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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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Wednesday, 13 July 22
MARKET INSIGHT - INTERMODAL
Taking the previous market insight a step further, market sentiment remains bullish regarding the overall ROI of scrubbers, facing tailwinds from a ...
Friday, 08 July 22
AUSTRALIAN COAL PRICE BREAKS AGAIN LEVEL US$ 400/TON!, UP AROUND 4% - CNBC INDONESIA
Coal prices shot up again and crossed the level of US$ 400 per ton. On Thursday (7/7/2022) trading, the selling price of August contract closed at ...
Friday, 08 July 22
INDONESIA MULLS MORE FREQUENT SETTING OF CRUDE PALM OIL REFERENCE PRICE - REUTERS
Indonesia is considering setting its crude palm oil (CPO) export reference price every two weeks instead of monthly, a senior trade ministry offici ...
Friday, 08 July 22
BUNKER PRICES EXPECTED TO RECOVER LOST GROUND NEXT WEEK - SERGEY IVANOV, MABUX
Over the Week 27, the world bunker indices showed a sharp decline, primarily due to the fall in oil prices on July 05. The 380 HSFO index fell by 5 ...
Thursday, 07 July 22
NTPC MINES 61% MORE COAL AT 4.22 MN METRIC TONNES IN APRIL-JUNE: PTI
State-owned power giant NTPC on Tuesday said that its coal output grew by 61 per cent to Rs 42.40 lakh metric tonnes in April-June quarter from 26. ...
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- Bayan Resources Tbk. - Indonesia
- Medco Energi Mining Internasional
- India Bulls Power Limited - India
- Krishnapatnam Port Company Ltd. - India
- Africa Commodities Group - South Africa
- GMR Energy Limited - India
- Xindia Steels Limited - India
- Meralco Power Generation, Philippines
- CNBM International Corporation - China
- Bank of Tokyo Mitsubishi UFJ Ltd
- Billiton Holdings Pty Ltd - Australia
- Borneo Indobara - Indonesia
- Ministry of Finance - Indonesia
- Altura Mining Limited, Indonesia
- Indogreen Group - Indonesia
- Central Electricity Authority - India
- Bahari Cakrawala Sebuku - Indonesia
- OPG Power Generation Pvt Ltd - India
- Siam City Cement PLC, Thailand
- Metalloyd Limited - United Kingdom
- Agrawal Coal Company - India
- Bukit Makmur.PT - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Planning Commission, India
- SMG Consultants - Indonesia
- Cement Manufacturers Association - India
- Deloitte Consulting - India
- Kepco SPC Power Corporation, Philippines
- Sindya Power Generating Company Private Ltd
- Eastern Coal Council - USA
- Dalmia Cement Bharat India
- Semirara Mining Corp, Philippines
- International Coal Ventures Pvt Ltd - India
- Renaissance Capital - South Africa
- Mercuria Energy - Indonesia
- Meenaskhi Energy Private Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Port Waratah Coal Services - Australia
- Sical Logistics Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Trasteel International SA, Italy
- Price Waterhouse Coopers - Russia
- Power Finance Corporation Ltd., India
- Star Paper Mills Limited - India
- Interocean Group of Companies - India
- Bukit Asam (Persero) Tbk - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- LBH Netherlands Bv - Netherlands
- Vijayanagar Sugar Pvt Ltd - India
- Indian Energy Exchange, India
- Samtan Co., Ltd - South Korea
- Goldman Sachs - Singapore
- White Energy Company Limited
- Makarim & Taira - Indonesia
- SN Aboitiz Power Inc, Philippines
- Bhoruka Overseas - Indonesia
- Iligan Light & Power Inc, Philippines
- Electricity Authority, New Zealand
- Kapuas Tunggal Persada - Indonesia
- Barasentosa Lestari - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Bhatia International Limited - India
- Coastal Gujarat Power Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Coalindo Energy - Indonesia
- Ambuja Cements Ltd - India
- Manunggal Multi Energi - Indonesia
- Mjunction Services Limited - India
- Coal and Oil Company - UAE
- Sojitz Corporation - Japan
- MS Steel International - UAE
- Pendopo Energi Batubara - Indonesia
- Commonwealth Bank - Australia
- Siam City Cement - Thailand
- Merrill Lynch Commodities Europe
- ASAPP Information Group - India
- Neyveli Lignite Corporation Ltd, - India
- Jorong Barutama Greston.PT - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Wood Mackenzie - Singapore
- Globalindo Alam Lestari - Indonesia
- Edison Trading Spa - Italy
- Rio Tinto Coal - Australia
- Mercator Lines Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Kumho Petrochemical, South Korea
- Carbofer General Trading SA - India
- Energy Development Corp, Philippines
- Orica Mining Services - Indonesia
- Sarangani Energy Corporation, Philippines
