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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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Sunday, 26 February 23
MAWANI AND JEDDAH CHAMBER SIGN AN AGREEMENT TO BUILD INTEGRATED LOGISTICS PARK
Press Release: The Saudi Ports Authority (Mawani) and Jeddah Chamber of Commerce and Industry have today inked an agreement to set up an integrated ...
Saturday, 25 February 23
INDONESIA IS STILL BY FAR THE TOP SUPPLIER OF COAL TO CHINA - 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, said ban ...
Wednesday, 22 February 23
MARKET INSIGHT - INTERMODAL
The short-term outlook of the global soybean market is currently pivoted by a combination of weather patterns that are affecting the harvest progre ...
Saturday, 18 February 23
OIL UNLIKELY TO BREAK ABOVE $100/BBL THIS YEAR, J.P.MORGAN SAYS –- REUTERS
Brent oil prices are unlikely to breach the $100 a barrel level this year, barring any significant geopolitical drivers, with OPEC+ potentially add ...
Saturday, 18 February 23
CHINA'S COAL PRICES FALL TO 1 YR-LOW, CLOUDING DEMAND AND IMPORT OUTLOOK - REUTERS
China’s thermal coal prices hit their lowest levels in a year this week on rising inventories as domestic mine production is recovering faste ...
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- Jorong Barutama Greston.PT - Indonesia
- Indonesian Coal Mining Association
- Coastal Gujarat Power Limited - India
- Lanco Infratech Ltd - India
- Planning Commission, India
- Orica Australia Pty. Ltd.
- Sical Logistics Limited - India
- VISA Power Limited - India
- Electricity Authority, New Zealand
- Indian Oil Corporation Limited
- Bukit Makmur.PT - Indonesia
- Tata Chemicals Ltd - India
- Africa Commodities Group - South Africa
- The University of Queensland
- Antam Resourcindo - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bhushan Steel Limited - India
- Anglo American - United Kingdom
- Alfred C Toepfer International GmbH - Germany
- Bank of Tokyo Mitsubishi UFJ Ltd
- Ambuja Cements Ltd - India
- Jaiprakash Power Ventures ltd
- Coal and Oil Company - UAE
- Singapore Mercantile Exchange
- Oldendorff Carriers - Singapore
- Karaikal Port Pvt Ltd - India
- Simpson Spence & Young - Indonesia
- Marubeni Corporation - India
- Petron Corporation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Central Electricity Authority - India
- ASAPP Information Group - India
- Australian Coal Association
- Romanian Commodities Exchange
- Carbofer General Trading SA - India
- London Commodity Brokers - England
- Parliament of New Zealand
- The State Trading Corporation of India Ltd
- PNOC Exploration Corporation - Philippines
- Ceylon Electricity Board - Sri Lanka
- GMR Energy Limited - India
- Trasteel International SA, Italy
- The Treasury - Australian Government
- Energy Development Corp, Philippines
- Ministry of Mines - Canada
- Essar Steel Hazira Ltd - India
- Commonwealth Bank - Australia
- Xindia Steels Limited - India
- Economic Council, Georgia
- Australian Commodity Traders Exchange
- Interocean Group of Companies - India
- CIMB Investment Bank - Malaysia
- Metalloyd Limited - United Kingdom
- Barasentosa Lestari - Indonesia
- Heidelberg Cement - Germany
- Ministry of Finance - Indonesia
- Thiess Contractors Indonesia
- GVK Power & Infra Limited - India
- Sarangani Energy Corporation, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Samtan Co., Ltd - South Korea
- Latin American Coal - Colombia
- Electricity Generating Authority of Thailand
- Gujarat Mineral Development Corp Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Kobexindo Tractors - Indoneisa
- Miang Besar Coal Terminal - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Uttam Galva Steels Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Attock Cement Pakistan Limited
- Parry Sugars Refinery, India
- SMC Global Power, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Jindal Steel & Power Ltd - India
- Larsen & Toubro Limited - India
- Intertek Mineral Services - Indonesia
- Global Green Power PLC Corporation, Philippines
- Semirara Mining and Power Corporation, Philippines
- New Zealand Coal & Carbon
- Mercuria Energy - Indonesia
- Posco Energy - South Korea
- Directorate Of Revenue Intelligence - India
- Indogreen Group - Indonesia
- Savvy Resources Ltd - HongKong
- Riau Bara Harum - Indonesia
- India Bulls Power Limited - India
- Aboitiz Power Corporation - Philippines
- Bayan Resources Tbk. - Indonesia
- PowerSource Philippines DevCo
- Independent Power Producers Association of India
