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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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Monday, 08 January 24
KOSPO TO BUY 80000 MT OF INDONESIAN LOW CALORIFIC VALUE COAL FOR FEB 2024
Korea Southern Power Co., Ltd. (KOSPO), is inviting bids for the supply of Indonesian Low Calorific Value Coal from qualified suppliers for Korean ...
Monday, 08 January 24
SEABORNE TRADE REACHES 12.4BN TONNES - CLARKSONS
China will establish a back-up coal production system by 2027 to stabilise prices and secure coal supply, the state planner said on Wednesday, even ...
Monday, 08 January 24
CAPESIZES START THE NEW YEAR ON POSITIVE NOTE - BALTIC EXCHANGE
Capesize
This week the capsize market has been marked by a mix of activities and challenges. Despite a slow start following the Christmas and N ...
Friday, 05 January 24
MORGAN STANLEY SEES LOWER OIL PRICES IN 2024 ON OVERSUPPLY CONCERNS - REUTERS
Morgan Stanley sees Brent crude prices anchored near $80 per barrel in the first half in 2024 before declining towards the end of the year as it ex ...
Friday, 05 January 24
INDIA'S COAL OUTPUT RISES NEARLY 11 PC IN DEC TO 92.87 MT - PTI
India’s coal production increased by 10.75 per cent to 92.87 million tonne in December 2023 as compared to the year-ago period, an official s ...
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- Xindia Steels Limited - India
- Cigading International Bulk Terminal - Indonesia
- Chamber of Mines of South Africa
- Kobexindo Tractors - Indoneisa
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Simpson Spence & Young - Indonesia
- Economic Council, Georgia
- Salva Resources Pvt Ltd - India
- CIMB Investment Bank - Malaysia
- Petron Corporation, Philippines
- Videocon Industries ltd - India
- Energy Development Corp, Philippines
- Maheswari Brothers Coal Limited - India
- International Coal Ventures Pvt Ltd - India
- Eastern Coal Council - USA
- Straits Asia Resources Limited - Singapore
- Maharashtra Electricity Regulatory Commission - India
- Ministry of Transport, Egypt
- Bharathi Cement Corporation - India
- Orica Mining Services - Indonesia
- Oldendorff Carriers - Singapore
- Ministry of Finance - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Renaissance Capital - South Africa
- Global Business Power Corporation, Philippines
- Alfred C Toepfer International GmbH - Germany
- Marubeni Corporation - India
- Kalimantan Lumbung Energi - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Cement Manufacturers Association - India
- Coastal Gujarat Power Limited - India
- Australian Commodity Traders Exchange
- TeaM Sual Corporation - Philippines
- Aditya Birla Group - India
- Goldman Sachs - Singapore
- White Energy Company Limited
- Kaltim Prima Coal - Indonesia
- GMR Energy Limited - India
- Singapore Mercantile Exchange
- SMG Consultants - Indonesia
- Electricity Authority, New Zealand
- Bukit Makmur.PT - Indonesia
- South Luzon Thermal Energy Corporation
- Anglo American - United Kingdom
- Baramulti Group, Indonesia
- ICICI Bank Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Gujarat Sidhee Cement - India
- Pipit Mutiara Jaya. PT, Indonesia
- Bayan Resources Tbk. - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Romanian Commodities Exchange
- Siam City Cement PLC, Thailand
- Vedanta Resources Plc - India
- Thai Mozambique Logistica
- Thiess Contractors Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Larsen & Toubro Limited - India
- Heidelberg Cement - Germany
- Globalindo Alam Lestari - Indonesia
- PTC India Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- The University of Queensland
- Bank of Tokyo Mitsubishi UFJ Ltd
- TNB Fuel Sdn Bhd - Malaysia
- Deloitte Consulting - India
- Bukit Asam (Persero) Tbk - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Kepco SPC Power Corporation, Philippines
- Jaiprakash Power Ventures ltd
- Georgia Ports Authority, United States
- Rashtriya Ispat Nigam Limited - India
- Chettinad Cement Corporation Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Attock Cement Pakistan Limited
- Indian Oil Corporation Limited
- Merrill Lynch Commodities Europe
- Electricity Generating Authority of Thailand
- Jorong Barutama Greston.PT - Indonesia
- Siam City Cement - Thailand
- Standard Chartered Bank - UAE
- Energy Link Ltd, New Zealand
- Commonwealth Bank - Australia
- Interocean Group of Companies - India
- Ceylon Electricity Board - Sri Lanka
- Kartika Selabumi Mining - Indonesia
- Uttam Galva Steels Limited - India
- Timah Investasi Mineral - Indoneisa
- CNBM International Corporation - China
- Madhucon Powers Ltd - India
- Karaikal Port Pvt Ltd - India
- Medco Energi Mining Internasional
- Leighton Contractors Pty Ltd - Australia
- Ministry of Mines - Canada
- Ind-Barath Power Infra Limited - India
- Miang Besar Coal Terminal - Indonesia
- LBH Netherlands Bv - Netherlands
- Essar Steel Hazira Ltd - India
- Vizag Seaport Private Limited - India
- Sarangani Energy Corporation, Philippines
- India Bulls Power Limited - India
- AsiaOL BioFuels Corp., Philippines
- Toyota Tsusho Corporation, Japan
- European Bulk Services B.V. - Netherlands
- Independent Power Producers Association of India
- Global Coal Blending Company Limited - Australia
- Semirara Mining and Power Corporation, Philippines
- Indo Tambangraya Megah - Indonesia
- Port Waratah Coal Services - Australia
- Jindal Steel & Power Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Grasim Industreis Ltd - India
- Bhushan Steel Limited - India
- VISA Power Limited - India
- GAC Shipping (India) Pvt Ltd
- Bukit Baiduri Energy - Indonesia
- Barasentosa Lestari - Indonesia
- Semirara Mining Corp, Philippines
- PowerSource Philippines DevCo
- Bhoruka Overseas - Indonesia
- Orica Australia Pty. Ltd.
