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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, 19 February 20
MINERS WELCOME INDONESIA'S NEW JOBS BILL THAT COULD SPUR COAL GROWTH - REUTERS
Miners have welcomed proposed changes to Indonesian mining rules under a new law aimed at boosting investment, though critics are concerned that th ...
Wednesday, 19 February 20
AS OCEAN TEMPERATURES RISE, SHIPOWNERS LOOK FOR WAYS TO COPE - WARTSILA
The world is heating up, and its oceans are no exception. According to the International Panel on Climate Change (IPCC), the oceans absorb the majo ...
Wednesday, 19 February 20
MARKET INSIGHT - INTERMODAL
The coronavirus outbreak is estimated to negatively affect global economy by at least EUR400bn this year, representing around the 0.4% of global GD ...
Tuesday, 18 February 20
WEEKLY MARKET ANALYSIS - ALLIED
Under such poorly performing market circumstances, many usually take the historical approach, in order to better understand and further analyze the ...
Tuesday, 18 February 20
ADARO SHIPPED 27 PERCENT OF ITS TOTAL COAL PRODUCTION IN 2019 TO INDIA AND CHINA
PT Adaro Energy Tbk (AE) produced 58.03 Mt of coal from PT Adaro Indonesia (AI), Balangan Coal Companies and Adaro Me ...
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- McConnell Dowell - Australia
- LBH Netherlands Bv - Netherlands
- Indonesian Coal Mining Association
- Larsen & Toubro Limited - India
- Rashtriya Ispat Nigam Limited - India
- Energy Link Ltd, New Zealand
- Lanco Infratech Ltd - India
- Sical Logistics Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Wood Mackenzie - Singapore
- VISA Power Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Jaiprakash Power Ventures ltd
- Borneo Indobara - Indonesia
- Semirara Mining Corp, Philippines
- Sakthi Sugars Limited - India
- Barasentosa Lestari - Indonesia
- Ambuja Cements Ltd - India
- Kumho Petrochemical, South Korea
- Vedanta Resources Plc - India
- PNOC Exploration Corporation - Philippines
- ASAPP Information Group - India
- IEA Clean Coal Centre - UK
- Kapuas Tunggal Persada - Indonesia
- Iligan Light & Power Inc, Philippines
- PowerSource Philippines DevCo
- Singapore Mercantile Exchange
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Jindal Steel & Power Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Jorong Barutama Greston.PT - Indonesia
- Energy Development Corp, Philippines
- Binh Thuan Hamico - Vietnam
- Carbofer General Trading SA - India
- Thiess Contractors Indonesia
- CIMB Investment Bank - Malaysia
- Australian Commodity Traders Exchange
- Aboitiz Power Corporation - Philippines
- Cement Manufacturers Association - India
- Medco Energi Mining Internasional
- Indo Tambangraya Megah - Indonesia
- GVK Power & Infra Limited - India
- Latin American Coal - Colombia
- Intertek Mineral Services - Indonesia
- Kepco SPC Power Corporation, Philippines
- Central Java Power - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Globalindo Alam Lestari - Indonesia
- Marubeni Corporation - India
- Meenaskhi Energy Private Limited - India
- Coal and Oil Company - UAE
- Indika Energy - Indonesia
- Coalindo Energy - Indonesia
- Antam Resourcindo - Indonesia
- Altura Mining Limited, Indonesia
- Dalmia Cement Bharat India
- SN Aboitiz Power Inc, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Kaltim Prima Coal - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Baramulti Group, Indonesia
- Bhushan Steel Limited - India
- Neyveli Lignite Corporation Ltd, - India
- IHS Mccloskey Coal Group - USA
- Mercator Lines Limited - India
- Siam City Cement - Thailand
- The Treasury - Australian Government
- Star Paper Mills Limited - India
- Price Waterhouse Coopers - Russia
- Chamber of Mines of South Africa
- ICICI Bank Limited - India
- Power Finance Corporation Ltd., India
- The State Trading Corporation of India Ltd
- Mjunction Services Limited - India
- Mintek Dendrill Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Electricity Generating Authority of Thailand
- Kobexindo Tractors - Indoneisa
- Electricity Authority, New Zealand
- Anglo American - United Kingdom
- Kalimantan Lumbung Energi - Indonesia
- Goldman Sachs - Singapore
- Renaissance Capital - South Africa
- Manunggal Multi Energi - Indonesia
- Interocean Group of Companies - India
- Global Green Power PLC Corporation, Philippines
- Eastern Energy - Thailand
- Chettinad Cement Corporation Ltd - India
- White Energy Company Limited
- Edison Trading Spa - Italy
- Malabar Cements Ltd - India
- Bulk Trading Sa - Switzerland
