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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, 27 January 22
2022 - A YEAR OF REBALANCING FOR METALS AND MINING - WOOD MACKENZIE
If 2021 was the year of rebound for metals and mining (M&M) commodities, then 2022 is shaping as the year of rebalance, says Wood Mackenzie, a ...
Wednesday, 26 January 22
MARKET INSIGHT - INTERMODAL
While it is logical that most of the S&P reports of the first weeks of the year are linked to very limited activity as reflected in the weekly ...
Wednesday, 26 January 22
INDONESIA: DME PROJECT IS ECONOMICALLY VIABLE AS STUDY DEMONSTRATES
The government is encouraging downstream coal processing or increase in coal added value, for example by turning coal into Dimethyl Ether (DME) to ...
Wednesday, 26 January 22
COMMODITY PRICES COULD SOAR IF THE RUSSIA-UKRAINE CRISIS ESCALATES - ING
It appears that a number of commodity markets are starting to at least price in some geopolitical risk around the growing tension between Russia an ...
Wednesday, 26 January 22
INDONESIA'S COAL BAN SENDS PRICES SOARING, OTHER EXPORTERS FAIL TO STEP UP - REUTERS
Indonesia’s short-lived ban on exporting coal has sent ructions through the seaborne market for the fuel in Asia, with the fallout likely to ...
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- Parry Sugars Refinery, India
- Sindya Power Generating Company Private Ltd
- London Commodity Brokers - England
- Grasim Industreis Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Star Paper Mills Limited - India
- Indogreen Group - Indonesia
- Intertek Mineral Services - Indonesia
- Ministry of Mines - Canada
- SMG Consultants - Indonesia
- Price Waterhouse Coopers - Russia
- Larsen & Toubro Limited - India
- AsiaOL BioFuels Corp., Philippines
- Iligan Light & Power Inc, Philippines
- Economic Council, Georgia
- Bukit Makmur.PT - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- TeaM Sual Corporation - Philippines
- PTC India Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Semirara Mining Corp, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Wilmar Investment Holdings
- Malabar Cements Ltd - India
- Billiton Holdings Pty Ltd - Australia
- IHS Mccloskey Coal Group - USA
- Power Finance Corporation Ltd., India
- Sarangani Energy Corporation, Philippines
- Central Java Power - Indonesia
- The Treasury - Australian Government
- Semirara Mining and Power Corporation, Philippines
- Edison Trading Spa - Italy
- Pipit Mutiara Jaya. PT, Indonesia
- Marubeni Corporation - India
- Indonesian Coal Mining Association
- San Jose City I Power Corp, Philippines
- Makarim & Taira - Indonesia
- Siam City Cement PLC, Thailand
- VISA Power Limited - India
- Electricity Generating Authority of Thailand
- Sical Logistics Limited - India
- India Bulls Power Limited - India
- Binh Thuan Hamico - Vietnam
- Independent Power Producers Association of India
- Rio Tinto Coal - Australia
- TNB Fuel Sdn Bhd - Malaysia
- Dalmia Cement Bharat India
- Kohat Cement Company Ltd. - Pakistan
- Thiess Contractors Indonesia
- Chettinad Cement Corporation Ltd - India
- Central Electricity Authority - India
- Chamber of Mines of South Africa
- PowerSource Philippines DevCo
- PNOC Exploration Corporation - Philippines
- Georgia Ports Authority, United States
- Bank of Tokyo Mitsubishi UFJ Ltd
- Altura Mining Limited, Indonesia
- Baramulti Group, Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Petrochimia International Co. Ltd.- Taiwan
- New Zealand Coal & Carbon
- Maheswari Brothers Coal Limited - India
- Sakthi Sugars Limited - India
- Uttam Galva Steels Limited - India
- Interocean Group of Companies - India
- Bhoruka Overseas - Indonesia
- Essar Steel Hazira Ltd - India
- Bangladesh Power Developement Board
- Madhucon Powers Ltd - India
- Meenaskhi Energy Private Limited - India
- Cigading International Bulk Terminal - Indonesia
- GMR Energy Limited - India
- Latin American Coal - Colombia
- Eastern Energy - Thailand
- International Coal Ventures Pvt Ltd - India
- Ministry of Finance - Indonesia
- Straits Asia Resources Limited - Singapore
- Ind-Barath Power Infra Limited - India
- Mintek Dendrill Indonesia
- Simpson Spence & Young - Indonesia
- Trasteel International SA, Italy
- Leighton Contractors Pty Ltd - Australia
- Antam Resourcindo - Indonesia
- The University of Queensland
- Petron Corporation, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Xindia Steels Limited - India
- Commonwealth Bank - Australia
- Planning Commission, India
- Sojitz Corporation - Japan
