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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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Sunday, 26 February 23
MAWANI AND JEDDAH CHAMBER SIGN AN AGREEMENT TO BUILD INTEGRATED LOGISTICS PARK
Press Release: The Saudi Ports Authority (Mawani) and Jeddah Chamber of Commerce and Industry have today inked an agreement to set up an integrated ...
Saturday, 25 February 23
INDONESIA IS STILL BY FAR THE TOP SUPPLIER OF COAL TO CHINA - 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, said ban ...
Wednesday, 22 February 23
MARKET INSIGHT - INTERMODAL
The short-term outlook of the global soybean market is currently pivoted by a combination of weather patterns that are affecting the harvest progre ...
Saturday, 18 February 23
OIL UNLIKELY TO BREAK ABOVE $100/BBL THIS YEAR, J.P.MORGAN SAYS –- REUTERS
Brent oil prices are unlikely to breach the $100 a barrel level this year, barring any significant geopolitical drivers, with OPEC+ potentially add ...
Saturday, 18 February 23
CHINA'S COAL PRICES FALL TO 1 YR-LOW, CLOUDING DEMAND AND IMPORT OUTLOOK - REUTERS
China’s thermal coal prices hit their lowest levels in a year this week on rising inventories as domestic mine production is recovering faste ...
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- Asia Pacific Energy Resources Ventures Inc, Philippines
- New Zealand Coal & Carbon
- Global Green Power PLC Corporation, Philippines
- Mercator Lines Limited - India
- Mintek Dendrill Indonesia
- PTC India Limited - India
- Indian Oil Corporation Limited
- Barasentosa Lestari - Indonesia
- Ministry of Transport, Egypt
- Rio Tinto Coal - Australia
- Bayan Resources Tbk. - Indonesia
- Videocon Industries ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Central Electricity Authority - India
- Baramulti Group, Indonesia
- Merrill Lynch Commodities Europe
- The State Trading Corporation of India Ltd
- Riau Bara Harum - Indonesia
- Borneo Indobara - Indonesia
- Malabar Cements Ltd - India
- Sojitz Corporation - Japan
- Sinarmas Energy and Mining - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Economic Council, Georgia
- Medco Energi Mining Internasional
- Vizag Seaport Private Limited - India
- Heidelberg Cement - Germany
- Attock Cement Pakistan Limited
- Leighton Contractors Pty Ltd - Australia
- GMR Energy Limited - India
- Posco Energy - South Korea
- Romanian Commodities Exchange
- ICICI Bank Limited - India
- The University of Queensland
- Billiton Holdings Pty Ltd - Australia
- Kartika Selabumi Mining - Indonesia
- Meenaskhi Energy Private Limited - India
- SMG Consultants - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Kobexindo Tractors - Indoneisa
- Semirara Mining Corp, Philippines
- Kaltim Prima Coal - Indonesia
- Jaiprakash Power Ventures ltd
- Energy Development Corp, Philippines
- GVK Power & Infra Limited - India
- Krishnapatnam Port Company Ltd. - India
- Marubeni Corporation - India
- Kalimantan Lumbung Energi - Indonesia
- Altura Mining Limited, Indonesia
- SMC Global Power, Philippines
- ASAPP Information Group - India
- Singapore Mercantile Exchange
- Maheswari Brothers Coal Limited - India
- Thai Mozambique Logistica
- White Energy Company Limited
- Aditya Birla Group - India
- Bhushan Steel Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- San Jose City I Power Corp, Philippines
- Bangladesh Power Developement Board
- Kapuas Tunggal Persada - Indonesia
- Binh Thuan Hamico - Vietnam
- Directorate Of Revenue Intelligence - India
- Bhatia International Limited - India
- Anglo American - United Kingdom
- Kepco SPC Power Corporation, Philippines
- Power Finance Corporation Ltd., India
- Siam City Cement PLC, Thailand
- Pendopo Energi Batubara - Indonesia
- Siam City Cement - Thailand
- Timah Investasi Mineral - Indoneisa
- OPG Power Generation Pvt Ltd - India
- International Coal Ventures Pvt Ltd - India
- GAC Shipping (India) Pvt Ltd
- PetroVietnam Power Coal Import and Supply Company
- Thiess Contractors Indonesia
- CIMB Investment Bank - Malaysia
- Global Business Power Corporation, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Toyota Tsusho Corporation, Japan
- Commonwealth Bank - Australia
- Electricity Authority, New Zealand
- Samtan Co., Ltd - South Korea
- Aboitiz Power Corporation - Philippines
- Chettinad Cement Corporation Ltd - India
- Iligan Light & Power Inc, Philippines
- Carbofer General Trading SA - India
- Metalloyd Limited - United Kingdom
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Bukit Asam (Persero) Tbk - Indonesia
- India Bulls Power Limited - India
- LBH Netherlands Bv - Netherlands
- Jorong Barutama Greston.PT - Indonesia
- Tata Chemicals Ltd - India
- SN Aboitiz Power Inc, Philippines
- PowerSource Philippines DevCo
- Banpu Public Company Limited - Thailand
- Indonesian Coal Mining Association
- Edison Trading Spa - Italy
- London Commodity Brokers - England
- Bank of Tokyo Mitsubishi UFJ Ltd
- Formosa Plastics Group - Taiwan
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Wood Mackenzie - Singapore
- Interocean Group of Companies - India
- Bulk Trading Sa - Switzerland
- Lanco Infratech Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Renaissance Capital - South Africa
- South Luzon Thermal Energy Corporation
- Antam Resourcindo - Indonesia
- Coal and Oil Company - UAE
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Coalindo Energy - Indonesia
- Price Waterhouse Coopers - Russia
- PNOC Exploration Corporation - Philippines
- Ceylon Electricity Board - Sri Lanka
- Globalindo Alam Lestari - Indonesia
- Energy Link Ltd, New Zealand
- Gujarat Electricity Regulatory Commission - India
- Orica Australia Pty. Ltd.
