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