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