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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, 18 March 23
HEDGE TO OFFSET LNG VOLATILITY, TRADERS TOLD - BALTIC EXCHANGE
A shift in imports from Asia to Europe led to significant volatility in liquefied natural gas shipping last year, prompting industry experts to urg ...
Friday, 17 March 23
INDONESIAN COAL PRICE REFERENCE UP AROUND 2.17% IN MARCH 2023
COALspot.com: Indonesian Coal Price Reference up around 2.17% in March 2023.
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Saturday, 11 March 23
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Wednesday, 08 March 23
INDONESIAN COAL REFERENCE PRICE FORMULA HAS OFFICIALLY CHANGED
Indonesian Minister of Energy and Mineral Resources has officially changed the guideline for determining the benchmark price for the sale of coal c ...
Thursday, 02 March 23
INDIA'S SEABORNE CRUDE OIL IMPORTS IN 2022 INCREASED BY 11.5% YOY - BANCHERO COSTA
2022 has turned out to be a very positive year for crude oil trade, despite the surging oil prices and risks of economic recession, Banchero Costa ...
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- Intertek Mineral Services - Indonesia
- Ministry of Mines - Canada
- India Bulls Power Limited - India
- Directorate Of Revenue Intelligence - India
- TeaM Sual Corporation - Philippines
- Gujarat Mineral Development Corp Ltd - India
- SMC Global Power, Philippines
- GMR Energy Limited - India
- LBH Netherlands Bv - Netherlands
- Latin American Coal - Colombia
- Price Waterhouse Coopers - Russia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Rashtriya Ispat Nigam Limited - India
- MS Steel International - UAE
- Coalindo Energy - Indonesia
- Sree Jayajothi Cements Limited - India
- CNBM International Corporation - China
- Xindia Steels Limited - India
- AsiaOL BioFuels Corp., Philippines
- GN Power Mariveles Coal Plant, Philippines
- Kumho Petrochemical, South Korea
- Kartika Selabumi Mining - Indonesia
- The Treasury - Australian Government
- Pipit Mutiara Jaya. PT, Indonesia
- Therma Luzon, Inc, Philippines
- Meenaskhi Energy Private Limited - India
- Oldendorff Carriers - Singapore
- Kaltim Prima Coal - Indonesia
- Essar Steel Hazira Ltd - India
- SMG Consultants - Indonesia
- Energy Link Ltd, New Zealand
- Aditya Birla Group - India
- GAC Shipping (India) Pvt Ltd
- Ambuja Cements Ltd - India
- Anglo American - United Kingdom
- Grasim Industreis Ltd - India
- Timah Investasi Mineral - Indoneisa
- Ind-Barath Power Infra Limited - India
- Semirara Mining Corp, Philippines
- OPG Power Generation Pvt Ltd - India
- Mjunction Services Limited - India
- Chamber of Mines of South Africa
- Kobexindo Tractors - Indoneisa
- Bangladesh Power Developement Board
- Independent Power Producers Association of India
- Wilmar Investment Holdings
- Lanco Infratech Ltd - India
- Heidelberg Cement - Germany
- Interocean Group of Companies - India
- Billiton Holdings Pty Ltd - Australia
- Rio Tinto Coal - Australia
- PTC India Limited - India
- Bhatia International Limited - India
- Merrill Lynch Commodities Europe
- PNOC Exploration Corporation - Philippines
- London Commodity Brokers - England
- Karaikal Port Pvt Ltd - India
- Medco Energi Mining Internasional
- Bhushan Steel Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Georgia Ports Authority, United States
- CIMB Investment Bank - Malaysia
- Straits Asia Resources Limited - Singapore
- Meralco Power Generation, Philippines
- Energy Development Corp, Philippines
- Attock Cement Pakistan Limited
- Jaiprakash Power Ventures ltd
- Kapuas Tunggal Persada - Indonesia
- Ministry of Finance - Indonesia
- Parry Sugars Refinery, India
- Ceylon Electricity Board - Sri Lanka
- Australian Commodity Traders Exchange
- Barasentosa Lestari - Indonesia
- Mercator Lines Limited - India
- Mintek Dendrill Indonesia
- IEA Clean Coal Centre - UK
- Uttam Galva Steels Limited - India
- San Jose City I Power Corp, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Cement Manufacturers Association - India
- Salva Resources Pvt Ltd - India
- Globalindo Alam Lestari - Indonesia
- Kepco SPC Power Corporation, Philippines
- Toyota Tsusho Corporation, Japan
- Jorong Barutama Greston.PT - Indonesia
- Commonwealth Bank - Australia
- Bhoruka Overseas - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Aboitiz Power Corporation - Philippines
- Riau Bara Harum - Indonesia
- Indian Oil Corporation Limited
- Global Business Power Corporation, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Global Green Power PLC Corporation, Philippines
