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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, 08 March 22
RUSSIA-UKRAINE CONFLICT ADDS IMPETUS TO ASIA'S ENERGY TRANSITION - IEEFA
Clean energy alternatives are a crucial hedge against future disruptions in global commodity markets
Russia’s invasion of Ukra ...
Tuesday, 08 March 22
THE HIGH COST OF INDONESIA’S DOWNSTREAM COAL PROJECTS IS UNDERESTIMATED - IEEFA
Three Indonesian ministries have come up with a DME purchase price of US$378/tonne fixed for 20 years compared to IEEFA’s US$601/tonne estima ...
Wednesday, 02 March 22
SHIPPING MARKET INSIGHT - INTERMODAL
The escalating confrontation between Russia and Ukraine has the potential to disrupt global order and set the world back a few decades. While count ...
Tuesday, 22 February 22
THE DRY BULK MARKET HAS MOVED ON A POSITIVE TRACK - ALLIED
The dry bulk market has moved on a positive track as of the past couple of weeks or so. Following the typical softening in freight conditions durin ...
Tuesday, 22 February 22
CHINA'S DAILY OUTPUT OF COAL REBOUNDS TO OVER 12 MLN TONNES - REUTERS
China’s coal output returned to more than 12 million tonnes per day as of Feb. 20, the country’s state planner said on Monday, a level ...
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- Borneo Indobara - Indonesia
- Malabar Cements Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Sinarmas Energy and Mining - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Directorate General of MIneral and Coal - Indonesia
- Thai Mozambique Logistica
- PetroVietnam Power Coal Import and Supply Company
- Riau Bara Harum - Indonesia
- Petron Corporation, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Singapore Mercantile Exchange
- European Bulk Services B.V. - Netherlands
- Baramulti Group, Indonesia
- VISA Power Limited - India
- Sojitz Corporation - Japan
- Barasentosa Lestari - Indonesia
- Savvy Resources Ltd - HongKong
- Kohat Cement Company Ltd. - Pakistan
- Metalloyd Limited - United Kingdom
- Grasim Industreis Ltd - India
- Indogreen Group - Indonesia
- CIMB Investment Bank - Malaysia
- Central Java Power - Indonesia
- Bukit Makmur.PT - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Neyveli Lignite Corporation Ltd, - India
- Eastern Energy - Thailand
- Asmin Koalindo Tuhup - Indonesia
- Australian Coal Association
- Leighton Contractors Pty Ltd - Australia
- The Treasury - Australian Government
- ASAPP Information Group - India
- Deloitte Consulting - India
- Edison Trading Spa - Italy
- Tamil Nadu electricity Board
- Global Green Power PLC Corporation, Philippines
- International Coal Ventures Pvt Ltd - India
- Indonesian Coal Mining Association
- Timah Investasi Mineral - Indoneisa
- Iligan Light & Power Inc, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Wilmar Investment Holdings
- Renaissance Capital - South Africa
- Chamber of Mines of South Africa
- Vizag Seaport Private Limited - India
- Bhatia International Limited - India
- Makarim & Taira - Indonesia
- Larsen & Toubro Limited - India
- Standard Chartered Bank - UAE
- ICICI Bank Limited - India
- Pendopo Energi Batubara - Indonesia
- Ambuja Cements Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Kideco Jaya Agung - Indonesia
- IHS Mccloskey Coal Group - USA
- Planning Commission, India
- Directorate Of Revenue Intelligence - India
- Ministry of Mines - Canada
- Karbindo Abesyapradhi - Indoneisa
- Kaltim Prima Coal - Indonesia
- Minerals Council of Australia
- Cigading International Bulk Terminal - Indonesia
- Cement Manufacturers Association - India
- Manunggal Multi Energi - Indonesia
- The University of Queensland
- Gujarat Sidhee Cement - India
- Ministry of Transport, Egypt
- Vedanta Resources Plc - India
- Central Electricity Authority - India
- Rashtriya Ispat Nigam Limited - India
- Posco Energy - South Korea
- Heidelberg Cement - Germany
- Agrawal Coal Company - India
- Interocean Group of Companies - India
- McConnell Dowell - Australia
- Simpson Spence & Young - Indonesia
- Maheswari Brothers Coal Limited - India
- Intertek Mineral Services - Indonesia
- Altura Mining Limited, Indonesia
- Sarangani Energy Corporation, Philippines
- Xindia Steels Limited - India
- Electricity Generating Authority of Thailand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Holcim Trading Pte Ltd - Singapore
- SN Aboitiz Power Inc, Philippines
- Toyota Tsusho Corporation, Japan
- Uttam Galva Steels Limited - India
- Latin American Coal - Colombia
- Siam City Cement PLC, Thailand
- Kobexindo Tractors - Indoneisa
- Videocon Industries ltd - India