- SN Aboitiz Power Inc, Philippines
- Leighton Contractors Pty Ltd - Australia
- European Bulk Services B.V. - Netherlands
- SMG Consultants - Indonesia
- Ind-Barath Power Infra Limited - India
- Semirara Mining Corp, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Standard Chartered Bank - UAE
- Star Paper Mills Limited - India
- Merrill Lynch Commodities Europe
- Pipit Mutiara Jaya. PT, Indonesia
- Orica Mining Services - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Vizag Seaport Private Limited - India
- Georgia Ports Authority, United States
- Medco Energi Mining Internasional
- Global Business Power Corporation, Philippines
- IEA Clean Coal Centre - UK
- Manunggal Multi Energi - Indonesia
- Malabar Cements Ltd - India
- Indian Energy Exchange, India
- Pendopo Energi Batubara - Indonesia
- Maheswari Brothers Coal Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Rashtriya Ispat Nigam Limited - India
- GAC Shipping (India) Pvt Ltd
- Karbindo Abesyapradhi - Indoneisa
- Borneo Indobara - Indonesia
- Gujarat Sidhee Cement - India
- Mjunction Services Limited - India
- Kaltim Prima Coal - Indonesia
- Sree Jayajothi Cements Limited - India
- San Jose City I Power Corp, Philippines
- Bangladesh Power Developement Board
- Billiton Holdings Pty Ltd - Australia
- McConnell Dowell - Australia
- Kartika Selabumi Mining - Indonesia
- CNBM International Corporation - China
- Altura Mining Limited, Indonesia
- Bharathi Cement Corporation - India
- Gujarat Electricity Regulatory Commission - India
- Global Coal Blending Company Limited - Australia
- IHS Mccloskey Coal Group - USA
- Chettinad Cement Corporation Ltd - India
- Toyota Tsusho Corporation, Japan
- Price Waterhouse Coopers - Russia
- Agrawal Coal Company - India
- South Luzon Thermal Energy Corporation
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Sinarmas Energy and Mining - Indonesia
- Makarim & Taira - Indonesia
- Grasim Industreis Ltd - India
- Eastern Coal Council - USA
- Siam City Cement - Thailand
- Directorate General of MIneral and Coal - Indonesia
- Siam City Cement PLC, Thailand
- Thai Mozambique Logistica
- Maharashtra Electricity Regulatory Commission - India
- LBH Netherlands Bv - Netherlands
- PetroVietnam Power Coal Import and Supply Company
- Dalmia Cement Bharat India
- Power Finance Corporation Ltd., India
- Wood Mackenzie - Singapore
- Bulk Trading Sa - Switzerland
- Krishnapatnam Port Company Ltd. - India
- Kohat Cement Company Ltd. - Pakistan
- Deloitte Consulting - India
- Indika Energy - Indonesia
- PTC India Limited - India
- Mintek Dendrill Indonesia
- Energy Link Ltd, New Zealand
- Vedanta Resources Plc - India
- Sindya Power Generating Company Private Ltd
- Meenaskhi Energy Private Limited - India
- Eastern Energy - Thailand
- Coalindo Energy - Indonesia
- Mercator Lines Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- White Energy Company Limited
- Sakthi Sugars Limited - India
- Chamber of Mines of South Africa
- Neyveli Lignite Corporation Ltd, - India
- Indo Tambangraya Megah - Indonesia
- Timah Investasi Mineral - Indoneisa
- Asmin Koalindo Tuhup - Indonesia
- International Coal Ventures Pvt Ltd - India
- Tamil Nadu electricity Board
- Cement Manufacturers Association - India
- Port Waratah Coal Services - Australia
- Cigading International Bulk Terminal - Indonesia
- MS Steel International - UAE
- Bukit Baiduri Energy - Indonesia
- TeaM Sual Corporation - Philippines
- ICICI Bank Limited - India
- Kepco SPC Power Corporation, Philippines
- Binh Thuan Hamico - Vietnam
- AsiaOL BioFuels Corp., Philippines
- Madhucon Powers Ltd - India
- OPG Power Generation Pvt Ltd - India
- Videocon Industries ltd - India
- Central Java Power - Indonesia
- Kideco Jaya Agung - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Aditya Birla Group - India
- Ministry of Transport, Egypt
- Iligan Light & Power Inc, Philippines
- Baramulti Group, Indonesia
- Edison Trading Spa - Italy
- Minerals Council of Australia
- Banpu Public Company Limited - Thailand
- Formosa Plastics Group - Taiwan
- Wilmar Investment Holdings
- Globalindo Alam Lestari - Indonesia
- Kumho Petrochemical, South Korea
- Salva Resources Pvt Ltd - India
- Straits Asia Resources Limited - Singapore
- Bhatia International Limited - India
- Sojitz Corporation - Japan
- Kapuas Tunggal Persada - Indonesia
- Rio Tinto Coal - Australia
- Therma Luzon, Inc, Philippines
- Renaissance Capital - South Africa
- Meralco Power Generation, Philippines
- Bhoruka Overseas - Indonesia
- Goldman Sachs - Singapore
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