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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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Tuesday, 17 January 23
CHINA'S SHANXI TARGETS 2023 COAL PRODUCTION OF NEARLY 1.37B TONS - XINHUA
China’s coal-rich province of Shanxi has set a coal production target of nearly 1.37 billion metric tons for 2023, according to a government ...
Tuesday, 17 January 23
MARKET INSIGHT - INTERMODAL
Rumor has it that the New Year has come, to set the pace in, for Russia to continue hostilities against Ukraine. Ten months on the go, into Russia& ...
Tuesday, 17 January 23
INDONESIA IS ACCOUNTING FOR 32.3% OF THE GLOBAL SEABORNE COAL MARKET IN 2022 - BENCHERO 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, Benchero ...
Tuesday, 10 January 23
INDONESIAN HBA IS SEEING A SPIKE IN JANUARY 2023 INSTEAD OF A SIGNIFICANT FALL IN DECEMBER 2022
COALspot.com: Indonesian Coal Price Reference up 8.43% in January 2023.
HBA is seeing a dramatic spike in January 2023 i ...
Sunday, 08 January 23
INDIAN COAL POWER PLANTS SHOULD BE COMPENSATED FOR 2022 FORCED GENERATION – REGULATOR : REUTERS
Indian power plants that rely on imported coal should be fully compensated when forced to supply electricity, the country’s power regulator s ...
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- Malabar Cements Ltd - India
- Intertek Mineral Services - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Bangladesh Power Developement Board
- Oldendorff Carriers - Singapore
- Renaissance Capital - South Africa
- Mjunction Services Limited - India
- Siam City Cement PLC, Thailand
- Kartika Selabumi Mining - Indonesia
- Vizag Seaport Private Limited - India
- The University of Queensland
- Edison Trading Spa - Italy
- Economic Council, Georgia
- Essar Steel Hazira Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Attock Cement Pakistan Limited
- Directorate Of Revenue Intelligence - India
- Savvy Resources Ltd - HongKong
- Interocean Group of Companies - India
- Mercator Lines Limited - India
- The Treasury - Australian Government
- Heidelberg Cement - Germany
- Thai Mozambique Logistica
- Gujarat Sidhee Cement - India
- Miang Besar Coal Terminal - Indonesia
- Aboitiz Power Corporation - Philippines
- Merrill Lynch Commodities Europe
- Power Finance Corporation Ltd., India
- Borneo Indobara - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Straits Asia Resources Limited - Singapore
- Manunggal Multi Energi - Indonesia
- Larsen & Toubro Limited - India
- Ministry of Finance - Indonesia
- Bayan Resources Tbk. - Indonesia
- CIMB Investment Bank - Malaysia
- Africa Commodities Group - South Africa
- OPG Power Generation Pvt Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- European Bulk Services B.V. - Netherlands
- CNBM International Corporation - China
- Indonesian Coal Mining Association
- Jaiprakash Power Ventures ltd
- The State Trading Corporation of India Ltd
- Tata Chemicals Ltd - India
- Romanian Commodities Exchange
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Goldman Sachs - Singapore
- Pendopo Energi Batubara - Indonesia
- Thiess Contractors Indonesia
- Orica Mining Services - Indonesia
- Parliament of New Zealand
- Rio Tinto Coal - Australia
- Iligan Light & Power Inc, Philippines
- Global Green Power PLC Corporation, Philippines
- Ind-Barath Power Infra Limited - India
- Madhucon Powers Ltd - India
- Electricity Generating Authority of Thailand
- Bharathi Cement Corporation - India
- Agrawal Coal Company - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Xindia Steels Limited - India
- Coastal Gujarat Power Limited - India
- Therma Luzon, Inc, Philippines
- Semirara Mining and Power Corporation, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Parry Sugars Refinery, India
- Price Waterhouse Coopers - Russia
- Sarangani Energy Corporation, Philippines
- Grasim Industreis Ltd - India
- Simpson Spence & Young - Indonesia
- Maheswari Brothers Coal Limited - India
- Antam Resourcindo - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kepco SPC Power Corporation, Philippines
- Tamil Nadu electricity Board
- Georgia Ports Authority, United States
- PTC India Limited - India
- Sical Logistics Limited - India
- Kideco Jaya Agung - Indonesia
- Commonwealth Bank - Australia
- MS Steel International - UAE
- Bukit Makmur.PT - Indonesia
- LBH Netherlands Bv - Netherlands
- Kapuas Tunggal Persada - Indonesia
- Australian Commodity Traders Exchange
- Port Waratah Coal Services - Australia
- Semirara Mining Corp, Philippines
- Chettinad Cement Corporation Ltd - India
