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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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Thursday, 02 March 23
DRY BULK MARKET: THE WAY CHINA GOES, SO GOES THE MARKET - BIMCO
We expect demand growth within the 1.5-2.5% range in 2023, driven by China’s economic recovery. Improvements in consumer sentiment should hel ...
Thursday, 02 March 23
INDIA, CHINA DEMAND BOOST LOW-RANK THERMAL COAL PRICES IN ASIA - RUSSELL, REUTERS
Signs of stronger import demand from India have arrested the decline in price of the thermal coal grades most commonly sought by the world’s ...
Thursday, 02 March 23
INDIA CHEERS THE RETURN OF ‘KING COAL’ AS INDUSTRY SEES BUOYANT FUTURE - REUTERS
India’s coal industry celebrated the return of its major conference after a three-year pandemic hiatus by presenting a bullish view of demand ...
Wednesday, 01 March 23
GEO CONNECT ASIA RETURNS IN MARCH TO ACCELERATE THE REGION’S GEOSPATIAL AND LOCATION INTELLIGENCE CAPABILITIES
Press Release: The third edition of GCA will be held in conjunction with Digital Construction Asia and the inaugural Drones Asia – an event d ...
Wednesday, 01 March 23
THE DECLINE IN THE COAL PRICE SINCE THE BEGINNING OF THE YEAR HAS BEEN SIGNIFICANT - INTERMODAL
Last week, the front-month API2 future rose by 3.5%, but since the beginning of the year the future has fallen by 39% to $136.65/t, while the Newca ...
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- Bulk Trading Sa - Switzerland
- Global Business Power Corporation, Philippines
- Electricity Authority, New Zealand
- Banpu Public Company Limited - Thailand
- European Bulk Services B.V. - Netherlands
- Sojitz Corporation - Japan
- Bharathi Cement Corporation - India
- Borneo Indobara - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Bhushan Steel Limited - India
- Star Paper Mills Limited - India
- Uttam Galva Steels Limited - India
- White Energy Company Limited
- Bangladesh Power Developement Board
- Kaltim Prima Coal - Indonesia
- Larsen & Toubro Limited - India
- Sarangani Energy Corporation, Philippines
- Krishnapatnam Port Company Ltd. - India
- Goldman Sachs - Singapore
- Globalindo Alam Lestari - Indonesia
- SMG Consultants - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Billiton Holdings Pty Ltd - Australia
- New Zealand Coal & Carbon
- Australian Coal Association
- VISA Power Limited - India
- Aboitiz Power Corporation - Philippines
- Parry Sugars Refinery, India
- Kumho Petrochemical, South Korea
- Ambuja Cements Ltd - India
- Central Electricity Authority - India
- Kartika Selabumi Mining - Indonesia
- Port Waratah Coal Services - Australia
- Energy Link Ltd, New Zealand
- Wilmar Investment Holdings
- Toyota Tsusho Corporation, Japan
- Mintek Dendrill Indonesia
- Bukit Baiduri Energy - Indonesia
- CIMB Investment Bank - Malaysia
- Kohat Cement Company Ltd. - Pakistan
- Indo Tambangraya Megah - Indonesia
- Ministry of Mines - Canada
- Gujarat Sidhee Cement - India
- Indogreen Group - Indonesia
- Semirara Mining Corp, Philippines
- Ministry of Finance - Indonesia
- Xindia Steels Limited - India
- Petron Corporation, Philippines
- Pendopo Energi Batubara - Indonesia
- Timah Investasi Mineral - Indoneisa
- Commonwealth Bank - Australia
- Holcim Trading Pte Ltd - Singapore
- Rio Tinto Coal - Australia
- Ceylon Electricity Board - Sri Lanka
- Attock Cement Pakistan Limited
- Price Waterhouse Coopers - Russia
- Thiess Contractors Indonesia
- Edison Trading Spa - Italy
- The University of Queensland
- OPG Power Generation Pvt Ltd - India
- Iligan Light & Power Inc, Philippines
- Leighton Contractors Pty Ltd - Australia
- Oldendorff Carriers - Singapore
- Bukit Asam (Persero) Tbk - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Bhatia International Limited - India
- LBH Netherlands Bv - Netherlands
- Trasteel International SA, Italy
- Karaikal Port Pvt Ltd - India
- Intertek Mineral Services - Indonesia
- Planning Commission, India
- Maharashtra Electricity Regulatory Commission - India
- MS Steel International - UAE
- GAC Shipping (India) Pvt Ltd
- Kobexindo Tractors - Indoneisa
- The State Trading Corporation of India Ltd
- Tata Chemicals Ltd - India
- Sakthi Sugars Limited - India
- SMC Global Power, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Semirara Mining and Power Corporation, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bhoruka Overseas - Indonesia
- Georgia Ports Authority, United States
- Coal and Oil Company - UAE
- Central Java Power - Indonesia
- Aditya Birla Group - India
- Sinarmas Energy and Mining - Indonesia
- Dalmia Cement Bharat India
- Indonesian Coal Mining Association
- Power Finance Corporation Ltd., India
- Makarim & Taira - Indonesia
- Coalindo Energy - Indonesia
- Maheswari Brothers Coal Limited - India
- GMR Energy Limited - India
- Merrill Lynch Commodities Europe
- Sical Logistics Limited - India
- TeaM Sual Corporation - Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Jaiprakash Power Ventures ltd
- Kalimantan Lumbung Energi - Indonesia
- London Commodity Brokers - England
- Samtan Co., Ltd - South Korea
- PowerSource Philippines DevCo
- Asmin Koalindo Tuhup - Indonesia
- Cement Manufacturers Association - India
- Interocean Group of Companies - India
- Indika Energy - Indonesia
- Simpson Spence & Young - Indonesia
- Antam Resourcindo - Indonesia
- PNOC Exploration Corporation - Philippines
- Chettinad Cement Corporation Ltd - India
- Orica Australia Pty. Ltd.
