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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, 10 February 22
EIA ANALYSIS CONSIDERS DIFFERENT OUTCOMES FOR COAL MARKETS IN INDIA AND SOUTHEAST ASIA
In our International Energy Outlook 2021 (IEO2021) Issues in Focus: Uncertainty in Coal Trade in India and Greater Southeast Asia, we analyze three ...
Wednesday, 09 February 22
OIL PRICES: "IT'S GOING TO BE VERY EASY" TO GET TO $100/BARREL, ANALYST SAYS - YAHOO FINANCE
Energy and oil prices have been on fire over the last six months — and expect them to go higher, says one analyst.
“For ...
Wednesday, 09 February 22
MARKET INSIGHT - INTERMODAL
Iron ore prices have jumped significantly in the week prior to the Chinese New Year with traders and producers stocking up on raw materials. China& ...
Wednesday, 09 February 22
FEBRUARY HBA HITS RECORD HIGH IN 2022 ON INDONESIA’S EXPORT BAN IN JANUARY, WORSEN SUPPLY, UKRAINE TENSIONS
COALspot.com: Indonesian Coal Price Reference for February in a steep climb from January 2022.
As expected in January the Indonesia ...
Wednesday, 09 February 22
CHINESE COAL MARKS BEST DAY IN 4 MONTHS ON TIGHT SUPPLY, HIGH DEMAND - REUTERS
China’s coal futures on Tuesday recorded their best session since Bejing’s mid-October intervention to cool runaway prices, aided by co ...
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- PNOC Exploration Corporation - Philippines
- Aditya Birla Group - India
- Global Coal Blending Company Limited - Australia
- London Commodity Brokers - England
- Asmin Koalindo Tuhup - Indonesia
- Videocon Industries ltd - India
- Ministry of Mines - Canada
- Bayan Resources Tbk. - Indonesia
- Tamil Nadu electricity Board
- Coal and Oil Company - UAE
- IEA Clean Coal Centre - UK
- Vedanta Resources Plc - India
- CIMB Investment Bank - Malaysia
- Carbofer General Trading SA - India
- Sindya Power Generating Company Private Ltd
- Ambuja Cements Ltd - India
- Essar Steel Hazira Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Star Paper Mills Limited - India
- Banpu Public Company Limited - Thailand
- The University of Queensland
- Madhucon Powers Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Riau Bara Harum - Indonesia
- Minerals Council of Australia
- Mintek Dendrill Indonesia
- Kaltim Prima Coal - Indonesia
- Bukit Makmur.PT - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Kideco Jaya Agung - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Xindia Steels Limited - India
- Orica Australia Pty. Ltd.
- Dalmia Cement Bharat India
- Baramulti Group, Indonesia
- Tata Chemicals Ltd - India
- Heidelberg Cement - Germany
- South Luzon Thermal Energy Corporation
- Orica Mining Services - Indonesia
- LBH Netherlands Bv - Netherlands
- CNBM International Corporation - China
- MS Steel International - UAE
- The Treasury - Australian Government
- Australian Commodity Traders Exchange
- Iligan Light & Power Inc, Philippines
- Cigading International Bulk Terminal - Indonesia
- Indogreen Group - Indonesia
- Rio Tinto Coal - Australia
- Sical Logistics Limited - India
- GMR Energy Limited - India
- New Zealand Coal & Carbon
- Energy Development Corp, Philippines
- Alfred C Toepfer International GmbH - Germany
- Energy Link Ltd, New Zealand
- Barasentosa Lestari - Indonesia
- Indonesian Coal Mining Association
- Eastern Energy - Thailand
- Mjunction Services Limited - India
- Metalloyd Limited - United Kingdom
- Toyota Tsusho Corporation, Japan
- Port Waratah Coal Services - Australia
- Petron Corporation, Philippines
- Thai Mozambique Logistica
- San Jose City I Power Corp, Philippines
- Coastal Gujarat Power Limited - India
- Kohat Cement Company Ltd. - Pakistan
- The State Trading Corporation of India Ltd
- Indian Energy Exchange, India
- Wood Mackenzie - Singapore
- Bangladesh Power Developement Board
- Planning Commission, India
- SN Aboitiz Power Inc, Philippines
- Thiess Contractors Indonesia
- Mercator Lines Limited - India
- Oldendorff Carriers - Singapore
- Leighton Contractors Pty Ltd - Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Power Finance Corporation Ltd., India
- Miang Besar Coal Terminal - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Posco Energy - South Korea
- Ministry of Finance - Indonesia
- Vizag Seaport Private Limited - India
- Krishnapatnam Port Company Ltd. - India
- Kepco SPC Power Corporation, Philippines
- GVK Power & Infra Limited - India
- Maheswari Brothers Coal Limited - India
- Central Electricity Authority - India
- Independent Power Producers Association of India
- GAC Shipping (India) Pvt Ltd
