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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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Wednesday, 07 December 22
MARKET INSIGHT - INTERMODAL
China’s coal imports from January to October were 230.1m mt, a decrease of around 10.7% y-o-y (2021 totalled 323.2m mt). The question is if t ...
Wednesday, 07 December 22
INDIA'S STEEL MINISTRY SEEKS IMPORT TAX WAIVER FOR COKING COAL - SOURCES REUTERS REPORTED
India’s steel ministry has asked the finance ministry for a waiver of import tax on coking coal among a slew of raw materials, as it scramble ...
Tuesday, 06 December 22
INDIA'S COAL PRODUCTION RISES 17% IN APR-NOV PERIOD - PTI
The country’s coal production increased 17 per cent to 524.20 million tonnes in the April-November period of the ongoing fiscal.
...
Tuesday, 06 December 22
INDONESIA AIMS TO STARTS COLLECTING COAL LEVY IN Q1 2023 - MINISTER, REUTERS REPORTED
Indonesia aims to establish a coal fund agency and start collecting a coal levy in the first quarter next year, to help ensure supply security for ...
Saturday, 03 December 22
COMPLEX RUSSIAN PRICE CAP MAKES MARITIME VISIBILITY A MUST - WINDWARD
Many commentators and analysts are speculating about the potential impact the Russian seaborne oil price cap will have on organizations and entitie ...
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- Savvy Resources Ltd - HongKong
- Bangladesh Power Developement Board
- Manunggal Multi Energi - Indonesia
- Parliament of New Zealand
- Indonesian Coal Mining Association
- Holcim Trading Pte Ltd - Singapore
- Grasim Industreis Ltd - India
- Vedanta Resources Plc - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bahari Cakrawala Sebuku - Indonesia
- Lanco Infratech Ltd - India
- Attock Cement Pakistan Limited
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Indo Tambangraya Megah - Indonesia
- Global Green Power PLC Corporation, Philippines
- Eastern Coal Council - USA
- Energy Development Corp, Philippines
- Salva Resources Pvt Ltd - India
- Malabar Cements Ltd - India
- Parry Sugars Refinery, India
- PetroVietnam Power Coal Import and Supply Company
- Kobexindo Tractors - Indoneisa
- IHS Mccloskey Coal Group - USA
- IEA Clean Coal Centre - UK
- Vizag Seaport Private Limited - India
- Energy Link Ltd, New Zealand
- Bhushan Steel Limited - India
- Coal and Oil Company - UAE
- Altura Mining Limited, Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Planning Commission, India
- CIMB Investment Bank - Malaysia
- Chettinad Cement Corporation Ltd - India
- Larsen & Toubro Limited - India
- Karbindo Abesyapradhi - Indoneisa
- MS Steel International - UAE
- Samtan Co., Ltd - South Korea
- Videocon Industries ltd - India
- Power Finance Corporation Ltd., India
- Bhatia International Limited - India
- Therma Luzon, Inc, Philippines
- Heidelberg Cement - Germany
- Global Business Power Corporation, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Cement Manufacturers Association - India
- Sree Jayajothi Cements Limited - India
- Gujarat Sidhee Cement - India
- Madhucon Powers Ltd - India
- Semirara Mining Corp, Philippines
- Meralco Power Generation, Philippines
- Romanian Commodities Exchange
- Commonwealth Bank - Australia
- Gujarat Mineral Development Corp Ltd - India
- Edison Trading Spa - Italy
- International Coal Ventures Pvt Ltd - India
- Barasentosa Lestari - Indonesia
- Maheswari Brothers Coal Limited - India
- Alfred C Toepfer International GmbH - Germany
- Eastern Energy - Thailand
- Straits Asia Resources Limited - Singapore
- Kumho Petrochemical, South Korea
- Central Java Power - Indonesia
- Simpson Spence & Young - Indonesia
- Kartika Selabumi Mining - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Sical Logistics Limited - India
- Bayan Resources Tbk. - Indonesia
- Indian Oil Corporation Limited
- Pipit Mutiara Jaya. PT, Indonesia
- Toyota Tsusho Corporation, Japan
- Medco Energi Mining Internasional
- Timah Investasi Mineral - Indoneisa
- Bharathi Cement Corporation - India
- Indogreen Group - Indonesia
- Mercator Lines Limited - India
- Thiess Contractors Indonesia
- Essar Steel Hazira Ltd - India
- Economic Council, Georgia
- Georgia Ports Authority, United States
- San Jose City I Power Corp, Philippines
- Billiton Holdings Pty Ltd - Australia
- SN Aboitiz Power Inc, Philippines
- GMR Energy Limited - India
- ICICI Bank Limited - India
- White Energy Company Limited
- Ceylon Electricity Board - Sri Lanka
- Ind-Barath Power Infra Limited - India
- Sinarmas Energy and Mining - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Xindia Steels Limited - India
