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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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Saturday, 25 March 23
COAL INDIA HAS STRONG CASE TO INCREASE PRICES, TALKS ON: CMD AGRAWAL - BUSINESS STANDARD
Coal India (CIL) Chairman and Managing Director Pramod Agrawal said on Monday there is a “strong case” for increasing coal prices, and ...
Saturday, 25 March 23
ASIAN CRUDE PALM OIL WATCH 1Q23 - FITCH RATINGS
Malaysian benchmark crude palm oil (CPO) spot prices have averaged around USD915 per tonne (t) so far in 1Q23, sharply lower than the average of ar ...
Saturday, 25 March 23
INDONESIA’S COAL EXPORT INCREASED BY 21.0% YOY TO 388.4 MLN T IN 2022 - BANCHERO COSTA
After a slow start in the first quarter, global coal trade has really picked up pace last year, and is now fully back to pre-Covid levels. In the f ...
Saturday, 25 March 23
GLOBAL LNG-ASIA SPOT PRICES SLIP AS WEAK NORTHERN DEMAND REMAINS - REUTERS
Asian spot prices of liquefied natural gas (LNG) declined this week, falling to a 21-month low, as weak demand in the northeast Asia region continu ...
Wednesday, 22 March 23
OIL PRICE FALL SPECULATIVE, TO HIT $140 BY YEAR-END -ANDURAND: REUTERS
The recent fall in oil prices due to banking jitters is speculative and oil will hit $140 a barrel by the end of the year, hedge fund manager Pierr ...
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- Jindal Steel & Power Ltd - India
- Vedanta Resources Plc - India
- Romanian Commodities Exchange
- Goldman Sachs - Singapore
- TeaM Sual Corporation - Philippines
- Formosa Plastics Group - Taiwan
- Lanco Infratech Ltd - India
- The Treasury - Australian Government
- Eastern Coal Council - USA
- Kapuas Tunggal Persada - Indonesia
- New Zealand Coal & Carbon
- Uttam Galva Steels Limited - India
- Attock Cement Pakistan Limited
- Bhushan Steel Limited - India
- Bulk Trading Sa - Switzerland
- Indian Oil Corporation Limited
- Mjunction Services Limited - India
- Makarim & Taira - Indonesia
- Latin American Coal - Colombia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Samtan Co., Ltd - South Korea
- Global Coal Blending Company Limited - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- White Energy Company Limited
- Bukit Asam (Persero) Tbk - Indonesia
- Bharathi Cement Corporation - India
- Savvy Resources Ltd - HongKong
- Maharashtra Electricity Regulatory Commission - India
- Gujarat Electricity Regulatory Commission - India
- CNBM International Corporation - China
- Therma Luzon, Inc, Philippines
- Deloitte Consulting - India
- International Coal Ventures Pvt Ltd - India
- Dalmia Cement Bharat India
- McConnell Dowell - Australia
- Timah Investasi Mineral - Indoneisa
- GN Power Mariveles Coal Plant, Philippines
- Maheswari Brothers Coal Limited - India
- Xindia Steels Limited - India
- Meenaskhi Energy Private Limited - India
- Gujarat Sidhee Cement - India
- Jaiprakash Power Ventures ltd
- Altura Mining Limited, Indonesia
- India Bulls Power Limited - India
- Kaltim Prima Coal - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Coal and Oil Company - UAE
- Central Java Power - Indonesia
- Madhucon Powers Ltd - India
- CIMB Investment Bank - Malaysia
- Aboitiz Power Corporation - Philippines
- South Luzon Thermal Energy Corporation
- Sojitz Corporation - Japan
- Price Waterhouse Coopers - Russia
- SMG Consultants - Indonesia
- Indian Energy Exchange, India
- Grasim Industreis Ltd - India
- Tata Chemicals Ltd - India
- Toyota Tsusho Corporation, Japan
- Offshore Bulk Terminal Pte Ltd, Singapore
- Singapore Mercantile Exchange
- Bayan Resources Tbk. - Indonesia
- Coastal Gujarat Power Limited - India
- SMC Global Power, Philippines
- PNOC Exploration Corporation - Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Directorate General of MIneral and Coal - Indonesia
- Binh Thuan Hamico - Vietnam
- San Jose City I Power Corp, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Orica Mining Services - Indonesia
- Mintek Dendrill Indonesia
- Antam Resourcindo - Indonesia
- Simpson Spence & Young - Indonesia
- IHS Mccloskey Coal Group - USA
- Miang Besar Coal Terminal - Indonesia
- Africa Commodities Group - South Africa
- Parliament of New Zealand
- Minerals Council of Australia
- Standard Chartered Bank - UAE
- Indo Tambangraya Megah - Indonesia
- The University of Queensland
- Aditya Birla Group - India
- Sinarmas Energy and Mining - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Vizag Seaport Private Limited - India
- Global Business Power Corporation, Philippines
- Australian Commodity Traders Exchange
- Economic Council, Georgia
- Ceylon Electricity Board - Sri Lanka
- Directorate Of Revenue Intelligence - India
- Commonwealth Bank - Australia
- Bahari Cakrawala Sebuku - Indonesia
- Renaissance Capital - South Africa
- Thiess Contractors Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Bangladesh Power Developement Board
- Medco Energi Mining Internasional
- European Bulk Services B.V. - Netherlands
- Port Waratah Coal Services - Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Krishnapatnam Port Company Ltd. - India
- Pipit Mutiara Jaya. PT, Indonesia
- Bhatia International Limited - India
- Karbindo Abesyapradhi - Indoneisa
- VISA Power Limited - India
- PowerSource Philippines DevCo
- Siam City Cement - Thailand
- Essar Steel Hazira Ltd - India
- Central Electricity Authority - India
- Manunggal Multi Energi - Indonesia
- Indonesian Coal Mining Association
- Cement Manufacturers Association - India
- Merrill Lynch Commodities Europe
- Kepco SPC Power Corporation, Philippines
- Edison Trading Spa - Italy
- Bukit Baiduri Energy - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Baramulti Group, Indonesia
- Orica Australia Pty. Ltd.
