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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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Friday, 02 September 22
INDONESIA COAL PRICE REFERENCE SLIPS SLIGHTLY IN SEPTEMBER 2022
COALspot.com: Indonesian Coal Price Reference for September delivery drops 0.74 per cent month on month.
The Indonesian Coal Price R ...
Friday, 02 September 22
ABM INVESTAMA BUYS 30% GEMS SHARES FOR US$ 420 MILLION
PT ABM Investama Tbk through its indirect subsidiary, bought a 30% stake in the PT Golden Energy Mines Tbk for US$ 420 million or around Rp 6.2 tri ...
Wednesday, 31 August 22
MARKET INSIGHT - INTERMODAL
Scorching temperatures and extremely dry conditions during the Northern hemisphere summer have been drying crops. Yield prospects have subsided in ...
Tuesday, 23 August 22
HIGH COAL PRICES COULD BOOST INDONESIA'S ENERGY TRANSITION - IEEFA
Global coal prices have reached an all-time high as countries stop purchasing Russian coal amidst the Russia-Ukraine conflict. Indonesian coal comp ...
Tuesday, 23 August 22
A COMBINED US$6.8-BILLION CASH BALANCE OF INDONESIAN COAL COMPANIES COULD PROVIDE FOR TIMELY INVESTMENTS IN GREEN TRANSITION - IEEFA
A combined US$6.8-billion cash balance of Indonesian coal companies could provide for timely investments in green transition
The opp ...
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- Rashtriya Ispat Nigam Limited - India
- Commonwealth Bank - Australia
- Cement Manufacturers Association - India
- Energy Development Corp, Philippines
- Indika Energy - Indonesia
- Bangladesh Power Developement Board
- SMG Consultants - Indonesia
- Iligan Light & Power Inc, Philippines
- Ministry of Mines - Canada
- Directorate Of Revenue Intelligence - India
- Latin American Coal - Colombia
- Gujarat Mineral Development Corp Ltd - India
- European Bulk Services B.V. - Netherlands
- GVK Power & Infra Limited - India
- Central Electricity Authority - India
- Petron Corporation, Philippines
- Trasteel International SA, Italy
- Maharashtra Electricity Regulatory Commission - India
- Timah Investasi Mineral - Indoneisa
- Vijayanagar Sugar Pvt Ltd - India
- Eastern Coal Council - USA
- Orica Mining Services - Indonesia
- Attock Cement Pakistan Limited
- Bukit Baiduri Energy - Indonesia
- Grasim Industreis Ltd - India
- CNBM International Corporation - China
- Kepco SPC Power Corporation, Philippines
- MS Steel International - UAE
- SMC Global Power, Philippines
- Ministry of Finance - Indonesia
- Sindya Power Generating Company Private Ltd
- SN Aboitiz Power Inc, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Orica Australia Pty. Ltd.
- Karaikal Port Pvt Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Intertek Mineral Services - Indonesia
- Bukit Makmur.PT - Indonesia
- Altura Mining Limited, Indonesia
- Sojitz Corporation - Japan
- Wood Mackenzie - Singapore
- The Treasury - Australian Government
- Tamil Nadu electricity Board
- Malabar Cements Ltd - India
- Mintek Dendrill Indonesia
- Indian Energy Exchange, India
- Holcim Trading Pte Ltd - Singapore
- Mercuria Energy - Indonesia
- Australian Coal Association
- Meralco Power Generation, Philippines
- LBH Netherlands Bv - Netherlands
- Jaiprakash Power Ventures ltd
- Africa Commodities Group - South Africa
- Lanco Infratech Ltd - India
- Economic Council, Georgia
- Merrill Lynch Commodities Europe
- Jorong Barutama Greston.PT - Indonesia
- Bayan Resources Tbk. - Indonesia
- Indogreen Group - Indonesia
- Interocean Group of Companies - India
- Thiess Contractors Indonesia
- ASAPP Information Group - India
- Posco Energy - South Korea
- Bhoruka Overseas - Indonesia
- Heidelberg Cement - Germany
- India Bulls Power Limited - India
- Mjunction Services Limited - India
- Electricity Generating Authority of Thailand
- South Luzon Thermal Energy Corporation
- Banpu Public Company Limited - Thailand
- Mercator Lines Limited - India
- Simpson Spence & Young - Indonesia
- White Energy Company Limited
- GAC Shipping (India) Pvt Ltd
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Chettinad Cement Corporation Ltd - India
- Energy Link Ltd, New Zealand
- Independent Power Producers Association of India
- Metalloyd Limited - United Kingdom
- Xindia Steels Limited - India
- Semirara Mining and Power Corporation, Philippines
- ICICI Bank Limited - India
- Edison Trading Spa - Italy
- Agrawal Coal Company - India
- Chamber of Mines of South Africa
- Videocon Industries ltd - India
- Ind-Barath Power Infra Limited - India
- Coalindo Energy - Indonesia
- Kaltim Prima Coal - Indonesia
- Kobexindo Tractors - Indoneisa