- Bharathi Cement Corporation - India
- Parry Sugars Refinery, India
- Eastern Energy - Thailand
- Vedanta Resources Plc - India
- Simpson Spence & Young - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Uttam Galva Steels Limited - India
- Rashtriya Ispat Nigam Limited - India
- Therma Luzon, Inc, Philippines
- Central Java Power - Indonesia
- Petron Corporation, Philippines
- Jindal Steel & Power Ltd - India
- Star Paper Mills Limited - India
- Kideco Jaya Agung - Indonesia
- Bhoruka Overseas - Indonesia
- Deloitte Consulting - India
- Mjunction Services Limited - India
- Australian Commodity Traders Exchange
- Directorate General of MIneral and Coal - Indonesia
- Indian Energy Exchange, India
- Essar Steel Hazira Ltd - India
- Ministry of Finance - Indonesia
- Oldendorff Carriers - Singapore
- Gujarat Sidhee Cement - India
- Trasteel International SA, Italy
- Bahari Cakrawala Sebuku - Indonesia
- CNBM International Corporation - China
- Global Coal Blending Company Limited - Australia
- Asmin Koalindo Tuhup - Indonesia
- Ambuja Cements Ltd - India
- VISA Power Limited - India
- Kumho Petrochemical, South Korea
- Indo Tambangraya Megah - Indonesia
- TeaM Sual Corporation - Philippines
- Australian Coal Association
- Manunggal Multi Energi - Indonesia
- Dalmia Cement Bharat India
- Karaikal Port Pvt Ltd - India
- IHS Mccloskey Coal Group - USA
- Ministry of Mines - Canada
- Tamil Nadu electricity Board
- Xindia Steels Limited - India
- Indika Energy - Indonesia
- MS Steel International - UAE
- McConnell Dowell - Australia
- Madhucon Powers Ltd - India
- Savvy Resources Ltd - HongKong
- Eastern Coal Council - USA
- AsiaOL BioFuels Corp., Philippines
- Sakthi Sugars Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Goldman Sachs - Singapore
- Port Waratah Coal Services - Australia
- Intertek Mineral Services - Indonesia
- Planning Commission, India
- Sindya Power Generating Company Private Ltd
- Semirara Mining and Power Corporation, Philippines
- Coastal Gujarat Power Limited - India
- Gujarat Mineral Development Corp Ltd - India
- The Treasury - Australian Government
- Mercuria Energy - Indonesia
- Latin American Coal - Colombia
- Grasim Industreis Ltd - India
- Sarangani Energy Corporation, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Karbindo Abesyapradhi - Indoneisa
- Independent Power Producers Association of India
- Cigading International Bulk Terminal - Indonesia
- Orica Mining Services - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Sical Logistics Limited - India
- Agrawal Coal Company - India
- Salva Resources Pvt Ltd - India
- Bukit Makmur.PT - Indonesia
- Meralco Power Generation, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Minerals Council of Australia
- Africa Commodities Group - South Africa
- Ind-Barath Power Infra Limited - India
- Wilmar Investment Holdings
- Bukit Baiduri Energy - Indonesia
- Parliament of New Zealand
- Larsen & Toubro Limited - India
- Indogreen Group - Indonesia
- IEA Clean Coal Centre - UK
- European Bulk Services B.V. - Netherlands
- Makarim & Taira - Indonesia
- Standard Chartered Bank - UAE
- Electricity Generating Authority of Thailand
- Straits Asia Resources Limited - Singapore
- Cement Manufacturers Association - India
- Chamber of Mines of South Africa
- Sree Jayajothi Cements Limited - India
- Georgia Ports Authority, United States
- Holcim Trading Pte Ltd - Singapore
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