- Pipit Mutiara Jaya. PT, Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Parliament of New Zealand
- Holcim Trading Pte Ltd - Singapore
- Simpson Spence & Young - Indonesia
- Metalloyd Limited - United Kingdom
- Posco Energy - South Korea
- Aditya Birla Group - India
- TeaM Sual Corporation - Philippines
- Siam City Cement PLC, Thailand
- Bukit Makmur.PT - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Global Coal Blending Company Limited - Australia
- Cigading International Bulk Terminal - Indonesia
- European Bulk Services B.V. - Netherlands
- OPG Power Generation Pvt Ltd - India
- Eastern Coal Council - USA
- Standard Chartered Bank - UAE
- CNBM International Corporation - China
- Miang Besar Coal Terminal - Indonesia
- South Luzon Thermal Energy Corporation
- Bhatia International Limited - India
- Alfred C Toepfer International GmbH - Germany
- AsiaOL BioFuels Corp., Philippines
- Planning Commission, India
- Therma Luzon, Inc, Philippines
- Port Waratah Coal Services - Australia
- Riau Bara Harum - Indonesia
- Romanian Commodities Exchange
- Tamil Nadu electricity Board
- Ministry of Transport, Egypt
- San Jose City I Power Corp, Philippines
- Agrawal Coal Company - India
- Attock Cement Pakistan Limited
- Africa Commodities Group - South Africa
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Orica Mining Services - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Formosa Plastics Group - Taiwan
- Samtan Co., Ltd - South Korea
- Ministry of Finance - Indonesia
- Madhucon Powers Ltd - India
- Salva Resources Pvt Ltd - India
- Wilmar Investment Holdings
- Indian Energy Exchange, India
- Global Business Power Corporation, Philippines
- The University of Queensland
- Commonwealth Bank - Australia
- Kohat Cement Company Ltd. - Pakistan
- Trasteel International SA, Italy
- Sojitz Corporation - Japan
- Vizag Seaport Private Limited - India
- Directorate Of Revenue Intelligence - India
- Rio Tinto Coal - Australia
- Deloitte Consulting - India
- Gujarat Mineral Development Corp Ltd - India
- Bangladesh Power Developement Board
- Gujarat Sidhee Cement - India
- Billiton Holdings Pty Ltd - Australia
- Orica Australia Pty. Ltd.
- Mercuria Energy - Indonesia
- Bhoruka Overseas - Indonesia
- Maheswari Brothers Coal Limited - India
- Savvy Resources Ltd - HongKong
- Xindia Steels Limited - India
- Sarangani Energy Corporation, Philippines
- International Coal Ventures Pvt Ltd - India
- GAC Shipping (India) Pvt Ltd
- Essar Steel Hazira Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Ceylon Electricity Board - Sri Lanka
- Bayan Resources Tbk. - Indonesia
- Indogreen Group - Indonesia
- Minerals Council of Australia
- GN Power Mariveles Coal Plant, Philippines
- Economic Council, Georgia
- Directorate General of MIneral and Coal - Indonesia
- Tata Chemicals Ltd - India
- India Bulls Power Limited - India
- Toyota Tsusho Corporation, Japan
- Independent Power Producers Association of India
- GMR Energy Limited - India
- Kideco Jaya Agung - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Pendopo Energi Batubara - Indonesia
- London Commodity Brokers - England
- Timah Investasi Mineral - Indoneisa
- Meralco Power Generation, Philippines
- PTC India Limited - India
- Petron Corporation, Philippines
- Banpu Public Company Limited - Thailand
- New Zealand Coal & Carbon
- Uttam Galva Steels Limited - India
- SMC Global Power, Philippines
- Oldendorff Carriers - Singapore
- Sindya Power Generating Company Private Ltd
- Videocon Industries ltd - India
- Bharathi Cement Corporation - India
- Central Electricity Authority - India
- Karaikal Port Pvt Ltd - India
- Australian Coal Association
- Petrochimia International Co. Ltd.- Taiwan
- Straits Asia Resources Limited - Singapore
- Ind-Barath Power Infra Limited - India
- Bukit Baiduri Energy - Indonesia
- Makarim & Taira - Indonesia
- Heidelberg Cement - Germany
- Georgia Ports Authority, United States
- Merrill Lynch Commodities Europe
- Kartika Selabumi Mining - Indonesia
- Ministry of Mines - Canada
- Grasim Industreis Ltd - India
- Thai Mozambique Logistica
- MS Steel International - UAE
- Sree Jayajothi Cements Limited - India
- Parry Sugars Refinery, India
- Maharashtra Electricity Regulatory Commission - India
- Coastal Gujarat Power Limited - India
- Leighton Contractors Pty Ltd - Australia
- Indian Oil Corporation Limited
- SMG Consultants - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bank of Tokyo Mitsubishi UFJ Ltd
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