- London Commodity Brokers - England
- Independent Power Producers Association of India
- Agrawal Coal Company - India
- Electricity Authority, New Zealand
- Parry Sugars Refinery, India
- Semirara Mining and Power Corporation, Philippines
- Power Finance Corporation Ltd., India
- Ministry of Mines - Canada
- Pendopo Energi Batubara - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Metalloyd Limited - United Kingdom
- GMR Energy Limited - India
- Australian Coal Association
- Larsen & Toubro Limited - India
- Ind-Barath Power Infra Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Ambuja Cements Ltd - India
- Borneo Indobara - Indonesia
- Trasteel International SA, Italy
- Leighton Contractors Pty Ltd - Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Electricity Generating Authority of Thailand
- Vijayanagar Sugar Pvt Ltd - India
- Marubeni Corporation - India
- Bhoruka Overseas - Indonesia
- Energy Development Corp, Philippines
- Bukit Makmur.PT - Indonesia
- Sindya Power Generating Company Private Ltd
- IEA Clean Coal Centre - UK
- Straits Asia Resources Limited - Singapore
- OPG Power Generation Pvt Ltd - India
- Rio Tinto Coal - Australia
- Asmin Koalindo Tuhup - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- GVK Power & Infra Limited - India
- Iligan Light & Power Inc, Philippines
- Posco Energy - South Korea
- Sakthi Sugars Limited - India
- Sical Logistics Limited - India
- Karaikal Port Pvt Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Indogreen Group - Indonesia
- Wood Mackenzie - Singapore
- Riau Bara Harum - Indonesia
- Intertek Mineral Services - Indonesia
- ICICI Bank Limited - India
- Chettinad Cement Corporation Ltd - India
- PTC India Limited - India
- Banpu Public Company Limited - Thailand
- ASAPP Information Group - India
- Rashtriya Ispat Nigam Limited - India
- Chamber of Mines of South Africa
- SN Aboitiz Power Inc, Philippines
- Indika Energy - Indonesia
- Sree Jayajothi Cements Limited - India
- Meralco Power Generation, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Billiton Holdings Pty Ltd - Australia
- Thai Mozambique Logistica
- Mercator Lines Limited - India
- Kartika Selabumi Mining - Indonesia
- Georgia Ports Authority, United States
- Interocean Group of Companies - India
- Tamil Nadu electricity Board
- Ministry of Transport, Egypt
- MS Steel International - UAE
- Sarangani Energy Corporation, Philippines
- Wilmar Investment Holdings
- Planning Commission, India
- LBH Netherlands Bv - Netherlands
- Coalindo Energy - Indonesia
- The State Trading Corporation of India Ltd
- Videocon Industries ltd - India
- Cigading International Bulk Terminal - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Star Paper Mills Limited - India
- GAC Shipping (India) Pvt Ltd
- Eastern Energy - Thailand
- Carbofer General Trading SA - India
- Semirara Mining Corp, Philippines
- Barasentosa Lestari - Indonesia
- Oldendorff Carriers - Singapore
- Global Green Power PLC Corporation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Kideco Jaya Agung - Indonesia
- Heidelberg Cement - Germany
- Ministry of Finance - Indonesia
- Energy Link Ltd, New Zealand
- Salva Resources Pvt Ltd - India
- Anglo American - United Kingdom
- Malabar Cements Ltd - India
- Mercuria Energy - Indonesia
- Globalindo Alam Lestari - Indonesia
- Kobexindo Tractors - Indoneisa
- Siam City Cement PLC, Thailand
- Petron Corporation, Philippines
- Kumho Petrochemical, South Korea
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