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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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Thursday, 12 April 18
ALWAYS ACCESSIBLE
KNOWLEDGE TO ELEVATE
On 26 March 2018 Mr Justice Knowles determined that the berth warranty ‘always accessible’ must mean the vess ...
Wednesday, 11 April 18
CHINA UTILITIES PLAN NEW COAL IMPORT PRICE INDEX TO CURB VOLATILITY - REUTERS
China’s major utilities are preparing to launch their own coal price index for imports, an official at China Huaneng Group said, in a move th ...
Wednesday, 11 April 18
US-CHINA TARIFF THREATS RAISE GLOBAL TRADE RISKS - FITCH
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Tuesday, 10 April 18
BUMA GRANTED ADDITIONAL LOAN FACILITY FROM BTMU TO SUPPORT GROWTH
Press Release: PT Delta Dunia Makmur Tbk. is pleased to announce that its subsidiary, PT Bukit Makmur Mandiri Utama ("BUMA"), signed an a ...
Monday, 09 April 18
APRIL INDONESIAN COAL PRICE REFERENCE DROPS TO LOWEST IN 2018
COALspot.com: According to latest ministerial decree, the Indonesian Coal Price Reference (HBA) decline 6.98 per cent in April 2018 compared to Mar ...
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- London Commodity Brokers - England
- Rio Tinto Coal - Australia
- Independent Power Producers Association of India
- Singapore Mercantile Exchange
- Jorong Barutama Greston.PT - Indonesia
- Sarangani Energy Corporation, Philippines
- PTC India Limited - India
- Antam Resourcindo - Indonesia
- Sindya Power Generating Company Private Ltd
- Goldman Sachs - Singapore
- Holcim Trading Pte Ltd - Singapore
- Binh Thuan Hamico - Vietnam
- India Bulls Power Limited - India
- Meenaskhi Energy Private Limited - India
- Dalmia Cement Bharat India
- Vedanta Resources Plc - India
- Eastern Energy - Thailand
- Straits Asia Resources Limited - Singapore
- Siam City Cement PLC, Thailand
- Merrill Lynch Commodities Europe
- Anglo American - United Kingdom
- Madhucon Powers Ltd - India
- Global Coal Blending Company Limited - Australia
- The University of Queensland
- Indogreen Group - Indonesia
- Vizag Seaport Private Limited - India
- GVK Power & Infra Limited - India
- Petron Corporation, Philippines
- Thai Mozambique Logistica
- Interocean Group of Companies - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Romanian Commodities Exchange
- Banpu Public Company Limited - Thailand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Eastern Coal Council - USA
- Gujarat Sidhee Cement - India
- Price Waterhouse Coopers - Russia
- Kohat Cement Company Ltd. - Pakistan
- Global Green Power PLC Corporation, Philippines
- Agrawal Coal Company - India
- New Zealand Coal & Carbon
- Heidelberg Cement - Germany
- SMG Consultants - Indonesia
- Salva Resources Pvt Ltd - India
- Central Electricity Authority - India
- Sinarmas Energy and Mining - Indonesia
- GMR Energy Limited - India
- Planning Commission, India
- LBH Netherlands Bv - Netherlands
- GAC Shipping (India) Pvt Ltd
- Deloitte Consulting - India
- Coalindo Energy - Indonesia
- Medco Energi Mining Internasional
- Energy Link Ltd, New Zealand
- Electricity Generating Authority of Thailand
- Miang Besar Coal Terminal - Indonesia
- SMC Global Power, Philippines
- Baramulti Group, Indonesia
- Formosa Plastics Group - Taiwan
- Australian Commodity Traders Exchange
- GN Power Mariveles Coal Plant, Philippines
- IHS Mccloskey Coal Group - USA
- Indika Energy - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Tamil Nadu electricity Board
- Vijayanagar Sugar Pvt Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Coal and Oil Company - UAE
- Central Java Power - Indonesia
- Ministry of Transport, Egypt
- Kaltim Prima Coal - Indonesia
- Intertek Mineral Services - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Africa Commodities Group - South Africa
- Mercuria Energy - Indonesia
- Jindal Steel & Power Ltd - India
- Simpson Spence & Young - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Oldendorff Carriers - Singapore
- Bayan Resources Tbk. - Indonesia
- Meralco Power Generation, Philippines
- Savvy Resources Ltd - HongKong
- MS Steel International - UAE
- Toyota Tsusho Corporation, Japan
- Posco Energy - South Korea
- International Coal Ventures Pvt Ltd - India
- Bharathi Cement Corporation - India
- Indian Oil Corporation Limited
- Orica Australia Pty. Ltd.
