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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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Tuesday, 17 January 23
CHINA'S SHANXI TARGETS 2023 COAL PRODUCTION OF NEARLY 1.37B TONS - XINHUA
China’s coal-rich province of Shanxi has set a coal production target of nearly 1.37 billion metric tons for 2023, according to a government ...
Tuesday, 17 January 23
MARKET INSIGHT - INTERMODAL
Rumor has it that the New Year has come, to set the pace in, for Russia to continue hostilities against Ukraine. Ten months on the go, into Russia& ...
Tuesday, 17 January 23
INDONESIA IS ACCOUNTING FOR 32.3% OF THE GLOBAL SEABORNE COAL MARKET IN 2022 - BENCHERO 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, Benchero ...
Tuesday, 10 January 23
INDONESIAN HBA IS SEEING A SPIKE IN JANUARY 2023 INSTEAD OF A SIGNIFICANT FALL IN DECEMBER 2022
COALspot.com: Indonesian Coal Price Reference up 8.43% in January 2023.
HBA is seeing a dramatic spike in January 2023 i ...
Sunday, 08 January 23
INDIAN COAL POWER PLANTS SHOULD BE COMPENSATED FOR 2022 FORCED GENERATION – REGULATOR : REUTERS
Indian power plants that rely on imported coal should be fully compensated when forced to supply electricity, the country’s power regulator s ...
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- Sakthi Sugars Limited - India
- ICICI Bank Limited - India
- Sarangani Energy Corporation, Philippines
- Indian Oil Corporation Limited
- Bharathi Cement Corporation - India
- TeaM Sual Corporation - Philippines
- Savvy Resources Ltd - HongKong
- Bhushan Steel Limited - India
- Ministry of Finance - Indonesia
- Metalloyd Limited - United Kingdom
- Leighton Contractors Pty Ltd - Australia
- CNBM International Corporation - China
- Iligan Light & Power Inc, Philippines
- Banpu Public Company Limited - Thailand
- Kumho Petrochemical, South Korea
- Aboitiz Power Corporation - Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Antam Resourcindo - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- VISA Power Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Sindya Power Generating Company Private Ltd
- ASAPP Information Group - India
- Indogreen Group - Indonesia
- Economic Council, Georgia
- Heidelberg Cement - Germany
- Straits Asia Resources Limited - Singapore
- Parliament of New Zealand
- Bahari Cakrawala Sebuku - Indonesia
- Lanco Infratech Ltd - India
- Sree Jayajothi Cements Limited - India
- Therma Luzon, Inc, Philippines
- Trasteel International SA, Italy
- Latin American Coal - Colombia
- Mercator Lines Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Power Finance Corporation Ltd., India
- Madhucon Powers Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Larsen & Toubro Limited - India
- Siam City Cement PLC, Thailand
- Pendopo Energi Batubara - Indonesia
- Georgia Ports Authority, United States
- Electricity Authority, New Zealand
- Renaissance Capital - South Africa
- Commonwealth Bank - Australia
- Grasim Industreis Ltd - India
- San Jose City I Power Corp, Philippines
- IEA Clean Coal Centre - UK
- Global Green Power PLC Corporation, Philippines
- International Coal Ventures Pvt Ltd - India
- Ministry of Mines - Canada
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Asmin Koalindo Tuhup - Indonesia
- Samtan Co., Ltd - South Korea
- Ministry of Transport, Egypt
- Indonesian Coal Mining Association
- Energy Development Corp, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Marubeni Corporation - India
- Miang Besar Coal Terminal - Indonesia
- Bukit Baiduri Energy - Indonesia
- Siam City Cement - Thailand
- GMR Energy Limited - India
- PowerSource Philippines DevCo
- Salva Resources Pvt Ltd - India
- Dalmia Cement Bharat India
- Thai Mozambique Logistica
- Interocean Group of Companies - India
- The State Trading Corporation of India Ltd
- Neyveli Lignite Corporation Ltd, - India
- European Bulk Services B.V. - Netherlands
- Indika Energy - Indonesia
- Malabar Cements Ltd - India
- Orica Australia Pty. Ltd.