- Thiess Contractors Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Leighton Contractors Pty Ltd - Australia
- Indo Tambangraya Megah - Indonesia
- Chettinad Cement Corporation Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Tamil Nadu electricity Board
- McConnell Dowell - Australia
- Alfred C Toepfer International GmbH - Germany
- Bayan Resources Tbk. - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Coastal Gujarat Power Limited - India
- Semirara Mining and Power Corporation, Philippines
- Antam Resourcindo - Indonesia
- Siam City Cement PLC, Thailand
- Eastern Energy - Thailand
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Cigading International Bulk Terminal - Indonesia
- Larsen & Toubro Limited - India
- Electricity Authority, New Zealand
- Directorate General of MIneral and Coal - Indonesia
- Minerals Council of Australia
- Electricity Generating Authority of Thailand
- Power Finance Corporation Ltd., India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Vedanta Resources Plc - India
- Altura Mining Limited, Indonesia
- New Zealand Coal & Carbon
- Gujarat Sidhee Cement - India
- Pendopo Energi Batubara - Indonesia
- Siam City Cement - Thailand
- Marubeni Corporation - India
- Goldman Sachs - Singapore
- Tata Chemicals Ltd - India
- Sojitz Corporation - Japan
- Indian Energy Exchange, India
- Ministry of Transport, Egypt
- Bukit Baiduri Energy - Indonesia
- Metalloyd Limited - United Kingdom
- Africa Commodities Group - South Africa
- Australian Coal Association
- Simpson Spence & Young - Indonesia
- IHS Mccloskey Coal Group - USA
- Indonesian Coal Mining Association
- Orica Australia Pty. Ltd.
- Neyveli Lignite Corporation Ltd, - India
- Gujarat Electricity Regulatory Commission - India
- ICICI Bank Limited - India
- Sinarmas Energy and Mining - Indonesia
- Orica Mining Services - Indonesia
- SN Aboitiz Power Inc, Philippines
- Eastern Coal Council - USA
- Wood Mackenzie - Singapore
- Vizag Seaport Private Limited - India
- Star Paper Mills Limited - India
- ASAPP Information Group - India
- Sical Logistics Limited - India
- GVK Power & Infra Limited - India
- Romanian Commodities Exchange
- Posco Energy - South Korea
- Sindya Power Generating Company Private Ltd
- Miang Besar Coal Terminal - Indonesia
- Edison Trading Spa - Italy
- Maheswari Brothers Coal Limited - India
- International Coal Ventures Pvt Ltd - India
- Standard Chartered Bank - UAE
- The State Trading Corporation of India Ltd
- Carbofer General Trading SA - India
- Banpu Public Company Limited - Thailand
- Asmin Koalindo Tuhup - Indonesia
- Bulk Trading Sa - Switzerland
- White Energy Company Limited
- Kalimantan Lumbung Energi - Indonesia
- Planning Commission, India
- Parliament of New Zealand
- Sarangani Energy Corporation, Philippines
- Holcim Trading Pte Ltd - Singapore
- Sakthi Sugars Limited - India
- Videocon Industries ltd - India
- Madhucon Powers Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- South Luzon Thermal Energy Corporation
- Malabar Cements Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Bukit Makmur.PT - Indonesia
- Indika Energy - Indonesia
- Makarim & Taira - Indonesia
- Dalmia Cement Bharat India
- Kideco Jaya Agung - Indonesia
- Binh Thuan Hamico - Vietnam
- Formosa Plastics Group - Taiwan
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bukit Asam (Persero) Tbk - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Agrawal Coal Company - India
- Savvy Resources Ltd - HongKong
- Samtan Co., Ltd - South Korea
- Baramulti Group, Indonesia
- Singapore Mercantile Exchange
- Indogreen Group - Indonesia
- Jindal Steel & Power Ltd - India
- Iligan Light & Power Inc, Philippines
- Thai Mozambique Logistica
- Mercuria Energy - Indonesia
- Manunggal Multi Energi - Indonesia
- Trasteel International SA, Italy
- The University of Queensland
- Petron Corporation, Philippines
- Coal and Oil Company - UAE
- PetroVietnam Power Coal Import and Supply Company
- Borneo Indobara - Indonesia
- Global Coal Blending Company Limited - Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bharathi Cement Corporation - India
- Central Electricity Authority - India
- Economic Council, Georgia
- Central Java Power - Indonesia
- Port Waratah Coal Services - Australia
- PowerSource Philippines DevCo
- European Bulk Services B.V. - Netherlands
- Renaissance Capital - South Africa
- VISA Power Limited - India
- Deloitte Consulting - India
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