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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, 30 June 21
BUMA SIGNED MINING AGREEMENT WITH ADARO
PT Delta Dunia Makmur Tbk. announced that its subsidiary, PT Bukit Makmur Mandiri Utama ("BUMA"), has entered into an agreement for the p ...
Wednesday, 30 June 21
MARKET INSIGHT - INTERMODAL
The strong freight performance since the beginning of year has continued for the dry bulk market with earnings being at the highest level in over a ...
Monday, 28 June 21
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The Ministry of Energy and Mineral Resources said that the revocation of mining business permits was in accordance with President Jokowi's inst ...
Sunday, 27 June 21
INDONESIA'S STATE-OWNED UTILITY PLN'S 2060 NET ZERO AMBITION NOT WITHOUT FLAWS AND GAPS - IEEFA
Indonesia on the right emissions reduction pathway but same old coal stories persist
Recent announcements by Indonesia’s state-owned uti ...
Saturday, 26 June 21
COAL PRICES HIT DECADE HIGH DESPITE EFFORTS TO WEAN THE WORLD OFF CARBON - WSJ
Rebounding electricity usage and scanty rainfall in China have added fuel to the rally
Coal prices have climbed to their highest lev ...
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- Semirara Mining Corp, Philippines
- Power Finance Corporation Ltd., India
- San Jose City I Power Corp, Philippines
- Central Electricity Authority - India
- Straits Asia Resources Limited - Singapore
- Simpson Spence & Young - Indonesia
- SMG Consultants - Indonesia
- Baramulti Group, Indonesia
- Bulk Trading Sa - Switzerland
- Trasteel International SA, Italy
- Global Green Power PLC Corporation, Philippines
- PNOC Exploration Corporation - Philippines
- Tamil Nadu electricity Board
- Eastern Energy - Thailand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sojitz Corporation - Japan
- Vedanta Resources Plc - India
- Pendopo Energi Batubara - Indonesia
- Indonesian Coal Mining Association
- Billiton Holdings Pty Ltd - Australia
- Coal and Oil Company - UAE
- Indika Energy - Indonesia
- Energy Development Corp, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- LBH Netherlands Bv - Netherlands
- Gujarat Electricity Regulatory Commission - India
- Deloitte Consulting - India
- Sree Jayajothi Cements Limited - India
- Agrawal Coal Company - India
- Ministry of Transport, Egypt
- Bhushan Steel Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Electricity Authority, New Zealand
- Gujarat Sidhee Cement - India
- Indo Tambangraya Megah - Indonesia
- Meralco Power Generation, Philippines
- Formosa Plastics Group - Taiwan
- Star Paper Mills Limited - India
- New Zealand Coal & Carbon
- Madhucon Powers Ltd - India
- Maheswari Brothers Coal Limited - India
- Planning Commission, India
- Manunggal Multi Energi - Indonesia
- Uttam Galva Steels Limited - India
- Semirara Mining and Power Corporation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Siam City Cement PLC, Thailand
- Metalloyd Limited - United Kingdom
- Jindal Steel & Power Ltd - India
- Kobexindo Tractors - Indoneisa
- Coastal Gujarat Power Limited - India
- Tata Chemicals Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Sakthi Sugars Limited - India
- Timah Investasi Mineral - Indoneisa
- Kartika Selabumi Mining - Indonesia
- Borneo Indobara - Indonesia
- Standard Chartered Bank - UAE
- Pipit Mutiara Jaya. PT, Indonesia
- Directorate Of Revenue Intelligence - India
- Maharashtra Electricity Regulatory Commission - India
- Commonwealth Bank - Australia
- Bangladesh Power Developement Board
- Eastern Coal Council - USA
- Australian Coal Association
- Essar Steel Hazira Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- IHS Mccloskey Coal Group - USA
- Kalimantan Lumbung Energi - Indonesia
- India Bulls Power Limited - India
- Carbofer General Trading SA - India
- Global Business Power Corporation, Philippines
- Oldendorff Carriers - Singapore
- Petrochimia International Co. Ltd.- Taiwan
- AsiaOL BioFuels Corp., Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Wood Mackenzie - Singapore
- Bahari Cakrawala Sebuku - Indonesia
- Dalmia Cement Bharat India
- Rio Tinto Coal - Australia
- Mercator Lines Limited - India
- International Coal Ventures Pvt Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Grasim Industreis Ltd - India
- Georgia Ports Authority, United States
- Banpu Public Company Limited - Thailand
- Kepco SPC Power Corporation, Philippines
- Lanco Infratech Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Sical Logistics Limited - India
- Bukit Makmur.PT - Indonesia
- Antam Resourcindo - Indonesia
- Ministry of Finance - Indonesia
- Edison Trading Spa - Italy
- Globalindo Alam Lestari - Indonesia
- Central Java Power - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Bharathi Cement Corporation - India
- Larsen & Toubro Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- TNB Fuel Sdn Bhd - Malaysia
- Kideco Jaya Agung - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Cement Manufacturers Association - India
- Sinarmas Energy and Mining - Indonesia
- IEA Clean Coal Centre - UK
- Romanian Commodities Exchange
- Altura Mining Limited, Indonesia
- Miang Besar Coal Terminal - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Price Waterhouse Coopers - Russia
- OPG Power Generation Pvt Ltd - India
- Mjunction Services Limited - India
- Sarangani Energy Corporation, Philippines
- The State Trading Corporation of India Ltd
- Wilmar Investment Holdings
- Karaikal Port Pvt Ltd - India
- Interocean Group of Companies - India
- TeaM Sual Corporation - Philippines
- Xindia Steels Limited - India
- SMC Global Power, Philippines
- Krishnapatnam Port Company Ltd. - India
- Orica Australia Pty. Ltd.
