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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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Wednesday, 13 October 21
MARKET INSIGHT - INTERMODAL
Following up on our insight on May 2021, where we discussed about the Capesize market outlook for the second half of the year, we are pleased to se ...
Wednesday, 13 October 21
FBX INDEX: THE IMPOSSIBILITY OF SHORT-TERM FORECASTING - LARS JENSEN
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Wednesday, 13 October 21
CHINA FLOODS: COAL PRICE HITS FRESH HIGH AS MINES SHUT - BBC
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Tuesday, 12 October 21
BUMA SIGNS CONDITIONAL AGREEMENT FOR AUSTRALIAN ASSET ACQUISITION
PT Tbk. announced that its subsidiary, PT Bukit Makmur Mandiri Utama, through its newly incorporated Australian subsidiary, BUMA International Pty ...
Tuesday, 12 October 21
INDONESIA'S COAL-BASED POWER PLANTS ARE SUBJECT TO CARBON TAX NEXT YEAR, ELECTRICITY COSTS COULD RISE! - CNBC
The Indonesian government is planning plans to implement a carbon tax of IDR 30 per kilogram (kg) of carbon dioxide equivalent (CO2e) or equivalent ...
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- Gujarat Sidhee Cement - India
- Sinarmas Energy and Mining - Indonesia
- Sree Jayajothi Cements Limited - India
- SN Aboitiz Power Inc, Philippines
- Jindal Steel & Power Ltd - India
- Baramulti Group, Indonesia
- Australian Commodity Traders Exchange
- AsiaOL BioFuels Corp., Philippines
- Standard Chartered Bank - UAE
- Tamil Nadu electricity Board
- Kartika Selabumi Mining - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Oldendorff Carriers - Singapore
- Maheswari Brothers Coal Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Ind-Barath Power Infra Limited - India
- Semirara Mining and Power Corporation, Philippines
- Intertek Mineral Services - Indonesia
- Parry Sugars Refinery, India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Power Finance Corporation Ltd., India
- Madhucon Powers Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Meenaskhi Energy Private Limited - India
- Petron Corporation, Philippines
- Siam City Cement PLC, Thailand
- ASAPP Information Group - India
- Savvy Resources Ltd - HongKong
- Mercuria Energy - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Jorong Barutama Greston.PT - Indonesia
- Wilmar Investment Holdings
- Coalindo Energy - Indonesia
- VISA Power Limited - India
- Chamber of Mines of South Africa
- Independent Power Producers Association of India
- IEA Clean Coal Centre - UK
- Economic Council, Georgia
- Formosa Plastics Group - Taiwan
- Sical Logistics Limited - India
- Videocon Industries ltd - India
- Antam Resourcindo - Indonesia
- Kobexindo Tractors - Indoneisa
- Cement Manufacturers Association - India
- Semirara Mining Corp, Philippines
- McConnell Dowell - Australia
- Ambuja Cements Ltd - India
- Binh Thuan Hamico - Vietnam
- MS Steel International - UAE
- Sindya Power Generating Company Private Ltd
- Pendopo Energi Batubara - Indonesia
- The Treasury - Australian Government
- GVK Power & Infra Limited - India
- Billiton Holdings Pty Ltd - Australia
- SMC Global Power, Philippines
- Jaiprakash Power Ventures ltd
- Kideco Jaya Agung - Indonesia
- Romanian Commodities Exchange
- Medco Energi Mining Internasional
- Vizag Seaport Private Limited - India
- The State Trading Corporation of India Ltd
- Dalmia Cement Bharat India
- Bahari Cakrawala Sebuku - Indonesia
- Banpu Public Company Limited - Thailand
- The University of Queensland
- Bukit Makmur.PT - Indonesia
- Attock Cement Pakistan Limited
- Agrawal Coal Company - India
- Australian Coal Association
- Eastern Energy - Thailand
- Manunggal Multi Energi - Indonesia
- Metalloyd Limited - United Kingdom
- Trasteel International SA, Italy
- Ministry of Mines - Canada
- Minerals Council of Australia
- Electricity Generating Authority of Thailand
- Indogreen Group - Indonesia
- SMG Consultants - Indonesia
- Sarangani Energy Corporation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Latin American Coal - Colombia
- Altura Mining Limited, Indonesia
- Merrill Lynch Commodities Europe
- Edison Trading Spa - Italy
- Larsen & Toubro Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Sakthi Sugars Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- International Coal Ventures Pvt Ltd - India
- Borneo Indobara - Indonesia
- Renaissance Capital - South Africa
- Kepco SPC Power Corporation, Philippines
- Globalindo Alam Lestari - Indonesia
- Orica Australia Pty. Ltd.