- New Zealand Coal & Carbon
- Coastal Gujarat Power Limited - India
- SMG Consultants - Indonesia
- Mjunction Services Limited - India
- Sical Logistics Limited - India
- Miang Besar Coal Terminal - Indonesia
- Parry Sugars Refinery, India
- San Jose City I Power Corp, Philippines
- PNOC Exploration Corporation - Philippines
- Chettinad Cement Corporation Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Essar Steel Hazira Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Lanco Infratech Ltd - India
- Romanian Commodities Exchange
- Ind-Barath Power Infra Limited - India
- Marubeni Corporation - India
- Port Waratah Coal Services - Australia
- Meenaskhi Energy Private Limited - India
- Bhushan Steel Limited - India
- Mercuria Energy - Indonesia
- Electricity Authority, New Zealand
- Commonwealth Bank - Australia
- Straits Asia Resources Limited - Singapore
- Ministry of Finance - Indonesia
- Meralco Power Generation, Philippines
- Ceylon Electricity Board - Sri Lanka
- Energy Link Ltd, New Zealand
- Vijayanagar Sugar Pvt Ltd - India
- London Commodity Brokers - England
- Jaiprakash Power Ventures ltd
- Economic Council, Georgia
- IEA Clean Coal Centre - UK
- Thiess Contractors Indonesia
- Binh Thuan Hamico - Vietnam
- Banpu Public Company Limited - Thailand
- India Bulls Power Limited - India
- Merrill Lynch Commodities Europe
- Jindal Steel & Power Ltd - India
- Georgia Ports Authority, United States
- PTC India Limited - India
- Coalindo Energy - Indonesia
- Siam City Cement - Thailand
- Kepco SPC Power Corporation, Philippines
- Global Business Power Corporation, Philippines
- Mercator Lines Limited - India
- TeaM Sual Corporation - Philippines
- Bhoruka Overseas - Indonesia
- Goldman Sachs - Singapore
- Rio Tinto Coal - Australia
- Kartika Selabumi Mining - Indonesia
- Anglo American - United Kingdom
- Indian Oil Corporation Limited
- Bangladesh Power Developement Board
- Kumho Petrochemical, South Korea
- GVK Power & Infra Limited - India
- CNBM International Corporation - China
- Maharashtra Electricity Regulatory Commission - India
- Alfred C Toepfer International GmbH - Germany
- Salva Resources Pvt Ltd - India
- GAC Shipping (India) Pvt Ltd
- Semirara Mining Corp, Philippines
- Australian Commodity Traders Exchange
- Independent Power Producers Association of India
- GMR Energy Limited - India
- Power Finance Corporation Ltd., India
- Carbofer General Trading SA - India
- Globalindo Alam Lestari - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- MS Steel International - UAE
- Antam Resourcindo - Indonesia
- Samtan Co., Ltd - South Korea
- OPG Power Generation Pvt Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Trasteel International SA, Italy
- Orica Mining Services - Indonesia
- Orica Australia Pty. Ltd.
- LBH Netherlands Bv - Netherlands
- Gujarat Electricity Regulatory Commission - India
- Indika Energy - Indonesia
- Bayan Resources Tbk. - Indonesia
- Energy Development Corp, Philippines
- Therma Luzon, Inc, Philippines
- Aboitiz Power Corporation - Philippines
- Indo Tambangraya Megah - Indonesia
- Africa Commodities Group - South Africa
- Sakthi Sugars Limited - India
- Dalmia Cement Bharat India
- Bharathi Cement Corporation - India
- Star Paper Mills Limited - India
- Attock Cement Pakistan Limited
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- PowerSource Philippines DevCo
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Medco Energi Mining Internasional
- Madhucon Powers Ltd - India
- Sree Jayajothi Cements Limited - India
- Parliament of New Zealand
- Krishnapatnam Port Company Ltd. - India
- Eastern Coal Council - USA
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- SMC Global Power, Philippines
- GN Power Mariveles Coal Plant, Philippines
- The State Trading Corporation of India Ltd
- Coal and Oil Company - UAE
- Wood Mackenzie - Singapore
- Karaikal Port Pvt Ltd - India
- Aditya Birla Group - India
- Bulk Trading Sa - Switzerland
- Global Coal Blending Company Limited - Australia
- Formosa Plastics Group - Taiwan
- Indian Energy Exchange, India
- Bahari Cakrawala Sebuku - Indonesia
- Semirara Mining and Power Corporation, Philippines
- White Energy Company Limited
- Tata Chemicals Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Bukit Baiduri Energy - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Mintek Dendrill Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Oldendorff Carriers - Singapore
- Sindya Power Generating Company Private Ltd
- South Luzon Thermal Energy Corporation
- Price Waterhouse Coopers - Russia
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