- PNOC Exploration Corporation - Philippines
- SN Aboitiz Power Inc, Philippines
- Trasteel International SA, Italy
- Wilmar Investment Holdings
- IEA Clean Coal Centre - UK
- Sree Jayajothi Cements Limited - India
- Parliament of New Zealand
- Billiton Holdings Pty Ltd - Australia
- Makarim & Taira - Indonesia
- Aboitiz Power Corporation - Philippines
- Rio Tinto Coal - Australia
- IHS Mccloskey Coal Group - USA
- Indian Energy Exchange, India
- Kapuas Tunggal Persada - Indonesia
- MS Steel International - UAE
- Altura Mining Limited, Indonesia
- Sical Logistics Limited - India
- Indika Energy - Indonesia
- Formosa Plastics Group - Taiwan
- Australian Coal Association
- Edison Trading Spa - Italy
- Planning Commission, India
- Gujarat Electricity Regulatory Commission - India
- Agrawal Coal Company - India
- Kideco Jaya Agung - Indonesia
- Parry Sugars Refinery, India
- Posco Energy - South Korea
- Global Green Power PLC Corporation, Philippines
- Dalmia Cement Bharat India
- Central Electricity Authority - India
- Directorate Of Revenue Intelligence - India
- Kumho Petrochemical, South Korea
- SMC Global Power, Philippines
- Pendopo Energi Batubara - Indonesia
- Sakthi Sugars Limited - India
- Ambuja Cements Ltd - India
- Bulk Trading Sa - Switzerland
- McConnell Dowell - Australia
- Mjunction Services Limited - India
- Indonesian Coal Mining Association
- Tata Chemicals Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Price Waterhouse Coopers - Russia
- Mercuria Energy - Indonesia
- Bhatia International Limited - India
- Malabar Cements Ltd - India
- Meenaskhi Energy Private Limited - India
- Power Finance Corporation Ltd., India
- Mercator Lines Limited - India
- Metalloyd Limited - United Kingdom
- Wood Mackenzie - Singapore
- Indogreen Group - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Banpu Public Company Limited - Thailand
- Coal and Oil Company - UAE
- Star Paper Mills Limited - India
- ASAPP Information Group - India
- Sinarmas Energy and Mining - Indonesia
- Africa Commodities Group - South Africa
- Savvy Resources Ltd - HongKong
- London Commodity Brokers - England
- The Treasury - Australian Government
- Meralco Power Generation, Philippines
- Intertek Mineral Services - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Antam Resourcindo - Indonesia
- Mintek Dendrill Indonesia
- Therma Luzon, Inc, Philippines
- Holcim Trading Pte Ltd - Singapore
- Tamil Nadu electricity Board
- New Zealand Coal & Carbon
- Sindya Power Generating Company Private Ltd
- Iligan Light & Power Inc, Philippines
- Directorate General of MIneral and Coal - Indonesia
- San Jose City I Power Corp, Philippines
- Latin American Coal - Colombia
- Bangladesh Power Developement Board
- Manunggal Multi Energi - Indonesia
- Central Java Power - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Borneo Indobara - Indonesia
- Carbofer General Trading SA - India
- Vijayanagar Sugar Pvt Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- The State Trading Corporation of India Ltd
- Minerals Council of Australia
- OPG Power Generation Pvt Ltd - India
- Eastern Energy - Thailand
- Samtan Co., Ltd - South Korea
- GVK Power & Infra Limited - India
- Coalindo Energy - Indonesia
- Lanco Infratech Ltd - India
- Binh Thuan Hamico - Vietnam
- Riau Bara Harum - Indonesia
- Sojitz Corporation - Japan
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