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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, 22 March 23
MARKET INSIGHT - INTERMODAL
The crude tanker market continues to gather momentum as we head towards the end of 1Q2023, against a backdrop of strong U.S. exports paired with a ...
Wednesday, 22 March 23
WILL LOWER GAS PRICES SPARK SWITCHING IN EUROPE AND ASIA?
Record high prices devastated demand for gas and LNG across Asia and Europe last year. But with prices falling, companies are starting to re-evalua ...
Monday, 20 March 23
NTPC MULLS 5.4 MILLION TONNES COAL IMPORT IN FIRST HALF OF 2023-24: PTI
State-run power giant NTPC is planning to import around 5.4 million tonnes of coal to meet the supply shortage during the first half 2023-24 fiscal ...
Monday, 20 March 23
S. AFRICA’S EXXARO RESOURCES SAYS COAL PRICES COOLING OFF - REUTERS
South Africa’s Exxaro Resources on Thursday posted a 28% jump in 2022 profit after seeing average coal prices surge more than 150%, but warne ...
Saturday, 18 March 23
RUSSIAN LNG EXPORTS TO EUROPE REMAIN HIGH - VESSELS VALUE
Russian LNG exports to Europe remained at very high levels in February at 3.6 million CBM, following a 13 month high in January of 4.1 million CBM. ...
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- VISA Power Limited - India
- ASAPP Information Group - India
- Commonwealth Bank - Australia
- Kepco SPC Power Corporation, Philippines
- Pendopo Energi Batubara - Indonesia
- New Zealand Coal & Carbon
- Miang Besar Coal Terminal - Indonesia
- Uttam Galva Steels Limited - India
- Karaikal Port Pvt Ltd - India
- Eastern Coal Council - USA
- Straits Asia Resources Limited - Singapore
- Barasentosa Lestari - Indonesia
- The Treasury - Australian Government
- Trasteel International SA, Italy
- Thai Mozambique Logistica
- Energy Link Ltd, New Zealand
- Globalindo Alam Lestari - Indonesia
- Wilmar Investment Holdings
- Semirara Mining Corp, Philippines
- Iligan Light & Power Inc, Philippines
- Rashtriya Ispat Nigam Limited - India
- Makarim & Taira - Indonesia
- Coal and Oil Company - UAE
- Global Green Power PLC Corporation, Philippines
- Gujarat Electricity Regulatory Commission - India
- Planning Commission, India
- Renaissance Capital - South Africa
- Jaiprakash Power Ventures ltd
- Sical Logistics Limited - India
- Deloitte Consulting - India
- PetroVietnam Power Coal Import and Supply Company
- Merrill Lynch Commodities Europe
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Indogreen Group - Indonesia
- Directorate Of Revenue Intelligence - India
- Sojitz Corporation - Japan
- GVK Power & Infra Limited - India
- Metalloyd Limited - United Kingdom
- Tamil Nadu electricity Board
- SN Aboitiz Power Inc, Philippines
- Bhatia International Limited - India
- GAC Shipping (India) Pvt Ltd
- The State Trading Corporation of India Ltd
- Orica Australia Pty. Ltd.
- Indian Oil Corporation Limited
- Sarangani Energy Corporation, Philippines
- Parry Sugars Refinery, India
- Formosa Plastics Group - Taiwan
- Mercuria Energy - Indonesia
- Oldendorff Carriers - Singapore
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Carbofer General Trading SA - India
- Kapuas Tunggal Persada - Indonesia
- Orica Mining Services - Indonesia
- TeaM Sual Corporation - Philippines
- International Coal Ventures Pvt Ltd - India
- Binh Thuan Hamico - Vietnam
- Toyota Tsusho Corporation, Japan
- Thiess Contractors Indonesia
- Bangladesh Power Developement Board
- CIMB Investment Bank - Malaysia
- Simpson Spence & Young - Indonesia
- Mjunction Services Limited - India
- Central Electricity Authority - India
- Sree Jayajothi Cements Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Global Coal Blending Company Limited - Australia
- Cigading International Bulk Terminal - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Directorate General of MIneral and Coal - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Gujarat Sidhee Cement - India
- IEA Clean Coal Centre - UK
- Africa Commodities Group - South Africa
- Kaltim Prima Coal - Indonesia
- Samtan Co., Ltd - South Korea
- Indonesian Coal Mining Association
- Salva Resources Pvt Ltd - India
- Kideco Jaya Agung - Indonesia
- Xindia Steels Limited - India
- Chettinad Cement Corporation Ltd - India
- Ind-Barath Power Infra Limited - India
- Wood Mackenzie - Singapore
- Gujarat Mineral Development Corp Ltd - India
- SMC Global Power, Philippines
- Anglo American - United Kingdom
- Bharathi Cement Corporation - India
- Bulk Trading Sa - Switzerland
- Chamber of Mines of South Africa
- Bukit Asam (Persero) Tbk - Indonesia