- Minerals Council of Australia
- Salva Resources Pvt Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Posco Energy - South Korea
- Electricity Authority, New Zealand
- GAC Shipping (India) Pvt Ltd
- Jorong Barutama Greston.PT - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Attock Cement Pakistan Limited
- Manunggal Multi Energi - Indonesia
- Parliament of New Zealand
- Videocon Industries ltd - India
- Coal and Oil Company - UAE
- Global Coal Blending Company Limited - Australia
- Tamil Nadu electricity Board
- Formosa Plastics Group - Taiwan
- Australian Commodity Traders Exchange
- White Energy Company Limited
- Eastern Coal Council - USA
- Bayan Resources Tbk. - Indonesia
- Globalindo Alam Lestari - Indonesia
- Global Green Power PLC Corporation, Philippines
- Tata Chemicals Ltd - India
- Mercuria Energy - Indonesia
- Riau Bara Harum - Indonesia
- Directorate Of Revenue Intelligence - India
- Agrawal Coal Company - India
- Wood Mackenzie - Singapore
- Miang Besar Coal Terminal - Indonesia
- Bhatia International Limited - India
- Kapuas Tunggal Persada - Indonesia
- Aditya Birla Group - India
- Rashtriya Ispat Nigam Limited - India
- Meralco Power Generation, Philippines
- Carbofer General Trading SA - India
- Heidelberg Cement - Germany
- Pendopo Energi Batubara - Indonesia
- CNBM International Corporation - China
- Anglo American - United Kingdom
- Indika Energy - Indonesia
- Indian Energy Exchange, India
- Bukit Baiduri Energy - Indonesia
- Kideco Jaya Agung - Indonesia
- Romanian Commodities Exchange
- Siam City Cement - Thailand
- Kaltim Prima Coal - Indonesia
- European Bulk Services B.V. - Netherlands
- IEA Clean Coal Centre - UK
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Cement Manufacturers Association - India
- Africa Commodities Group - South Africa
- Gujarat Electricity Regulatory Commission - India
- Standard Chartered Bank - UAE
- Aboitiz Power Corporation - Philippines
- Gujarat Sidhee Cement - India
- Bulk Trading Sa - Switzerland
- Karbindo Abesyapradhi - Indoneisa
- Thai Mozambique Logistica
- Global Business Power Corporation, Philippines
- Ambuja Cements Ltd - India
- Vedanta Resources Plc - India
- Maharashtra Electricity Regulatory Commission - India
- Coalindo Energy - Indonesia
- Borneo Indobara - Indonesia
- Kobexindo Tractors - Indoneisa
- Goldman Sachs - Singapore
- Ministry of Transport, Egypt
- Kepco SPC Power Corporation, Philippines
- Indian Oil Corporation Limited
- Jindal Steel & Power Ltd - India
- South Luzon Thermal Energy Corporation
- Bukit Asam (Persero) Tbk - Indonesia
- The State Trading Corporation of India Ltd
- Kartika Selabumi Mining - Indonesia
- SMC Global Power, Philippines
- Vizag Seaport Private Limited - India
- Indo Tambangraya Megah - Indonesia
- Samtan Co., Ltd - South Korea
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- ICICI Bank Limited - India
- Alfred C Toepfer International GmbH - Germany
- Coastal Gujarat Power Limited - India
- Renaissance Capital - South Africa
- Port Waratah Coal Services - Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bharathi Cement Corporation - India
- PetroVietnam Power Coal Import and Supply Company
- Krishnapatnam Port Company Ltd. - India
- Orica Mining Services - Indonesia
- Mercator Lines Limited - India
- Singapore Mercantile Exchange
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Banpu Public Company Limited - Thailand
- GVK Power & Infra Limited - India
- MS Steel International - UAE
- Lanco Infratech Ltd - India
- Savvy Resources Ltd - HongKong
- Karaikal Port Pvt Ltd - India
- Jaiprakash Power Ventures ltd
- Oldendorff Carriers - Singapore
- Medco Energi Mining Internasional
- Metalloyd Limited - United Kingdom
- Energy Link Ltd, New Zealand
- CIMB Investment Bank - Malaysia
- McConnell Dowell - Australia
- Asmin Koalindo Tuhup - Indonesia
- Sree Jayajothi Cements Limited - India
- OPG Power Generation Pvt Ltd - India
- Toyota Tsusho Corporation, Japan
- Orica Australia Pty. Ltd.
- SN Aboitiz Power Inc, Philippines
- Holcim Trading Pte Ltd - Singapore
- Therma Luzon, Inc, Philippines
- Bhushan Steel Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- LBH Netherlands Bv - Netherlands
- Energy Development Corp, Philippines
- ASAPP Information Group - India
- Australian Coal Association
- Mjunction Services Limited - India
- Deloitte Consulting - India
- Timah Investasi Mineral - Indoneisa
- Barasentosa Lestari - Indonesia
- Merrill Lynch Commodities Europe
- Kumho Petrochemical, South Korea
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