- Dalmia Cement Bharat India
- Indo Tambangraya Megah - Indonesia
- Ministry of Transport, Egypt
- Indian Energy Exchange, India
- Lanco Infratech Ltd - India
- McConnell Dowell - Australia
- PowerSource Philippines DevCo
- Coalindo Energy - Indonesia
- Binh Thuan Hamico - Vietnam
- Independent Power Producers Association of India
- Electricity Authority, New Zealand
- Coal and Oil Company - UAE
- Energy Link Ltd, New Zealand
- Standard Chartered Bank - UAE
- Mercuria Energy - Indonesia
- Timah Investasi Mineral - Indoneisa
- Global Coal Blending Company Limited - Australia
- Kaltim Prima Coal - Indonesia
- Posco Energy - South Korea
- Petron Corporation, Philippines
- Aditya Birla Group - India
- Samtan Co., Ltd - South Korea
- Alfred C Toepfer International GmbH - Germany
- Star Paper Mills Limited - India
- SMC Global Power, Philippines
- VISA Power Limited - India
- SMG Consultants - Indonesia
- Eastern Coal Council - USA
- Karbindo Abesyapradhi - Indoneisa
- Deloitte Consulting - India
- Karaikal Port Pvt Ltd - India
- Sree Jayajothi Cements Limited - India
- India Bulls Power Limited - India
- Trasteel International SA, Italy
- Kobexindo Tractors - Indoneisa
- Leighton Contractors Pty Ltd - Australia
- IHS Mccloskey Coal Group - USA
- Indian Oil Corporation Limited
- Ministry of Mines - Canada
- Makarim & Taira - Indonesia
- Sojitz Corporation - Japan
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bulk Trading Sa - Switzerland
- Bukit Asam (Persero) Tbk - Indonesia
- Altura Mining Limited, Indonesia
- Minerals Council of Australia
- Mintek Dendrill Indonesia
- Energy Development Corp, Philippines
- GMR Energy Limited - India
- Sinarmas Energy and Mining - Indonesia
- Wilmar Investment Holdings
- Billiton Holdings Pty Ltd - Australia
- Vijayanagar Sugar Pvt Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Cement Manufacturers Association - India
- Riau Bara Harum - Indonesia
- SN Aboitiz Power Inc, Philippines
- AsiaOL BioFuels Corp., Philippines
- London Commodity Brokers - England
- Latin American Coal - Colombia
- Planning Commission, India
- Bukit Baiduri Energy - Indonesia
- South Luzon Thermal Energy Corporation
- ASAPP Information Group - India
- Bhushan Steel Limited - India
- Bhatia International Limited - India
- Orica Australia Pty. Ltd.
- ICICI Bank Limited - India
- Eastern Energy - Thailand
- Barasentosa Lestari - Indonesia
- Gujarat Electricity Regulatory Commission - India
- TNB Fuel Sdn Bhd - Malaysia
- Neyveli Lignite Corporation Ltd, - India
- Toyota Tsusho Corporation, Japan
- Formosa Plastics Group - Taiwan
- Kohat Cement Company Ltd. - Pakistan
- Maharashtra Electricity Regulatory Commission - India
- Bhoruka Overseas - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- IEA Clean Coal Centre - UK
- Ceylon Electricity Board - Sri Lanka
- Sindya Power Generating Company Private Ltd
- GAC Shipping (India) Pvt Ltd
- Petrochimia International Co. Ltd.- Taiwan
- New Zealand Coal & Carbon
- Bahari Cakrawala Sebuku - Indonesia
- International Coal Ventures Pvt Ltd - India
- Singapore Mercantile Exchange
- Chamber of Mines of South Africa
- GVK Power & Infra Limited - India
- Videocon Industries ltd - India
- Central Electricity Authority - India
- White Energy Company Limited
- Banpu Public Company Limited - Thailand
- Siam City Cement - Thailand
- Jindal Steel & Power Ltd - India
- Uttam Galva Steels Limited - India
- Sakthi Sugars Limited - India
- Central Java Power - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Krishnapatnam Port Company Ltd. - India
- Vedanta Resources Plc - India
- Directorate General of MIneral and Coal - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Cigading International Bulk Terminal - Indonesia
- Rashtriya Ispat Nigam Limited - India
- TeaM Sual Corporation - Philippines
- Ambuja Cements Ltd - India
- PNOC Exploration Corporation - Philippines
- Indogreen Group - Indonesia
- Wood Mackenzie - Singapore
- Anglo American - United Kingdom
- Marubeni Corporation - India
- Meenaskhi Energy Private Limited - India
- San Jose City I Power Corp, Philippines
- Australian Coal Association
- Kumho Petrochemical, South Korea
- Jorong Barutama Greston.PT - Indonesia
- Global Business Power Corporation, Philippines
- Carbofer General Trading SA - India
- Baramulti Group, Indonesia
- Indika Energy - Indonesia
- Medco Energi Mining Internasional
- Metalloyd Limited - United Kingdom
- Globalindo Alam Lestari - Indonesia
- Meralco Power Generation, Philippines
- Salva Resources Pvt Ltd - India
- Kalimantan Lumbung Energi - Indonesia
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