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