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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 March 21
MARCH 2021 INDONESIA COAL PRICE REFERENCE SETTLES LOWER
COALspot.com: The Indonesia coal price reference for March 2021 settles at US$ 84.49 per ton FOB vessel.
The Indonesia coal pr ...
Saturday, 06 March 21
AUSTRALIAN COAL: SOME WEAKNESS COULD MATERIALIZE AFTER THE WINTER - ING
Newcastle coal prices remain well supported for now, however as we move out of the winter months we would expect prices to come under pressure. Mea ...
Saturday, 06 March 21
ASIA SEABORNE COAL PRICES START TO RETREAT, CHINA-AUSTRALIA DISPUTE LINGERS - REUTERS
There are signs that the price and demand surge for coal during the recent colder-than-expected winter across North Asia is starting to ease, even ...
Thursday, 04 March 21
HEAD OF JBIC SAYS THE JAPANESE BANK WILL NOT FUND NEW COAL PLANT DEVELOPMENT - NHK NEWS
The governor of the Japan Bank for International Cooperation has said that the government-owned financial institution will stop funding new coal-fi ...
Wednesday, 03 March 21
MARKET INSIGHT - INTERMODAL
Following the recent rally to multi year highs of metal-based commodities, amid an unprecedented global economic stimulus, discussions of an emergi ...
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- Barasentosa Lestari - Indonesia
- Coal and Oil Company - UAE
- Directorate General of MIneral and Coal - Indonesia
- Indonesian Coal Mining Association
- Pendopo Energi Batubara - Indonesia
- Deloitte Consulting - India
- Energy Link Ltd, New Zealand
- SMG Consultants - Indonesia
- Mintek Dendrill Indonesia
- Chettinad Cement Corporation Ltd - India
- SN Aboitiz Power Inc, Philippines
- Jindal Steel & Power Ltd - India
- Orica Mining Services - Indonesia
- Renaissance Capital - South Africa
- MS Steel International - UAE
- Simpson Spence & Young - Indonesia
- Riau Bara Harum - Indonesia
- India Bulls Power Limited - India
- New Zealand Coal & Carbon
- Sree Jayajothi Cements Limited - India
- Samtan Co., Ltd - South Korea
- Madhucon Powers Ltd - India
- Kaltim Prima Coal - Indonesia
- Singapore Mercantile Exchange
- GMR Energy Limited - India
- Orica Australia Pty. Ltd.
- LBH Netherlands Bv - Netherlands
- Minerals Council of Australia
- Power Finance Corporation Ltd., India
- The Treasury - Australian Government
- Semirara Mining and Power Corporation, Philippines
- Indian Energy Exchange, India
- Rashtriya Ispat Nigam Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Rio Tinto Coal - Australia
- Kohat Cement Company Ltd. - Pakistan
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Maharashtra Electricity Regulatory Commission - India
- Indo Tambangraya Megah - Indonesia
- Africa Commodities Group - South Africa
- Videocon Industries ltd - India
- Eastern Coal Council - USA
- Malabar Cements Ltd - India
- SMC Global Power, Philippines
- Grasim Industreis Ltd - India
- Bayan Resources Tbk. - Indonesia
- Siam City Cement - Thailand
- GN Power Mariveles Coal Plant, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- McConnell Dowell - Australia
- Kartika Selabumi Mining - Indonesia
- Altura Mining Limited, Indonesia
- Larsen & Toubro Limited - India
- VISA Power Limited - India
- Karaikal Port Pvt Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Romanian Commodities Exchange
- Jaiprakash Power Ventures ltd
- TeaM Sual Corporation - Philippines
- Asmin Koalindo Tuhup - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Baramulti Group, Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Antam Resourcindo - Indonesia
- Ministry of Mines - Canada
- Gujarat Electricity Regulatory Commission - India
- Port Waratah Coal Services - Australia
- Ministry of Finance - Indonesia
- Bulk Trading Sa - Switzerland
- Alfred C Toepfer International GmbH - Germany
- Holcim Trading Pte Ltd - Singapore
- Meenaskhi Energy Private Limited - India
- International Coal Ventures Pvt Ltd - India
- Coalindo Energy - Indonesia
- Wood Mackenzie - Singapore
- Kobexindo Tractors - Indoneisa
- Bhatia International Limited - India
- Lanco Infratech Ltd - India
- Posco Energy - South Korea
- Mjunction Services Limited - India
- Straits Asia Resources Limited - Singapore
- Latin American Coal - Colombia
- Salva Resources Pvt Ltd - India
- Aboitiz Power Corporation - Philippines
- Tamil Nadu electricity Board
- IEA Clean Coal Centre - UK
- Therma Luzon, Inc, Philippines
- Australian Coal Association
- Bhushan Steel Limited - India
- IHS Mccloskey Coal Group - USA
- Heidelberg Cement - Germany
- Formosa Plastics Group - Taiwan