- Carbofer General Trading SA - India
- Coastal Gujarat Power Limited - India
- Savvy Resources Ltd - HongKong
- GN Power Mariveles Coal Plant, Philippines
- The Treasury - Australian Government
- GVK Power & Infra Limited - India
- Cigading International Bulk Terminal - Indonesia
- Africa Commodities Group - South Africa
- Bukit Makmur.PT - Indonesia
- Essar Steel Hazira Ltd - India
- Agrawal Coal Company - India
- Barasentosa Lestari - Indonesia
- Ind-Barath Power Infra Limited - India
- Renaissance Capital - South Africa
- Sindya Power Generating Company Private Ltd
- Rashtriya Ispat Nigam Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Chamber of Mines of South Africa
- Neyveli Lignite Corporation Ltd, - India
- Binh Thuan Hamico - Vietnam
- CNBM International Corporation - China
- ASAPP Information Group - India
- Madhucon Powers Ltd - India
- Therma Luzon, Inc, Philippines
- Indian Oil Corporation Limited
- Pipit Mutiara Jaya. PT, Indonesia
- Kideco Jaya Agung - Indonesia
- Marubeni Corporation - India
- Altura Mining Limited, Indonesia
- Indian Energy Exchange, India
- Directorate General of MIneral and Coal - Indonesia
- Economic Council, Georgia
- Lanco Infratech Ltd - India
- Tamil Nadu electricity Board
- South Luzon Thermal Energy Corporation
- Australian Commodity Traders Exchange
- Straits Asia Resources Limited - Singapore
- Siam City Cement PLC, Thailand
- Gujarat Mineral Development Corp Ltd - India
- Mercuria Energy - Indonesia
- Kepco SPC Power Corporation, Philippines
- Mercator Lines Limited - India
- Meenaskhi Energy Private Limited - India
- Thai Mozambique Logistica
- PTC India Limited - India
- Parliament of New Zealand
- Alfred C Toepfer International GmbH - Germany
- Anglo American - United Kingdom
- Deloitte Consulting - India
- Jindal Steel & Power Ltd - India
- Global Green Power PLC Corporation, Philippines
- Singapore Mercantile Exchange
- Global Coal Blending Company Limited - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Directorate Of Revenue Intelligence - India
- Bayan Resources Tbk. - Indonesia
- Grasim Industreis Ltd - India
- San Jose City I Power Corp, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Latin American Coal - Colombia
- Vedanta Resources Plc - India
- SN Aboitiz Power Inc, Philippines
- Manunggal Multi Energi - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Petrochimia International Co. Ltd.- Taiwan
- Mjunction Services Limited - India
- Sree Jayajothi Cements Limited - India
- Standard Chartered Bank - UAE
- Bahari Cakrawala Sebuku - Indonesia
- Malabar Cements Ltd - India
- Meralco Power Generation, Philippines
- International Coal Ventures Pvt Ltd - India
- Gujarat Electricity Regulatory Commission - India
- India Bulls Power Limited - India
- AsiaOL BioFuels Corp., Philippines
- Electricity Generating Authority of Thailand
- Romanian Commodities Exchange
- Formosa Plastics Group - Taiwan
- IEA Clean Coal Centre - UK
- Vizag Seaport Private Limited - India
- Energy Development Corp, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Baramulti Group, Indonesia
- Orica Mining Services - Indonesia
- ICICI Bank Limited - India
- Kapuas Tunggal Persada - Indonesia
- Eastern Coal Council - USA
- Videocon Industries ltd - India
- Ministry of Transport, Egypt
- Siam City Cement - Thailand
- Salva Resources Pvt Ltd - India
- Metalloyd Limited - United Kingdom
- McConnell Dowell - Australia
- Medco Energi Mining Internasional
- Posco Energy - South Korea
- Heidelberg Cement - Germany
- Wood Mackenzie - Singapore
- Riau Bara Harum - Indonesia
- Eastern Energy - Thailand
- Independent Power Producers Association of India
- IHS Mccloskey Coal Group - USA
- Minerals Council of Australia
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