- Samtan Co., Ltd - South Korea
- Edison Trading Spa - Italy
- Parry Sugars Refinery, India
- Agrawal Coal Company - India
- OPG Power Generation Pvt Ltd - India
- Indika Energy - Indonesia
- Kartika Selabumi Mining - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Intertek Mineral Services - Indonesia
- Uttam Galva Steels Limited - India
- Coalindo Energy - Indonesia
- Karaikal Port Pvt Ltd - India
- Simpson Spence & Young - Indonesia
- Attock Cement Pakistan Limited
- Vijayanagar Sugar Pvt Ltd - India
- ASAPP Information Group - India
- Meralco Power Generation, Philippines
- Lanco Infratech Ltd - India
- Goldman Sachs - Singapore
- Sinarmas Energy and Mining - Indonesia
- Globalindo Alam Lestari - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Price Waterhouse Coopers - Russia
- Bukit Baiduri Energy - Indonesia
- Malabar Cements Ltd - India
- PowerSource Philippines DevCo
- Pipit Mutiara Jaya. PT, Indonesia
- Borneo Indobara - Indonesia
- Meenaskhi Energy Private Limited - India
- Bharathi Cement Corporation - India
- TNB Fuel Sdn Bhd - Malaysia
- Kobexindo Tractors - Indoneisa
- Sojitz Corporation - Japan
- Bhushan Steel Limited - India
- PTC India Limited - India
- Pendopo Energi Batubara - Indonesia
- Economic Council, Georgia
- Ministry of Transport, Egypt
- IHS Mccloskey Coal Group - USA
- Karbindo Abesyapradhi - Indoneisa
- PetroVietnam Power Coal Import and Supply Company
- Kapuas Tunggal Persada - Indonesia
- SMG Consultants - Indonesia
- International Coal Ventures Pvt Ltd - India
- Sree Jayajothi Cements Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Deloitte Consulting - India
- Sakthi Sugars Limited - India
- India Bulls Power Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Australian Coal Association
- Romanian Commodities Exchange
- European Bulk Services B.V. - Netherlands
- Gujarat Mineral Development Corp Ltd - India
- Aboitiz Power Corporation - Philippines
- White Energy Company Limited
- Bhatia International Limited - India
- Ind-Barath Power Infra Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Semirara Mining and Power Corporation, Philippines
- Gujarat Electricity Regulatory Commission - India
- Africa Commodities Group - South Africa
- Chettinad Cement Corporation Ltd - India
- Directorate Of Revenue Intelligence - India
- Siam City Cement PLC, Thailand
- Timah Investasi Mineral - Indoneisa
- Bhoruka Overseas - Indonesia
- Straits Asia Resources Limited - Singapore
- Bulk Trading Sa - Switzerland
- Cement Manufacturers Association - India
- Global Business Power Corporation, Philippines
- Merrill Lynch Commodities Europe
- Antam Resourcindo - Indonesia
- Savvy Resources Ltd - HongKong
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kumho Petrochemical, South Korea
- Commonwealth Bank - Australia
- Anglo American - United Kingdom
- Singapore Mercantile Exchange
- Sarangani Energy Corporation, Philippines
- Mercuria Energy - Indonesia
- Makarim & Taira - Indonesia
- Interocean Group of Companies - India
- TeaM Sual Corporation - Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Therma Luzon, Inc, Philippines
- Ceylon Electricity Board - Sri Lanka
- Binh Thuan Hamico - Vietnam
- Georgia Ports Authority, United States
- ICICI Bank Limited - India
- Global Green Power PLC Corporation, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Renaissance Capital - South Africa
- Semirara Mining Corp, Philippines
- Manunggal Multi Energi - Indonesia
- Grasim Industreis Ltd - India
- Electricity Authority, New Zealand
- Gujarat Sidhee Cement - India
- Trasteel International SA, Italy
- Indo Tambangraya Megah - Indonesia
- McConnell Dowell - Australia
- Formosa Plastics Group - Taiwan
- Altura Mining Limited, Indonesia
- Salva Resources Pvt Ltd - India
- VISA Power Limited - India
- Jindal Steel & Power Ltd - India
- Chamber of Mines of South Africa
- Electricity Generating Authority of Thailand
- Central Java Power - Indonesia
- Siam City Cement - Thailand
- Marubeni Corporation - India
- Bukit Asam (Persero) Tbk - Indonesia
- Larsen & Toubro Limited - India
- SMC Global Power, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Standard Chartered Bank - UAE
- Parliament of New Zealand
- Billiton Holdings Pty Ltd - Australia
- Latin American Coal - Colombia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Petrochimia International Co. Ltd.- Taiwan
- Medco Energi Mining Internasional
- Indian Oil Corporation Limited
- Wilmar Investment Holdings
- Jaiprakash Power Ventures ltd
- Eastern Coal Council - USA
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