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