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