- Sree Jayajothi Cements Limited - India
- Romanian Commodities Exchange
- Carbofer General Trading SA - India
- Vedanta Resources Plc - India
- Karbindo Abesyapradhi - Indoneisa
- Formosa Plastics Group - Taiwan
- Bharathi Cement Corporation - India
- Aboitiz Power Corporation - Philippines
- Leighton Contractors Pty Ltd - Australia
- Kapuas Tunggal Persada - Indonesia
- PTC India Limited - India
- San Jose City I Power Corp, Philippines
- Siam City Cement PLC, Thailand
- TNB Fuel Sdn Bhd - Malaysia
- Neyveli Lignite Corporation Ltd, - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Goldman Sachs - Singapore
- Wilmar Investment Holdings
- Singapore Mercantile Exchange
- Sinarmas Energy and Mining - Indonesia
- CIMB Investment Bank - Malaysia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- AsiaOL BioFuels Corp., Philippines
- VISA Power Limited - India
- Parry Sugars Refinery, India
- TeaM Sual Corporation - Philippines
- Asmin Koalindo Tuhup - Indonesia
- IHS Mccloskey Coal Group - USA
- Vizag Seaport Private Limited - India
- Antam Resourcindo - Indonesia
- Meenaskhi Energy Private Limited - India
- Gujarat Electricity Regulatory Commission - India
- London Commodity Brokers - England
- Indo Tambangraya Megah - Indonesia
- Kideco Jaya Agung - Indonesia
- Ministry of Transport, Egypt
- Sakthi Sugars Limited - India
- PNOC Exploration Corporation - Philippines
- Thai Mozambique Logistica
- Larsen & Toubro Limited - India
- GMR Energy Limited - India
- Indian Oil Corporation Limited
- Anglo American - United Kingdom
- Uttam Galva Steels Limited - India
- Central Java Power - Indonesia
- Electricity Authority, New Zealand
- Bhushan Steel Limited - India
- Barasentosa Lestari - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Binh Thuan Hamico - Vietnam
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Manunggal Multi Energi - Indonesia
- OPG Power Generation Pvt Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Ceylon Electricity Board - Sri Lanka
- Kumho Petrochemical, South Korea
- Bank of Tokyo Mitsubishi UFJ Ltd
- International Coal Ventures Pvt Ltd - India
- Madhucon Powers Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Rio Tinto Coal - Australia
- New Zealand Coal & Carbon
- Eastern Energy - Thailand
- Baramulti Group, Indonesia
- Alfred C Toepfer International GmbH - Germany
- McConnell Dowell - Australia
- Oldendorff Carriers - Singapore
- Straits Asia Resources Limited - Singapore
- Billiton Holdings Pty Ltd - Australia
- Pendopo Energi Batubara - Indonesia
- Georgia Ports Authority, United States
- Bulk Trading Sa - Switzerland
- Kartika Selabumi Mining - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Borneo Indobara - Indonesia
- Medco Energi Mining Internasional
- The State Trading Corporation of India Ltd
- Dalmia Cement Bharat India
- Global Coal Blending Company Limited - Australia
- Parliament of New Zealand
- Kohat Cement Company Ltd. - Pakistan
- The University of Queensland
- Planning Commission, India
- Jindal Steel & Power Ltd - India
- Samtan Co., Ltd - South Korea
- Therma Luzon, Inc, Philippines
- Sical Logistics Limited - India
- Australian Commodity Traders Exchange
- Price Waterhouse Coopers - Russia
- Indonesian Coal Mining Association
- PowerSource Philippines DevCo
- Marubeni Corporation - India
- Toyota Tsusho Corporation, Japan
- Globalindo Alam Lestari - Indonesia
- Krishnapatnam Port Company Ltd. - India
- IEA Clean Coal Centre - UK
- Petrochimia International Co. Ltd.- Taiwan
- Tata Chemicals Ltd - India
- Sarangani Energy Corporation, Philippines
- Riau Bara Harum - Indonesia
- Star Paper Mills Limited - India
- Salva Resources Pvt Ltd - India
- Power Finance Corporation Ltd., India
- Standard Chartered Bank - UAE
- Global Green Power PLC Corporation, Philippines
- Gujarat Sidhee Cement - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Renaissance Capital - South Africa
- Deloitte Consulting - India
- Global Business Power Corporation, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Maheswari Brothers Coal Limited - India
- Coastal Gujarat Power Limited - India
- Port Waratah Coal Services - Australia
- Bukit Asam (Persero) Tbk - Indonesia
- Bhatia International Limited - India
- Coal and Oil Company - UAE
- Essar Steel Hazira Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Siam City Cement - Thailand
- Minerals Council of Australia
- Ambuja Cements Ltd - India
- Semirara Mining Corp, Philippines
- Aditya Birla Group - India
- Makarim & Taira - Indonesia
- Savvy Resources Ltd - HongKong
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