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