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