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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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Thursday, 17 February 22
MAJOR INSTITUTIONS PROVIDED OVER $1.5 TRLN TO COAL SECTOR IN 2019-2021, SAYS NGO GROUP - REUTERS
Financial institutions channelled more than $1.5 trillion into the coal industry in loans and underwriting from January 2019 to November 2021, even ...
Thursday, 17 February 22
APAC THERMAL COAL PRICES TO EASE ON END OF INDONESIA EXPORT BAN - FITCH RATINGS
Fitch Ratings-Shanghai/Singapore-14 February 2022: APAC thermal coal prices are likely to come under pressure in the near term due to seasonally we ...
Tuesday, 15 February 22
IS ANOTHER COAL SHORTAGE CRISIS LOOMING OVER INDIA? - BUSINESS STANDARD
In December last year, the Federation of Indian Mineral Industries (FIMI) shot off a letter to the Prime Minister claiming that the coal crisis was ...
Tuesday, 15 February 22
THERMAL COAL'S RECORD PRICE RUN MAY END UP ITS OWN WORST ENEMY - REUTERS
The price of benchmark Australian thermal coal rose last week to trade near record highs, providing a short-term boost to producers but increasing ...
Thursday, 10 February 22
INDONESIA: COAL EXPORT BAN - SKULD
Indonesia's coal export ban in the light of force majeure and off-hire clauses
In January 2022, Indonesia, the world's biggest exporte ...
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- CIMB Investment Bank - Malaysia
- Toyota Tsusho Corporation, Japan
- Bahari Cakrawala Sebuku - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Jindal Steel & Power Ltd - India
- New Zealand Coal & Carbon
- Meenaskhi Energy Private Limited - India
- Aboitiz Power Corporation - Philippines
- Coastal Gujarat Power Limited - India
- Global Business Power Corporation, Philippines
- Goldman Sachs - Singapore
- Star Paper Mills Limited - India
- Ministry of Finance - Indonesia
- Deloitte Consulting - India
- Baramulti Group, Indonesia
- Economic Council, Georgia
- Bhushan Steel Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Oldendorff Carriers - Singapore
- Parry Sugars Refinery, India
- Formosa Plastics Group - Taiwan
- Dalmia Cement Bharat India
- Meralco Power Generation, Philippines
- Parliament of New Zealand
- Sakthi Sugars Limited - India
- Eastern Energy - Thailand
- Metalloyd Limited - United Kingdom
- Agrawal Coal Company - India
- Posco Energy - South Korea
- Billiton Holdings Pty Ltd - Australia
- Krishnapatnam Port Company Ltd. - India
- PetroVietnam Power Coal Import and Supply Company
- Cement Manufacturers Association - India
- London Commodity Brokers - England
- San Jose City I Power Corp, Philippines
- Siam City Cement - Thailand
- GMR Energy Limited - India
- Straits Asia Resources Limited - Singapore
- Rio Tinto Coal - Australia
- Indian Energy Exchange, India
- Orica Australia Pty. Ltd.
- Lanco Infratech Ltd - India
- Cigading International Bulk Terminal - Indonesia
- IHS Mccloskey Coal Group - USA
- Kaltim Prima Coal - Indonesia
- Australian Commodity Traders Exchange
- Romanian Commodities Exchange
- Sree Jayajothi Cements Limited - India
- MS Steel International - UAE
- Sinarmas Energy and Mining - Indonesia
- Aditya Birla Group - India
- Eastern Coal Council - USA
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Antam Resourcindo - Indonesia
- Videocon Industries ltd - India
- Malabar Cements Ltd - India
- Ceylon Electricity Board - Sri Lanka
- McConnell Dowell - Australia
- Heidelberg Cement - Germany
- South Luzon Thermal Energy Corporation
- GVK Power & Infra Limited - India
- Miang Besar Coal Terminal - Indonesia
- CNBM International Corporation - China
- Sojitz Corporation - Japan
- Alfred C Toepfer International GmbH - Germany
- Barasentosa Lestari - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Ministry of Mines - Canada
- Australian Coal Association
- Ambuja Cements Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Port Waratah Coal Services - Australia
- Petron Corporation, Philippines
- Latin American Coal - Colombia
- Price Waterhouse Coopers - Russia
- Mintek Dendrill Indonesia
- GAC Shipping (India) Pvt Ltd
- Thai Mozambique Logistica
- The Treasury - Australian Government
- Directorate Of Revenue Intelligence - India
- Global Coal Blending Company Limited - Australia
- Kobexindo Tractors - Indoneisa
- Semirara Mining and Power Corporation, Philippines
- Mjunction Services Limited - India
- Bukit Makmur.PT - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Standard Chartered Bank - UAE
- Semirara Mining Corp, Philippines