- Intertek Mineral Services - Indonesia
- Essar Steel Hazira Ltd - India
- Siam City Cement - Thailand
- Bayan Resources Tbk. - Indonesia
- Attock Cement Pakistan Limited
- Asmin Koalindo Tuhup - Indonesia
- Goldman Sachs - Singapore
- Savvy Resources Ltd - HongKong
- South Luzon Thermal Energy Corporation
- Dalmia Cement Bharat India
- Coalindo Energy - Indonesia
- Interocean Group of Companies - India
- Aboitiz Power Corporation - Philippines
- LBH Netherlands Bv - Netherlands
- IHS Mccloskey Coal Group - USA
- Minerals Council of Australia
- Energy Development Corp, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- India Bulls Power Limited - India
- Vizag Seaport Private Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Star Paper Mills Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Maharashtra Electricity Regulatory Commission - India
- CNBM International Corporation - China
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kalimantan Lumbung Energi - Indonesia
- Kartika Selabumi Mining - Indonesia
- Heidelberg Cement - Germany
- Videocon Industries ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Vedanta Resources Plc - India
- Grasim Industreis Ltd - India
- Latin American Coal - Colombia
- Cement Manufacturers Association - India
- Singapore Mercantile Exchange
- Holcim Trading Pte Ltd - Singapore
- Aditya Birla Group - India
- Sinarmas Energy and Mining - Indonesia
- Eastern Energy - Thailand
- Ministry of Mines - Canada
- PNOC Exploration Corporation - Philippines
- Malabar Cements Ltd - India
- Timah Investasi Mineral - Indoneisa
- Electricity Generating Authority of Thailand
- Maheswari Brothers Coal Limited - India
- European Bulk Services B.V. - Netherlands
- GMR Energy Limited - India
- Meenaskhi Energy Private Limited - India
- Riau Bara Harum - Indonesia
- Electricity Authority, New Zealand
- Ambuja Cements Ltd - India
- Coastal Gujarat Power Limited - India
- Manunggal Multi Energi - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Parliament of New Zealand
- Georgia Ports Authority, United States
- PTC India Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bukit Makmur.PT - Indonesia
- Bhoruka Overseas - Indonesia
- Meralco Power Generation, Philippines
- Posco Energy - South Korea
- Independent Power Producers Association of India
- Krishnapatnam Port Company Ltd. - India
- Power Finance Corporation Ltd., India
- Jindal Steel & Power Ltd - India
- Sindya Power Generating Company Private Ltd
- Semirara Mining and Power Corporation, Philippines
- Global Business Power Corporation, Philippines
- Baramulti Group, Indonesia
- White Energy Company Limited
- Indian Energy Exchange, India
- MS Steel International - UAE
- OPG Power Generation Pvt Ltd - India
- Mintek Dendrill Indonesia
- Marubeni Corporation - India
- McConnell Dowell - Australia
- Romanian Commodities Exchange
- Neyveli Lignite Corporation Ltd, - India
- Edison Trading Spa - Italy
- Australian Coal Association
- Standard Chartered Bank - UAE
- Ministry of Finance - Indonesia
- ICICI Bank Limited - India
- Larsen & Toubro Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Tata Chemicals Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ministry of Transport, Egypt
- Economic Council, Georgia
- Rio Tinto Coal - Australia
- Australian Commodity Traders Exchange
- Billiton Holdings Pty Ltd - Australia
- Lanco Infratech Ltd - India
- San Jose City I Power Corp, Philippines
- Therma Luzon, Inc, Philippines
- Medco Energi Mining Internasional
- Jorong Barutama Greston.PT - Indonesia
- Central Java Power - Indonesia
- Antam Resourcindo - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Indo Tambangraya Megah - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Sakthi Sugars Limited - India
- Price Waterhouse Coopers - Russia
- Alfred C Toepfer International GmbH - Germany
- Madhucon Powers Ltd - India
- Agrawal Coal Company - India
- Bhushan Steel Limited - India
- Bukit Baiduri Energy - Indonesia
- Kumho Petrochemical, South Korea
- Port Waratah Coal Services - Australia
- Borneo Indobara - Indonesia
- PowerSource Philippines DevCo
- Indika Energy - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Banpu Public Company Limited - Thailand
- Mercator Lines Limited - India
- Kobexindo Tractors - Indoneisa
- Altura Mining Limited, Indonesia
- Petron Corporation, Philippines
- London Commodity Brokers - England
- SMG Consultants - Indonesia
- AsiaOL BioFuels Corp., Philippines
- The University of Queensland
- Siam City Cement PLC, Thailand
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