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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, 13 July 22
MARKET INSIGHT - INTERMODAL
Taking the previous market insight a step further, market sentiment remains bullish regarding the overall ROI of scrubbers, facing tailwinds from a ...
Friday, 08 July 22
AUSTRALIAN COAL PRICE BREAKS AGAIN LEVEL US$ 400/TON!, UP AROUND 4% - CNBC INDONESIA
Coal prices shot up again and crossed the level of US$ 400 per ton. On Thursday (7/7/2022) trading, the selling price of August contract closed at ...
Friday, 08 July 22
INDONESIA MULLS MORE FREQUENT SETTING OF CRUDE PALM OIL REFERENCE PRICE - REUTERS
Indonesia is considering setting its crude palm oil (CPO) export reference price every two weeks instead of monthly, a senior trade ministry offici ...
Friday, 08 July 22
BUNKER PRICES EXPECTED TO RECOVER LOST GROUND NEXT WEEK - SERGEY IVANOV, MABUX
Over the Week 27, the world bunker indices showed a sharp decline, primarily due to the fall in oil prices on July 05. The 380 HSFO index fell by 5 ...
Thursday, 07 July 22
NTPC MINES 61% MORE COAL AT 4.22 MN METRIC TONNES IN APRIL-JUNE: PTI
State-owned power giant NTPC on Tuesday said that its coal output grew by 61 per cent to Rs 42.40 lakh metric tonnes in April-June quarter from 26. ...
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- Altura Mining Limited, Indonesia
- Merrill Lynch Commodities Europe
- Directorate General of MIneral and Coal - Indonesia
- Edison Trading Spa - Italy
- Iligan Light & Power Inc, Philippines
- Electricity Authority, New Zealand
- PNOC Exploration Corporation - Philippines
- Georgia Ports Authority, United States
- Bulk Trading Sa - Switzerland
- Kartika Selabumi Mining - Indonesia
- Barasentosa Lestari - Indonesia
- The State Trading Corporation of India Ltd
- Australian Coal Association
- Krishnapatnam Port Company Ltd. - India
- Neyveli Lignite Corporation Ltd, - India
- Siam City Cement PLC, Thailand
- Lanco Infratech Ltd - India
- Global Coal Blending Company Limited - Australia
- SMC Global Power, Philippines
- Marubeni Corporation - India
- Miang Besar Coal Terminal - Indonesia
- India Bulls Power Limited - India
- Directorate Of Revenue Intelligence - India
- Chamber of Mines of South Africa
- Australian Commodity Traders Exchange
- Vijayanagar Sugar Pvt Ltd - India
- TeaM Sual Corporation - Philippines
- Wood Mackenzie - Singapore
- SN Aboitiz Power Inc, Philippines
- White Energy Company Limited
- PetroVietnam Power Coal Import and Supply Company
- Energy Link Ltd, New Zealand
- Indian Oil Corporation Limited
- PTC India Limited - India
- MS Steel International - UAE
- Standard Chartered Bank - UAE
- Latin American Coal - Colombia
- Kapuas Tunggal Persada - Indonesia
- Holcim Trading Pte Ltd - Singapore
- AsiaOL BioFuels Corp., Philippines
- VISA Power Limited - India
- Indonesian Coal Mining Association
- Kumho Petrochemical, South Korea
- ASAPP Information Group - India
- Bhoruka Overseas - Indonesia
- Indo Tambangraya Megah - Indonesia
- Indogreen Group - Indonesia
- Commonwealth Bank - Australia
- Samtan Co., Ltd - South Korea
- McConnell Dowell - Australia
- IEA Clean Coal Centre - UK
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bukit Makmur.PT - Indonesia
- Bhatia International Limited - India
- Therma Luzon, Inc, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Central Java Power - Indonesia
- Star Paper Mills Limited - India
- Global Business Power Corporation, Philippines
- Bhushan Steel Limited - India
- Grasim Industreis Ltd - India
- Africa Commodities Group - South Africa
- Aditya Birla Group - India
- Planning Commission, India
- SMG Consultants - Indonesia
- GAC Shipping (India) Pvt Ltd
- Heidelberg Cement - Germany
- Siam City Cement - Thailand
- The Treasury - Australian Government
- Jindal Steel & Power Ltd - India
- Romanian Commodities Exchange
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Sindya Power Generating Company Private Ltd
- Kobexindo Tractors - Indoneisa
- Salva Resources Pvt Ltd - India
- Orica Australia Pty. Ltd.