- Krishnapatnam Port Company Ltd. - India
- Sarangani Energy Corporation, Philippines
- Goldman Sachs - Singapore
- Miang Besar Coal Terminal - Indonesia
- Dalmia Cement Bharat India
- Eastern Energy - Thailand
- Neyveli Lignite Corporation Ltd, - India
- Kepco SPC Power Corporation, Philippines
- Marubeni Corporation - India
- Ambuja Cements Ltd - India
- Planning Commission, India
- London Commodity Brokers - England
- Australian Commodity Traders Exchange
- AsiaOL BioFuels Corp., Philippines
- Xindia Steels Limited - India
- Petron Corporation, Philippines
- Maheswari Brothers Coal Limited - India
- Metalloyd Limited - United Kingdom
- Thai Mozambique Logistica
- Commonwealth Bank - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Meralco Power Generation, Philippines
- Directorate Of Revenue Intelligence - India
- Bangladesh Power Developement Board
- Global Green Power PLC Corporation, Philippines
- Iligan Light & Power Inc, Philippines
- Semirara Mining Corp, Philippines
- Central Electricity Authority - India
- ICICI Bank Limited - India
- Sakthi Sugars Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Interocean Group of Companies - India
- Indogreen Group - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Karbindo Abesyapradhi - Indoneisa
- Bukit Baiduri Energy - Indonesia
- South Luzon Thermal Energy Corporation
- Coastal Gujarat Power Limited - India
- Savvy Resources Ltd - HongKong
- Essar Steel Hazira Ltd - India
- PTC India Limited - India
- European Bulk Services B.V. - Netherlands
- The University of Queensland
- Wilmar Investment Holdings
- Ind-Barath Power Infra Limited - India
- Sinarmas Energy and Mining - Indonesia
- Indika Energy - Indonesia
- Uttam Galva Steels Limited - India
- Chamber of Mines of South Africa
- San Jose City I Power Corp, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Globalindo Alam Lestari - Indonesia
- Ministry of Transport, Egypt
- Bhoruka Overseas - Indonesia
- Bharathi Cement Corporation - India
- Parliament of New Zealand
- Gujarat Mineral Development Corp Ltd - India
- Central Java Power - Indonesia
- The State Trading Corporation of India Ltd
- Mercator Lines Limited - India
- Sical Logistics Limited - India
- Tata Chemicals Ltd - India
- Binh Thuan Hamico - Vietnam
- Leighton Contractors Pty Ltd - Australia
- Jorong Barutama Greston.PT - Indonesia
- Standard Chartered Bank - UAE
- Vizag Seaport Private Limited - India
- Energy Development Corp, Philippines
- Cement Manufacturers Association - India
- Siam City Cement PLC, Thailand
- GAC Shipping (India) Pvt Ltd
- Agrawal Coal Company - India
- Carbofer General Trading SA - India
- Trasteel International SA, Italy
- PowerSource Philippines DevCo
- Thiess Contractors Indonesia
- OPG Power Generation Pvt Ltd - India
- Georgia Ports Authority, United States
- Offshore Bulk Terminal Pte Ltd, Singapore
- Indian Oil Corporation Limited
- Manunggal Multi Energi - Indonesia
- Economic Council, Georgia
- Kalimantan Lumbung Energi - Indonesia
- Mercuria Energy - Indonesia
- Vedanta Resources Plc - India
- Intertek Mineral Services - Indonesia
- Edison Trading Spa - Italy
- Parry Sugars Refinery, India
- Kumho Petrochemical, South Korea
- White Energy Company Limited
- Attock Cement Pakistan Limited
- Electricity Generating Authority of Thailand
- Bank of Tokyo Mitsubishi UFJ Ltd
- Independent Power Producers Association of India
- Timah Investasi Mineral - Indoneisa
- ASAPP Information Group - India
- Global Coal Blending Company Limited - Australia
- Borneo Indobara - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Toyota Tsusho Corporation, Japan
- PNOC Exploration Corporation - Philippines
- Sindya Power Generating Company Private Ltd
- CIMB Investment Bank - Malaysia
- Kapuas Tunggal Persada - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- CNBM International Corporation - China
- Price Waterhouse Coopers - Russia
- Global Business Power Corporation, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Banpu Public Company Limited - Thailand
- Anglo American - United Kingdom
- GVK Power & Infra Limited - India
- Makarim & Taira - Indonesia
- Star Paper Mills Limited - India
- Medco Energi Mining Internasional
- Kideco Jaya Agung - Indonesia
- Electricity Authority, New Zealand
- Sojitz Corporation - Japan
- Ceylon Electricity Board - Sri Lanka
- Bukit Makmur.PT - Indonesia
- Aditya Birla Group - India
- Gujarat Sidhee Cement - India
- Merrill Lynch Commodities Europe
- Cigading International Bulk Terminal - Indonesia
- Oldendorff Carriers - Singapore
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