- PTC India Limited - India
- Standard Chartered Bank - UAE
- Global Coal Blending Company Limited - Australia
- Therma Luzon, Inc, Philippines
- Ministry of Mines - Canada
- Chettinad Cement Corporation Ltd - India
- Binh Thuan Hamico - Vietnam
- Global Business Power Corporation, Philippines
- Petron Corporation, Philippines
- Energy Link Ltd, New Zealand
- Kideco Jaya Agung - Indonesia
- Banpu Public Company Limited - Thailand
- Asmin Koalindo Tuhup - Indonesia
- Directorate Of Revenue Intelligence - India
- Bangladesh Power Developement Board
- Latin American Coal - Colombia
- Bhushan Steel Limited - India
- Kaltim Prima Coal - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- ICICI Bank Limited - India
- Central Java Power - Indonesia
- TeaM Sual Corporation - Philippines
- Thai Mozambique Logistica
- Toyota Tsusho Corporation, Japan
- CIMB Investment Bank - Malaysia
- Mintek Dendrill Indonesia
- Thiess Contractors Indonesia
- PNOC Exploration Corporation - Philippines
- Global Green Power PLC Corporation, Philippines
- Oldendorff Carriers - Singapore
- Riau Bara Harum - Indonesia
- Miang Besar Coal Terminal - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Chamber of Mines of South Africa
- Cigading International Bulk Terminal - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Vizag Seaport Private Limited - India
- AsiaOL BioFuels Corp., Philippines
- Kobexindo Tractors - Indoneisa
- Directorate General of MIneral and Coal - Indonesia
- IHS Mccloskey Coal Group - USA
- Marubeni Corporation - India
- South Luzon Thermal Energy Corporation
- The State Trading Corporation of India Ltd
- Lanco Infratech Ltd - India
- Romanian Commodities Exchange
- Videocon Industries ltd - India
- SMC Global Power, Philippines
- Orica Australia Pty. Ltd.
- Anglo American - United Kingdom
- Aditya Birla Group - India
- Leighton Contractors Pty Ltd - Australia
- London Commodity Brokers - England
- Tamil Nadu electricity Board
- Holcim Trading Pte Ltd - Singapore
- Indo Tambangraya Megah - Indonesia
- IEA Clean Coal Centre - UK
- Sree Jayajothi Cements Limited - India
- Straits Asia Resources Limited - Singapore
- Georgia Ports Authority, United States
- VISA Power Limited - India
- Antam Resourcindo - Indonesia
- Grasim Industreis Ltd - India
- Formosa Plastics Group - Taiwan
- GAC Shipping (India) Pvt Ltd
- Ministry of Transport, Egypt
- TNB Fuel Sdn Bhd - Malaysia
- Simpson Spence & Young - Indonesia
- San Jose City I Power Corp, Philippines
- Indonesian Coal Mining Association
- New Zealand Coal & Carbon
- Electricity Generating Authority of Thailand
- Karbindo Abesyapradhi - Indoneisa
- Malabar Cements Ltd - India
- Bharathi Cement Corporation - India
- PowerSource Philippines DevCo
- Posco Energy - South Korea
- Eastern Energy - Thailand
- Indian Oil Corporation Limited
- Offshore Bulk Terminal Pte Ltd, Singapore
- Ind-Barath Power Infra Limited - India
- The University of Queensland
- Gujarat Electricity Regulatory Commission - India
- Australian Coal Association
- Parry Sugars Refinery, India
- Economic Council, Georgia
- Baramulti Group, Indonesia
- Tata Chemicals Ltd - India
- Bulk Trading Sa - Switzerland
- Gujarat Mineral Development Corp Ltd - India
- Minerals Council of Australia
- Larsen & Toubro Limited - India
- Heidelberg Cement - Germany
- Ceylon Electricity Board - Sri Lanka
- Jaiprakash Power Ventures ltd
- Vedanta Resources Plc - India
- Madhucon Powers Ltd - India
- Salva Resources Pvt Ltd - India
- Sakthi Sugars Limited - India
- Timah Investasi Mineral - Indoneisa
- Essar Steel Hazira Ltd - India
- Wilmar Investment Holdings
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Jindal Steel & Power Ltd - India
- Maheswari Brothers Coal Limited - India
- The Treasury - Australian Government
- Uttam Galva Steels Limited - India
- Attock Cement Pakistan Limited
- Independent Power Producers Association of India
- Bukit Baiduri Energy - Indonesia
- McConnell Dowell - Australia
- European Bulk Services B.V. - Netherlands
- Singapore Mercantile Exchange
- Karaikal Port Pvt Ltd - India
- Intertek Mineral Services - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Parliament of New Zealand
- Savvy Resources Ltd - HongKong
- Alfred C Toepfer International GmbH - Germany
- Australian Commodity Traders Exchange
- Aboitiz Power Corporation - Philippines
- GVK Power & Infra Limited - India
- Gujarat Sidhee Cement - India
- Kartika Selabumi Mining - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Indika Energy - Indonesia
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