- McConnell Dowell - Australia
- Minerals Council of Australia
- Bukit Asam (Persero) Tbk - Indonesia
- Krishnapatnam Port Company Ltd. - India
- GVK Power & Infra Limited - India
- Africa Commodities Group - South Africa
- Sindya Power Generating Company Private Ltd
- OPG Power Generation Pvt Ltd - India
- PowerSource Philippines DevCo
- Mjunction Services Limited - India
- Standard Chartered Bank - UAE
- Kohat Cement Company Ltd. - Pakistan
- Coastal Gujarat Power Limited - India
- Wood Mackenzie - Singapore
- Ministry of Transport, Egypt
- GN Power Mariveles Coal Plant, Philippines
- Indian Energy Exchange, India
- Kaltim Prima Coal - Indonesia
- Independent Power Producers Association of India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- CNBM International Corporation - China
- New Zealand Coal & Carbon
- Indika Energy - Indonesia
- Aditya Birla Group - India
- The State Trading Corporation of India Ltd
- Karaikal Port Pvt Ltd - India
- Dalmia Cement Bharat India
- Aboitiz Power Corporation - Philippines
- Ministry of Finance - Indonesia
- Kepco SPC Power Corporation, Philippines
- GAC Shipping (India) Pvt Ltd
- Central Electricity Authority - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Semirara Mining and Power Corporation, Philippines
- SMG Consultants - Indonesia
- Jindal Steel & Power Ltd - India
- Australian Coal Association
- Deloitte Consulting - India
- Carbofer General Trading SA - India
- Tata Chemicals Ltd - India
- PTC India Limited - India
- Riau Bara Harum - Indonesia
- Orica Mining Services - Indonesia
- Baramulti Group, Indonesia
- European Bulk Services B.V. - Netherlands
- Bukit Baiduri Energy - Indonesia
- Chamber of Mines of South Africa
- Ambuja Cements Ltd - India
- Wilmar Investment Holdings
- Electricity Generating Authority of Thailand
- Meenaskhi Energy Private Limited - India
- Intertek Mineral Services - Indonesia
- Jaiprakash Power Ventures ltd
- Borneo Indobara - Indonesia
- ASAPP Information Group - India
- Coalindo Energy - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Binh Thuan Hamico - Vietnam
- Banpu Public Company Limited - Thailand
- Bulk Trading Sa - Switzerland
- TNB Fuel Sdn Bhd - Malaysia
- Formosa Plastics Group - Taiwan
- Renaissance Capital - South Africa
- Ministry of Mines - Canada
- SMC Global Power, Philippines
- Sakthi Sugars Limited - India
- LBH Netherlands Bv - Netherlands
- Anglo American - United Kingdom
- The University of Queensland
- Sarangani Energy Corporation, Philippines
- Siam City Cement PLC, Thailand
- Orica Australia Pty. Ltd.
- South Luzon Thermal Energy Corporation
- TeaM Sual Corporation - Philippines
- Electricity Authority, New Zealand
- The Treasury - Australian Government
- Iligan Light & Power Inc, Philippines
- Tamil Nadu electricity Board
- Antam Resourcindo - Indonesia
- Trasteel International SA, Italy
- Siam City Cement - Thailand
- Kapuas Tunggal Persada - Indonesia
- Agrawal Coal Company - India
- Vijayanagar Sugar Pvt Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Marubeni Corporation - India
- London Commodity Brokers - England
- Mercuria Energy - Indonesia
- Directorate Of Revenue Intelligence - India
- Sojitz Corporation - Japan
- Interocean Group of Companies - India
- Kideco Jaya Agung - Indonesia
- Australian Commodity Traders Exchange
- Offshore Bulk Terminal Pte Ltd, Singapore
- Metalloyd Limited - United Kingdom
- Bukit Makmur.PT - Indonesia
- Petron Corporation, Philippines
- AsiaOL BioFuels Corp., Philippines
- Rio Tinto Coal - Australia
- Price Waterhouse Coopers - Russia
- Oldendorff Carriers - Singapore
- Global Coal Blending Company Limited - Australia
- India Bulls Power Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Pendopo Energi Batubara - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Posco Energy - South Korea
- PNOC Exploration Corporation - Philippines
- Port Waratah Coal Services - Australia
- Singapore Mercantile Exchange
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- VISA Power Limited - India
- Goldman Sachs - Singapore
- Star Paper Mills Limited - India
- Bhoruka Overseas - Indonesia
- Thai Mozambique Logistica
- Globalindo Alam Lestari - Indonesia
- Latin American Coal - Colombia
- Rashtriya Ispat Nigam Limited - India
- Mintek Dendrill Indonesia
- Uttam Galva Steels Limited - India
- Leighton Contractors Pty Ltd - Australia
- Merrill Lynch Commodities Europe
- Gujarat Electricity Regulatory Commission - India
- Makarim & Taira - Indonesia
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