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