- Bhoruka Overseas - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Holcim Trading Pte Ltd - Singapore
- The University of Queensland
- Asmin Koalindo Tuhup - Indonesia
- Commonwealth Bank - Australia
- Larsen & Toubro Limited - India
- Ministry of Transport, Egypt
- Neyveli Lignite Corporation Ltd, - India
- TeaM Sual Corporation - Philippines
- The State Trading Corporation of India Ltd
- Essar Steel Hazira Ltd - India
- LBH Netherlands Bv - Netherlands
- ICICI Bank Limited - India
- Siam City Cement PLC, Thailand
- SN Aboitiz Power Inc, Philippines
- Carbofer General Trading SA - India
- Trasteel International SA, Italy
- VISA Power Limited - India
- Salva Resources Pvt Ltd - India
- Karaikal Port Pvt Ltd - India
- Madhucon Powers Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Gujarat Mineral Development Corp Ltd - India
- Central Java Power - Indonesia
- Sical Logistics Limited - India
- Banpu Public Company Limited - Thailand
- SMC Global Power, Philippines
- Rashtriya Ispat Nigam Limited - India
- Savvy Resources Ltd - HongKong
- Sindya Power Generating Company Private Ltd
- Grasim Industreis Ltd - India
- Vizag Seaport Private Limited - India
- Borneo Indobara - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Chamber of Mines of South Africa
- Directorate General of MIneral and Coal - Indonesia
- Bukit Baiduri Energy - Indonesia
- Minerals Council of Australia
- Indika Energy - Indonesia
- Energy Development Corp, Philippines
- IEA Clean Coal Centre - UK
- Central Electricity Authority - India
- Tata Chemicals Ltd - India
- PTC India Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Binh Thuan Hamico - Vietnam
- Bhatia International Limited - India
- Intertek Mineral Services - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Globalindo Alam Lestari - Indonesia
- Makarim & Taira - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Chettinad Cement Corporation Ltd - India
- Georgia Ports Authority, United States
- Indian Oil Corporation Limited
- Mercator Lines Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Independent Power Producers Association of India
- Bukit Asam (Persero) Tbk - Indonesia
- OPG Power Generation Pvt Ltd - India
- Attock Cement Pakistan Limited
- Electricity Generating Authority of Thailand
- European Bulk Services B.V. - Netherlands
- ASAPP Information Group - India
- AsiaOL BioFuels Corp., Philippines
- Merrill Lynch Commodities Europe
- Planning Commission, India
- Coalindo Energy - Indonesia
- Ind-Barath Power Infra Limited - India
- PNOC Exploration Corporation - Philippines
- Kideco Jaya Agung - Indonesia
- Mercuria Energy - Indonesia
- Jaiprakash Power Ventures ltd
- Gujarat Sidhee Cement - India
- Tamil Nadu electricity Board
- Energy Link Ltd, New Zealand
- PowerSource Philippines DevCo
- Global Green Power PLC Corporation, Philippines
- Africa Commodities Group - South Africa
- Manunggal Multi Energi - Indonesia
- Kartika Selabumi Mining - Indonesia
- Uttam Galva Steels Limited - India
- Power Finance Corporation Ltd., India
- International Coal Ventures Pvt Ltd - India
- Kepco SPC Power Corporation, Philippines
- Timah Investasi Mineral - Indoneisa
- Altura Mining Limited, Indonesia
- Thiess Contractors Indonesia
- Bangladesh Power Developement Board
- White Energy Company Limited
- Electricity Authority, New Zealand
- Pendopo Energi Batubara - Indonesia
- Xindia Steels Limited - India
- Kapuas Tunggal Persada - Indonesia
- Wilmar Investment Holdings
- Edison Trading Spa - Italy
- Karbindo Abesyapradhi - Indoneisa
- Interocean Group of Companies - India
- Bulk Trading Sa - Switzerland
- Anglo American - United Kingdom
- Indonesian Coal Mining Association
- Wood Mackenzie - Singapore
- Medco Energi Mining Internasional
- Indo Tambangraya Megah - Indonesia
- Simpson Spence & Young - Indonesia
- Renaissance Capital - South Africa
- Leighton Contractors Pty Ltd - Australia
- Bharathi Cement Corporation - India
- Vedanta Resources Plc - India
- Iligan Light & Power Inc, Philippines
- Sarangani Energy Corporation, Philippines
- Orica Mining Services - Indonesia
- Marubeni Corporation - India
- Samtan Co., Ltd - South Korea
- Coal and Oil Company - UAE
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bayan Resources Tbk. - Indonesia
- Riau Bara Harum - Indonesia
- Kumho Petrochemical, South Korea
- Singapore Mercantile Exchange
- Indogreen Group - Indonesia
- Maheswari Brothers Coal Limited - India
- SMG Consultants - Indonesia
- India Bulls Power Limited - India
- Therma Luzon, Inc, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
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