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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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Friday, 06 September 24
REBOUND IN OIL DEMAND COULD LIFT MARKET IN LATTER HALF OF 2024 - BIMCO
Supply/demand
Based on a strong second half demand, the supply/balance is forecast to strengthen in 2024 but weaken slightly in 2025 as n ...
Friday, 06 September 24
GLOBAL SEABORNE LNG TRADE HAS CONTINUED TO INCREASE LAST YEAR - BANCHERO COSTA
Global seaborne LNG trade has continued to increase last year, helped also by the events in Ukraine which forced Europe to diversify away from Russ ...
Wednesday, 28 August 24
SEABORNE COAL IMPORTS INTO INDIA INCREASED BY +9.9% Y-O-Y TO 146.6 MLN T - BANCHERO COSTA
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Tuesday, 06 August 24
EXERCISE CAUTION WITH AMMONIA SWITCH - BALTIC EXCHANGE
A new study from the Massachusetts Institute of Technology (MIT) has thrown a spanner into the plan to transition ships from diesel fuel to ammonia ...
Friday, 02 August 24
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The recent surge in natural gas and coal prices has been so swift that the main benchmarks were roughly three times higher in 2022Q2 compared to a ...
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- Orica Australia Pty. Ltd.
- Indika Energy - Indonesia
- Intertek Mineral Services - Indonesia
- Savvy Resources Ltd - HongKong
- Georgia Ports Authority, United States
- Heidelberg Cement - Germany
- Australian Coal Association
- Uttam Galva Steels Limited - India
- Tata Chemicals Ltd - India
- Singapore Mercantile Exchange
- Bukit Makmur.PT - Indonesia
- Wood Mackenzie - Singapore
- Karaikal Port Pvt Ltd - India
- Borneo Indobara - Indonesia
- Coastal Gujarat Power Limited - India
- Mercuria Energy - Indonesia
- Electricity Authority, New Zealand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Mintek Dendrill Indonesia
- Krishnapatnam Port Company Ltd. - India
- Bhoruka Overseas - Indonesia
- CIMB Investment Bank - Malaysia
- Gujarat Sidhee Cement - India
- Makarim & Taira - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Bharathi Cement Corporation - India
- Madhucon Powers Ltd - India
- Coal and Oil Company - UAE
- Indo Tambangraya Megah - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Semirara Mining and Power Corporation, Philippines
- Trasteel International SA, Italy
- Kideco Jaya Agung - Indonesia
- Parry Sugars Refinery, India
- The University of Queensland
- Binh Thuan Hamico - Vietnam
- Planning Commission, India
- Simpson Spence & Young - Indonesia
- Barasentosa Lestari - Indonesia
- SMG Consultants - Indonesia
- Kobexindo Tractors - Indoneisa
- Gujarat Mineral Development Corp Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Minerals Council of Australia
- The Treasury - Australian Government
- Maheswari Brothers Coal Limited - India
- Semirara Mining Corp, Philippines
- Siam City Cement - Thailand
- Bulk Trading Sa - Switzerland
- Kepco SPC Power Corporation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Indian Energy Exchange, India
- Sindya Power Generating Company Private Ltd
- SN Aboitiz Power Inc, Philippines
- Energy Link Ltd, New Zealand
- Formosa Plastics Group - Taiwan
- LBH Netherlands Bv - Netherlands
- Standard Chartered Bank - UAE
- Lanco Infratech Ltd - India
- The State Trading Corporation of India Ltd
- Chamber of Mines of South Africa
- Timah Investasi Mineral - Indoneisa
- Star Paper Mills Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Grasim Industreis Ltd - India
- GAC Shipping (India) Pvt Ltd
- Essar Steel Hazira Ltd - India
- Interocean Group of Companies - India
- Carbofer General Trading SA - India
- Deloitte Consulting - India
- Ministry of Finance - Indonesia
- Anglo American - United Kingdom
- Ministry of Mines - Canada
- Baramulti Group, Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Videocon Industries ltd - India
- Pendopo Energi Batubara - Indonesia
- Meralco Power Generation, Philippines
- Marubeni Corporation - India
- Global Green Power PLC Corporation, Philippines
- MS Steel International - UAE
- Sakthi Sugars Limited - India
- Indian Oil Corporation Limited
- Sojitz Corporation - Japan
- PetroVietnam Power Coal Import and Supply Company
- Global Coal Blending Company Limited - Australia
- Karbindo Abesyapradhi - Indoneisa
- Cement Manufacturers Association - India
- PNOC Exploration Corporation - Philippines
- Merrill Lynch Commodities Europe
- Neyveli Lignite Corporation Ltd, - India
