India Limited - India
- San Jose City I Power Corp, Philippines
- The Treasury - Australian Government
- Malabar Cements Ltd - India
- Indian Energy Exchange, India
- Karaikal Port Pvt Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Miang Besar Coal Terminal - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- London Commodity Brokers - England
- Bhoruka Overseas - Indonesia
- The University of Queensland
- Xindia Steels Limited - India
- Sical Logistics Limited - India
- Merrill Lynch Commodities Europe
- The State Trading Corporation of India Ltd
- Vijayanagar Sugar Pvt Ltd - India
- Antam Resourcindo - Indonesia
- Global Green Power PLC Corporation, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Kideco Jaya Agung - Indonesia
- Standard Chartered Bank - UAE
- LBH Netherlands Bv - Netherlands
- Sindya Power Generating Company Private Ltd
- Latin American Coal - Colombia
- SMC Global Power, Philippines
- Orica Mining Services - Indonesia
- European Bulk Services B.V. - Netherlands
- Electricity Authority, New Zealand
- Power Finance Corporation Ltd., India
- Aditya Birla Group - India
- Bukit Asam (Persero) Tbk - Indonesia
- Rio Tinto Coal - Australia
- South Luzon Thermal Energy Corporation
- Tata Chemicals Ltd - India
- Chamber of Mines of South Africa
- PetroVietnam Power Coal Import and Supply Company
- Petron Corporation, Philippines
- MS Steel International - UAE
- TeaM Sual Corporation - Philippines
- CNBM International Corporation - China
- Pendopo Energi Batubara - Indonesia
- Independent Power Producers Association of India
- Pipit Mutiara Jaya. PT, Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Indogreen Group - Indonesia
- Barasentosa Lestari - Indonesia
- Maheswari Brothers Coal Limited - India
- Directorate Of Revenue Intelligence - India
- Australian Commodity Traders Exchange
- Bukit Makmur.PT - Indonesia
- Straits Asia Resources Limited - Singapore
- Larsen & Toubro Limited - India
- Planning Commission, India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Maharashtra Electricity Regulatory Commission - India
- CIMB Investment Bank - Malaysia
- Tamil Nadu electricity Board
- Global Coal Blending Company Limited - Australia
- Sakthi Sugars Limited - India
- GVK Power & Infra Limited - India
- Heidelberg Cement - Germany
- Metalloyd Limited - United Kingdom
- Eastern Energy - Thailand
- Port Waratah Coal Services - Australia
- Meenaskhi Energy Private Limited - India
- Makarim & Taira - Indonesia
- VISA Power Limited - India
- Formosa Plastics Group - Taiwan
- Indian Oil Corporation Limited
- Bharathi Cement Corporation - India
- Central Java Power - Indonesia
- Australian Coal Association
- Kalimantan Lumbung Energi - Indonesia
- Ind-Barath Power Infra Limited - India
- Aboitiz Power Corporation - Philippines
- Intertek Mineral Services - Indonesia
- Central Electricity Authority - India
- Iligan Light & Power Inc, Philippines
- Baramulti Group, Indonesia
- Price Waterhouse Coopers - Russia
- Energy Development Corp, Philippines
- Orica Australia Pty. Ltd.
- Jorong Barutama Greston.PT - Indonesia
- International Coal Ventures Pvt Ltd - India
- Africa Commodities Group - South Africa
- Bulk Trading Sa - Switzerland
- Therma Luzon, Inc, Philippines
- McConnell Dowell - Australia
- Savvy Resources Ltd - HongKong
- Ministry of Finance - Indonesia
- Wilmar Investment Holdings
- Minerals Council of Australia
- Bangladesh Power Developement Board
- Cigading International Bulk Terminal - Indonesia
- Ministry of Mines - Canada
- Banpu Public Company Limited - Thailand
- Trasteel International SA, Italy
- Mercuria Energy - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Georgia Ports Authority, United States
- Goldman Sachs - Singapore
- Vedanta Resources Plc - India
- Mjunction Services Limited - India
- Krishnapatnam Port Company Ltd. - India
- TNB Fuel Sdn Bhd - Malaysia
- Medco Energi Mining Internasional
- Uttam Galva Steels Limited - India
- Cement Manufacturers Association - India
- Holcim Trading Pte Ltd - Singapore
- Binh Thuan Hamico - Vietnam
- Sinarmas Energy and Mining - Indonesia
- Coal and Oil Company - UAE
- Semirara Mining Corp, Philippines
- Kumho Petrochemical, South Korea
- Kapuas Tunggal Persada - Indonesia
- Agrawal Coal Company - India
- Gujarat Sidhee Cement - India
- Ceylon Electricity Board - Sri Lanka
- Riau Bara Harum - Indonesia
- Salva Resources Pvt Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Siam City Cement PLC, Thailand
- Singapore Mercantile Exchange
- Alfred C Toepfer International GmbH - Germany
- Marubeni Corporation - India
- Parliament of New Zealand
- Toyota Tsusho Corporation, Japan
- Karbindo Abesyapradhi - Indoneisa
- Ambuja Cements Ltd - India
- Madhucon Powers Ltd - India
- Interocean Group of Companies - India
- Wood Mackenzie - Singapore
- Siam City Cement - Thailand
- Simpson Spence & Young - Indonesia
- Indonesian Coal Mining Association
- Meralco Power Generation, Philippines
- IHS Mccloskey Coal Group - USA
- Jindal Steel & Power Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- White Energy Company Limited
- Chettinad Cement Corporation Ltd - India
- Manunggal Multi Energi - Indonesia
- SN Aboitiz Power Inc, Philippines
- Global Business Power Corporation, Philippines
- Energy Link Ltd, New Zealand
- New Zealand Coal & Carbon
- Ministry of Transport, Egypt
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Star Paper Mills Limited - India
- Billiton Holdings Pty Ltd - Australia
- Thai Mozambique Logistica
- Sarangani Energy Corporation, Philippines
- Indo Tambangraya Megah - Indonesia
- Indika Energy - Indonesia
- Parry Sugars Refinery, India
- Borneo Indobara - Indonesia
- ICICI Bank Limited - India
- Kobexindo Tractors - Indoneisa
- Essar Steel Hazira Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- OPG Power Generation Pvt Ltd - India
- Bukit Baiduri Energy - Indonesia
- PNOC Exploration Corporation - Philippines
- Mercator Lines Limited - India
- Carbofer General Trading SA - India
- Coalindo Energy - Indonesia
- Attock Cement Pakistan Limited
- Lanco Infratech Ltd - India
- Economic Council, Georgia
- Gujarat Electricity Regulatory Commission - India
- Bhatia International Limited - India
- Kepco SPC Power Corporation, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Anglo American - United Kingdom
- Thiess Contractors Indonesia
- Commonwealth Bank - Australia
- PowerSource Philippines DevCo
- Posco Energy - South Korea
- GN Power Mariveles Coal Plant, Philippines
- Oldendorff Carriers - Singapore
- Samtan Co., Ltd - South Korea
- Coastal Gujarat Power Limited - India
- Bhushan Steel Limited - India
- Sree Jayajothi Cements Limited - India
- AsiaOL BioFuels Corp., Philippines
- Leighton Contractors Pty Ltd - Australia
- Semirara Mining and Power Corporation, Philippines
- Renaissance Capital - South Africa
- IEA Clean Coal Centre - UK
- Kartika Selabumi Mining - Indonesia
- Dalmia Cement Bharat India
- Deloitte Consulting - India
- Kaltim Prima Coal - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- GMR Energy Limited - India
- Eastern Coal Council - USA
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