- Gujarat Electricity Regulatory Commission - India
- Directorate Of Revenue Intelligence - India
- Manunggal Multi Energi - Indonesia
- White Energy Company Limited
- Makarim & Taira - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- TNB Fuel Sdn Bhd - Malaysia
- Neyveli Lignite Corporation Ltd, - India
- Sakthi Sugars Limited - India
- Thiess Contractors Indonesia
- South Luzon Thermal Energy Corporation
- Altura Mining Limited, Indonesia
- Commonwealth Bank - Australia
- Sree Jayajothi Cements Limited - India
- Metalloyd Limited - United Kingdom
- Semirara Mining Corp, Philippines
- Ceylon Electricity Board - Sri Lanka
- Kalimantan Lumbung Energi - Indonesia
- Bulk Trading Sa - Switzerland
- Jaiprakash Power Ventures ltd
- Samtan Co., Ltd - South Korea
- Pipit Mutiara Jaya. PT, Indonesia
- OPG Power Generation Pvt Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Xindia Steels Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Uttam Galva Steels Limited - India
- Wood Mackenzie - Singapore
- Leighton Contractors Pty Ltd - Australia
- Australian Coal Association
- Globalindo Alam Lestari - Indonesia
- ICICI Bank Limited - India
- Bhushan Steel Limited - India
- Malabar Cements Ltd - India
- Marubeni Corporation - India
- Bhoruka Overseas - Indonesia
- Karaikal Port Pvt Ltd - India
- Kepco SPC Power Corporation, Philippines
- Aditya Birla Group - India
- Grasim Industreis Ltd - India
- Latin American Coal - Colombia
- CNBM International Corporation - China
- SN Aboitiz Power Inc, Philippines
- Aboitiz Power Corporation - Philippines
- Chamber of Mines of South Africa
- Ind-Barath Power Infra Limited - India
- Cigading International Bulk Terminal - Indonesia
- Georgia Ports Authority, United States
- Ministry of Mines - Canada
- Bahari Cakrawala Sebuku - Indonesia
- Tata Chemicals Ltd - India
- Port Waratah Coal Services - Australia
- Kobexindo Tractors - Indoneisa
- TeaM Sual Corporation - Philippines
- Mercator Lines Limited - India
- PNOC Exploration Corporation - Philippines
- McConnell Dowell - Australia
- Kartika Selabumi Mining - Indonesia
- Minerals Council of Australia
- Bukit Asam (Persero) Tbk - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Bangladesh Power Developement Board
- Parliament of New Zealand
- Borneo Indobara - Indonesia
- Ministry of Finance - Indonesia
- Essar Steel Hazira Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Kideco Jaya Agung - Indonesia
- Iligan Light & Power Inc, Philippines
- ASAPP Information Group - India
- Electricity Authority, New Zealand
- Orica Mining Services - Indonesia
- IEA Clean Coal Centre - UK
- Economic Council, Georgia
- PetroVietnam Power Coal Import and Supply Company
- Coastal Gujarat Power Limited - India
- Lanco Infratech Ltd - India
- Indo Tambangraya Megah - Indonesia
- Chettinad Cement Corporation Ltd - India
- Star Paper Mills Limited - India
- PowerSource Philippines DevCo
- Siam City Cement - Thailand
- Bhatia International Limited - India
- AsiaOL BioFuels Corp., Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Timah Investasi Mineral - Indoneisa
- Gujarat Mineral Development Corp Ltd - India
- Parry Sugars Refinery, India
- Pendopo Energi Batubara - Indonesia
- Bukit Makmur.PT - Indonesia
- CIMB Investment Bank - Malaysia
- Global Business Power Corporation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- European Bulk Services B.V. - Netherlands
- Videocon Industries ltd - India
- The Treasury - Australian Government
- Asmin Koalindo Tuhup - Indonesia
- Therma Luzon, Inc, Philippines
- San Jose City I Power Corp, Philippines
- The State Trading Corporation of India Ltd
- Karbindo Abesyapradhi - Indoneisa
- Power Finance Corporation Ltd., India
- Cement Manufacturers Association - India
- Larsen & Toubro Limited - India
- Bukit Baiduri Energy - Indonesia
- Indonesian Coal Mining Association
- Standard Chartered Bank - UAE
- Ambuja Cements Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Indian Energy Exchange, India
- Kumho Petrochemical, South Korea
- Sojitz Corporation - Japan
- Carbofer General Trading SA - India
- Mintek Dendrill Indonesia
- Maheswari Brothers Coal Limited - India
- Wilmar Investment Holdings
- VISA Power Limited - India
- Energy Development Corp, Philippines
- Sical Logistics Limited - India
- Edison Trading Spa - Italy
- Renaissance Capital - South Africa
- Trasteel International SA, Italy
- Mjunction Services Limited - India
- Riau Bara Harum - Indonesia
- Attock Cement Pakistan Limited
- Barasentosa Lestari - Indonesia
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