- Krishnapatnam Port Company Ltd. - India
- PNOC Exploration Corporation - Philippines
- Energy Link Ltd, New Zealand
- Central Electricity Authority - India
- European Bulk Services B.V. - Netherlands
- Africa Commodities Group - South Africa
- Karaikal Port Pvt Ltd - India
- Parliament of New Zealand
- Directorate General of MIneral and Coal - Indonesia
- San Jose City I Power Corp, Philippines
- South Luzon Thermal Energy Corporation
- Neyveli Lignite Corporation Ltd, - India
- Salva Resources Pvt Ltd - India
- Price Waterhouse Coopers - Russia
- Central Java Power - Indonesia
- Deloitte Consulting - India
- Miang Besar Coal Terminal - Indonesia
- Toyota Tsusho Corporation, Japan
- Thai Mozambique Logistica
- Rio Tinto Coal - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bukit Asam (Persero) Tbk - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Malabar Cements Ltd - India
- Straits Asia Resources Limited - Singapore
- IHS Mccloskey Coal Group - USA
- Posco Energy - South Korea
- Iligan Light & Power Inc, Philippines
- Coastal Gujarat Power Limited - India
- CIMB Investment Bank - Malaysia
- Makarim & Taira - Indonesia
- Port Waratah Coal Services - Australia
- Barasentosa Lestari - Indonesia
- Planning Commission, India
- GMR Energy Limited - India
- PowerSource Philippines DevCo
- TNB Fuel Sdn Bhd - Malaysia
- Kalimantan Lumbung Energi - Indonesia
- Wood Mackenzie - Singapore
- Bharathi Cement Corporation - India
- Vedanta Resources Plc - India
- Anglo American - United Kingdom
- Global Green Power PLC Corporation, Philippines
- Xindia Steels Limited - India
- Indo Tambangraya Megah - Indonesia
- Uttam Galva Steels Limited - India
- Ministry of Transport, Egypt
- Chettinad Cement Corporation Ltd - India
- Aditya Birla Group - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Grasim Industreis Ltd - India
- Indika Energy - Indonesia
- Siam City Cement - Thailand
- Interocean Group of Companies - India
- Lanco Infratech Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Kumho Petrochemical, South Korea
- Cigading International Bulk Terminal - Indonesia
- Bhushan Steel Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- PTC India Limited - India
- Thiess Contractors Indonesia
- Mjunction Services Limited - India
- Ministry of Finance - Indonesia
- White Energy Company Limited
- Eastern Coal Council - USA
- Rashtriya Ispat Nigam Limited - India
- Star Paper Mills Limited - India
- Singapore Mercantile Exchange
- Riau Bara Harum - Indonesia
- Timah Investasi Mineral - Indoneisa
- Gujarat Electricity Regulatory Commission - India
- Goldman Sachs - Singapore
- Marubeni Corporation - India
- Energy Development Corp, Philippines
- London Commodity Brokers - England
- Bhatia International Limited - India
- Aboitiz Power Corporation - Philippines
- Ceylon Electricity Board - Sri Lanka
- Mercator Lines Limited - India
- GAC Shipping (India) Pvt Ltd
- Orica Mining Services - Indonesia
- Global Coal Blending Company Limited - Australia
- Indian Oil Corporation Limited
- Asmin Koalindo Tuhup - Indonesia
- CNBM International Corporation - China
- India Bulls Power Limited - India
- ICICI Bank Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sojitz Corporation - Japan
- Bangladesh Power Developement Board
- Kapuas Tunggal Persada - Indonesia
- Mintek Dendrill Indonesia
- Commonwealth Bank - Australia
- Indonesian Coal Mining Association
- TeaM Sual Corporation - Philippines
- Meralco Power Generation, Philippines
- Bukit Baiduri Energy - Indonesia
- Tata Chemicals Ltd - India
- Global Business Power Corporation, Philippines
- Essar Steel Hazira Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Heidelberg Cement - Germany
- PetroVietnam Power Coal Import and Supply Company
- Bulk Trading Sa - Switzerland
- Indian Energy Exchange, India
- OPG Power Generation Pvt Ltd - India
- Kaltim Prima Coal - Indonesia
- LBH Netherlands Bv - Netherlands
- Carbofer General Trading SA - India
- Bayan Resources Tbk. - Indonesia
- Georgia Ports Authority, United States
- Samtan Co., Ltd - South Korea
- New Zealand Coal & Carbon
- Electricity Authority, New Zealand
- Coal and Oil Company - UAE
- Therma Luzon, Inc, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Simpson Spence & Young - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Directorate Of Revenue Intelligence - India
- Bhoruka Overseas - Indonesia
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