- Riau Bara Harum - Indonesia
- Anglo American - United Kingdom
- Directorate General of MIneral and Coal - Indonesia
- Aditya Birla Group - India
- Standard Chartered Bank - UAE
- Semirara Mining and Power Corporation, Philippines
- Billiton Holdings Pty Ltd - Australia
- Makarim & Taira - Indonesia
- Vedanta Resources Plc - India
- OPG Power Generation Pvt Ltd - India
- Independent Power Producers Association of India
- Kohat Cement Company Ltd. - Pakistan
- Uttam Galva Steels Limited - India
- Kartika Selabumi Mining - Indonesia
- Bangladesh Power Developement Board
- Ind-Barath Power Infra Limited - India
- Toyota Tsusho Corporation, Japan
- Rio Tinto Coal - Australia
- Gujarat Mineral Development Corp Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Kepco SPC Power Corporation, Philippines
- SMC Global Power, Philippines
- Petron Corporation, Philippines
- Star Paper Mills Limited - India
- Simpson Spence & Young - Indonesia
- Mintek Dendrill Indonesia
- Edison Trading Spa - Italy
- New Zealand Coal & Carbon
- Xindia Steels Limited - India
- Chettinad Cement Corporation Ltd - India
- LBH Netherlands Bv - Netherlands
- Pipit Mutiara Jaya. PT, Indonesia
- Sinarmas Energy and Mining - Indonesia
- Coastal Gujarat Power Limited - India
- Gujarat Electricity Regulatory Commission - India
- Merrill Lynch Commodities Europe
- Goldman Sachs - Singapore
- Intertek Mineral Services - Indonesia
- Bhatia International Limited - India
- Formosa Plastics Group - Taiwan
- Manunggal Multi Energi - Indonesia
- Semirara Mining Corp, Philippines
- Minerals Council of Australia
- White Energy Company Limited
- Tata Chemicals Ltd - India
- Deloitte Consulting - India
- Sojitz Corporation - Japan
- Jindal Steel & Power Ltd - India
- Electricity Generating Authority of Thailand
- Price Waterhouse Coopers - Russia
- Wilmar Investment Holdings
- Borneo Indobara - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Australian Coal Association
- Bayan Resources Tbk. - Indonesia
- Oldendorff Carriers - Singapore
- Meralco Power Generation, Philippines
- Planning Commission, India
- Energy Link Ltd, New Zealand
- Global Coal Blending Company Limited - Australia
- Cement Manufacturers Association - India
- Agrawal Coal Company - India
- Parry Sugars Refinery, India
- The University of Queensland
- Alfred C Toepfer International GmbH - Germany
- Bank of Tokyo Mitsubishi UFJ Ltd
- Tamil Nadu electricity Board
- Mjunction Services Limited - India
- GVK Power & Infra Limited - India
- SN Aboitiz Power Inc, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kaltim Prima Coal - Indonesia
- Globalindo Alam Lestari - Indonesia
- The Treasury - Australian Government
- Cigading International Bulk Terminal - Indonesia
- Binh Thuan Hamico - Vietnam
- Meenaskhi Energy Private Limited - India
- PNOC Exploration Corporation - Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- London Commodity Brokers - England
- Gujarat Sidhee Cement - India
- Attock Cement Pakistan Limited
- Altura Mining Limited, Indonesia
- India Bulls Power Limited - India
- PTC India Limited - India
- Bhoruka Overseas - Indonesia
- Port Waratah Coal Services - Australia
- Central Java Power - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Kobexindo Tractors - Indoneisa
- Vizag Seaport Private Limited - India
- Chamber of Mines of South Africa
- Africa Commodities Group - South Africa
- Mercuria Energy - Indonesia
- Thiess Contractors Indonesia
- SMG Consultants - Indonesia
- Baramulti Group, Indonesia
- Eastern Coal Council - USA
- Indo Tambangraya Megah - Indonesia
- Kideco Jaya Agung - Indonesia
- Directorate Of Revenue Intelligence - India
- Karbindo Abesyapradhi - Indoneisa
- Wood Mackenzie - Singapore
- Ambuja Cements Ltd - India
- Australian Commodity Traders Exchange
- Posco Energy - South Korea
- Jorong Barutama Greston.PT - Indonesia
- Coalindo Energy - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Romanian Commodities Exchange
- South Luzon Thermal Energy Corporation
- IHS Mccloskey Coal Group - USA
- Sical Logistics Limited - India
- GAC Shipping (India) Pvt Ltd
- Orica Mining Services - Indonesia
- Videocon Industries ltd - India
- McConnell Dowell - Australia
- Timah Investasi Mineral - Indoneisa
- Coal and Oil Company - UAE
- Holcim Trading Pte Ltd - Singapore
- Central Electricity Authority - India
- MS Steel International - UAE
- Singapore Mercantile Exchange
- Karaikal Port Pvt Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Maheswari Brothers Coal Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Indian Energy Exchange, India
- Rashtriya Ispat Nigam Limited - India
- Barasentosa Lestari - Indonesia
- Bukit Makmur.PT - Indonesia
- Jaiprakash Power Ventures ltd
- AsiaOL BioFuels Corp., Philippines
- Bulk Trading Sa - Switzerland
- Essar Steel Hazira Ltd - India
- Global Business Power Corporation, Philippines
- Carbofer General Trading SA - India
- CIMB Investment Bank - Malaysia
- Eastern Energy - Thailand
- Medco Energi Mining Internasional
- Krishnapatnam Port Company Ltd. - India
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