- South Luzon Thermal Energy Corporation
- CIMB Investment Bank - Malaysia
- Indian Oil Corporation Limited
- Savvy Resources Ltd - HongKong
- Meenaskhi Energy Private Limited - India
- Minerals Council of Australia
- Siam City Cement - Thailand
- Medco Energi Mining Internasional
- Africa Commodities Group - South Africa
- Orica Mining Services - Indonesia
- Binh Thuan Hamico - Vietnam
- Renaissance Capital - South Africa
- Alfred C Toepfer International GmbH - Germany
- VISA Power Limited - India
- Riau Bara Harum - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Ind-Barath Power Infra Limited - India
- White Energy Company Limited
- Aditya Birla Group - India
- Merrill Lynch Commodities Europe
- Marubeni Corporation - India
- Rashtriya Ispat Nigam Limited - India
- Independent Power Producers Association of India
- Therma Luzon, Inc, Philippines
- Coalindo Energy - Indonesia
- Heidelberg Cement - Germany
- Latin American Coal - Colombia
- Cigading International Bulk Terminal - Indonesia
- Posco Energy - South Korea
- PTC India Limited - India
- MS Steel International - UAE
- ICICI Bank Limited - India
- PowerSource Philippines DevCo
- ASAPP Information Group - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Sindya Power Generating Company Private Ltd
- CNBM International Corporation - China
- Videocon Industries ltd - India
- Indian Energy Exchange, India
- Parry Sugars Refinery, India
- Barasentosa Lestari - Indonesia
- Goldman Sachs - Singapore
- Petron Corporation, Philippines
- Australian Commodity Traders Exchange
- Salva Resources Pvt Ltd - India
- Ambuja Cements Ltd - India
- European Bulk Services B.V. - Netherlands
- Indogreen Group - Indonesia
- Singapore Mercantile Exchange
- Aboitiz Power Corporation - Philippines
- Bayan Resources Tbk. - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Holcim Trading Pte Ltd - Singapore
- Thai Mozambique Logistica
- Samtan Co., Ltd - South Korea
- GVK Power & Infra Limited - India
- Bhatia International Limited - India
- Anglo American - United Kingdom
- Jorong Barutama Greston.PT - Indonesia
- McConnell Dowell - Australia
- Asmin Koalindo Tuhup - Indonesia
- Kaltim Prima Coal - Indonesia
- Toyota Tsusho Corporation, Japan
- Attock Cement Pakistan Limited
- Intertek Mineral Services - Indonesia
- The Treasury - Australian Government
- Malabar Cements Ltd - India
- Makarim & Taira - Indonesia
- Ministry of Mines - Canada
- Vizag Seaport Private Limited - India
- Electricity Generating Authority of Thailand
- Kumho Petrochemical, South Korea
- Bukit Asam (Persero) Tbk - Indonesia
- Port Waratah Coal Services - Australia
- Bhoruka Overseas - Indonesia
- Global Coal Blending Company Limited - Australia
- Iligan Light & Power Inc, Philippines
- Mintek Dendrill Indonesia
- Mercuria Energy - Indonesia
- GAC Shipping (India) Pvt Ltd
- GMR Energy Limited - India
- Jaiprakash Power Ventures ltd
- London Commodity Brokers - England
- Bukit Baiduri Energy - Indonesia
- Thiess Contractors Indonesia
- Chettinad Cement Corporation Ltd - India
- Chamber of Mines of South Africa
- The University of Queensland
- SN Aboitiz Power Inc, Philippines
- Economic Council, Georgia
- Energy Link Ltd, New Zealand
- Parliament of New Zealand
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