- Globalindo Alam Lestari - Indonesia
- International Coal Ventures Pvt Ltd - India
- Ind-Barath Power Infra Limited - India
- Eastern Energy - Thailand
- Metalloyd Limited - United Kingdom
- Ministry of Transport, Egypt
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Eastern Coal Council - USA
- Aditya Birla Group - India
- Orica Mining Services - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Agrawal Coal Company - India
- India Bulls Power Limited - India
- Ambuja Cements Ltd - India
- CNBM International Corporation - China
- Bayan Resources Tbk. - Indonesia
- Price Waterhouse Coopers - Russia
- ASAPP Information Group - India
- Directorate General of MIneral and Coal - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Indogreen Group - Indonesia
- Riau Bara Harum - Indonesia
- Siam City Cement PLC, Thailand
- European Bulk Services B.V. - Netherlands
- Iligan Light & Power Inc, Philippines
- AsiaOL BioFuels Corp., Philippines
- GMR Energy Limited - India
- Central Java Power - Indonesia
- IEA Clean Coal Centre - UK
- Samtan Co., Ltd - South Korea
- Rashtriya Ispat Nigam Limited - India
- IHS Mccloskey Coal Group - USA
- Dalmia Cement Bharat India
- Latin American Coal - Colombia
- Sical Logistics Limited - India
- Straits Asia Resources Limited - Singapore
- San Jose City I Power Corp, Philippines
- Sree Jayajothi Cements Limited - India
- Jaiprakash Power Ventures ltd
- Cigading International Bulk Terminal - Indonesia
- Economic Council, Georgia
- Bahari Cakrawala Sebuku - Indonesia
- Tamil Nadu electricity Board
- PowerSource Philippines DevCo
- Oldendorff Carriers - Singapore
- Ceylon Electricity Board - Sri Lanka
- Holcim Trading Pte Ltd - Singapore
- New Zealand Coal & Carbon
- White Energy Company Limited
- Chettinad Cement Corporation Ltd - India
- Kumho Petrochemical, South Korea
- Parliament of New Zealand
- Kapuas Tunggal Persada - Indonesia
- Salva Resources Pvt Ltd - India
- Mercator Lines Limited - India
- Kartika Selabumi Mining - Indonesia
- London Commodity Brokers - England
- Romanian Commodities Exchange
- Xindia Steels Limited - India
- ICICI Bank Limited - India
- PTC India Limited - India
- Mjunction Services Limited - India
- Altura Mining Limited, Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Vizag Seaport Private Limited - India
- Meenaskhi Energy Private Limited - India
- Attock Cement Pakistan Limited
- Posco Energy - South Korea
- Indonesian Coal Mining Association
- Kaltim Prima Coal - Indonesia
- Medco Energi Mining Internasional
- GVK Power & Infra Limited - India
- Goldman Sachs - Singapore
- McConnell Dowell - Australia
- Electricity Generating Authority of Thailand
- Australian Commodity Traders Exchange
- Maharashtra Electricity Regulatory Commission - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Miang Besar Coal Terminal - Indonesia
- Energy Development Corp, Philippines
- Banpu Public Company Limited - Thailand
- Power Finance Corporation Ltd., India
- Coalindo Energy - Indonesia
- Central Electricity Authority - India
- Vijayanagar Sugar Pvt Ltd - India
- Larsen & Toubro Limited - India
- Thiess Contractors Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Independent Power Producers Association of India
- Toyota Tsusho Corporation, Japan
- Petrochimia International Co. Ltd.- Taiwan
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Aboitiz Power Corporation - Philippines
- Bhushan Steel Limited - India
- TeaM Sual Corporation - Philippines
- Edison Trading Spa - Italy
- Antam Resourcindo - Indonesia
- Directorate Of Revenue Intelligence - India
- Vedanta Resources Plc - India
- Leighton Contractors Pty Ltd - Australia
- Bhatia International Limited - India
- Thai Mozambique Logistica
- Renaissance Capital - South Africa
- SMC Global Power, Philippines
- Bangladesh Power Developement Board
- Rio Tinto Coal - Australia
- Therma Luzon, Inc, Philippines
- Manunggal Multi Energi - Indonesia
- VISA Power Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Port Waratah Coal Services - Australia
- Petron Corporation, Philippines
- Sarangani Energy Corporation, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Commonwealth Bank - Australia
- Bukit Baiduri Energy - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Jindal Steel & Power Ltd - India
- Wilmar Investment Holdings
- South Luzon Thermal Energy Corporation
- Africa Commodities Group - South Africa
- OPG Power Generation Pvt Ltd - India
- Malabar Cements Ltd - India
- Global Business Power Corporation, Philippines
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