- Videocon Industries ltd - India
- Kepco SPC Power Corporation, Philippines
- Mintek Dendrill Indonesia
- Sical Logistics Limited - India
- Parry Sugars Refinery, India
- Ind-Barath Power Infra Limited - India
- Madhucon Powers Ltd - India
- Jaiprakash Power Ventures ltd
- Antam Resourcindo - Indonesia
- Dalmia Cement Bharat India
- Parliament of New Zealand
- Timah Investasi Mineral - Indoneisa
- OPG Power Generation Pvt Ltd - India
- Coal and Oil Company - UAE
- Essar Steel Hazira Ltd - India
- Electricity Generating Authority of Thailand
- Indika Energy - Indonesia
- Sakthi Sugars Limited - India
- Singapore Mercantile Exchange
- Sinarmas Energy and Mining - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Alfred C Toepfer International GmbH - Germany
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- The University of Queensland
- Aboitiz Power Corporation - Philippines
- Price Waterhouse Coopers - Russia
- Thai Mozambique Logistica
- GN Power Mariveles Coal Plant, Philippines
- Goldman Sachs - Singapore
- Eastern Energy - Thailand
- Meenaskhi Energy Private Limited - India
- CNBM International Corporation - China
- Globalindo Alam Lestari - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Ministry of Transport, Egypt
- Bukit Asam (Persero) Tbk - Indonesia
- Deloitte Consulting - India
- Makarim & Taira - Indonesia
- Bukit Baiduri Energy - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Ministry of Mines - Canada
- Coalindo Energy - Indonesia
- Metalloyd Limited - United Kingdom
- Leighton Contractors Pty Ltd - Australia
- Agrawal Coal Company - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- GVK Power & Infra Limited - India
- Posco Energy - South Korea
- Bayan Resources Tbk. - Indonesia
- Cement Manufacturers Association - India
- Tamil Nadu electricity Board
- Semirara Mining and Power Corporation, Philippines
- Oldendorff Carriers - Singapore
- Banpu Public Company Limited - Thailand
- Asmin Koalindo Tuhup - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Larsen & Toubro Limited - India
- International Coal Ventures Pvt Ltd - India
- Maheswari Brothers Coal Limited - India
- London Commodity Brokers - England
- Minerals Council of Australia
- Karbindo Abesyapradhi - Indoneisa
- Uttam Galva Steels Limited - India
- Xindia Steels Limited - India
- Wilmar Investment Holdings
- Gujarat Sidhee Cement - India
- Tata Chemicals Ltd - India
- San Jose City I Power Corp, Philippines
- Ceylon Electricity Board - Sri Lanka
- Sree Jayajothi Cements Limited - India
- Maharashtra Electricity Regulatory Commission - India
- LBH Netherlands Bv - Netherlands
- Carbofer General Trading SA - India
- Central Electricity Authority - India
- Mercuria Energy - Indonesia
- Bangladesh Power Developement Board
- Borneo Indobara - Indonesia
- Trasteel International SA, Italy
- ICICI Bank Limited - India
- Binh Thuan Hamico - Vietnam
- Malabar Cements Ltd - India
- Riau Bara Harum - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Vizag Seaport Private Limited - India
- Port Waratah Coal Services - Australia
- Medco Energi Mining Internasional
- Ambuja Cements Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- GMR Energy Limited - India
- Billiton Holdings Pty Ltd - Australia
- Mercator Lines Limited - India
- Eastern Coal Council - USA
- Manunggal Multi Energi - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Intertek Mineral Services - Indonesia
- Power Finance Corporation Ltd., India
- Interocean Group of Companies - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Indian Energy Exchange, India
- Rio Tinto Coal - Australia
- Sojitz Corporation - Japan
- Straits Asia Resources Limited - Singapore
- Semirara Mining Corp, Philippines
- Ministry of Finance - Indonesia
- CIMB Investment Bank - Malaysia
- Orica Mining Services - Indonesia
- Savvy Resources Ltd - HongKong
- Jorong Barutama Greston.PT - Indonesia
- Vedanta Resources Plc - India
- Meralco Power Generation, Philippines
- Pendopo Energi Batubara - Indonesia
- Formosa Plastics Group - Taiwan
- Sarangani Energy Corporation, Philippines
- Simpson Spence & Young - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Independent Power Producers Association of India
- South Luzon Thermal Energy Corporation
- Petron Corporation, Philippines
- Chettinad Cement Corporation Ltd - India
- Kaltim Prima Coal - Indonesia
- Renaissance Capital - South Africa
- Economic Council, Georgia
- Mjunction Services Limited - India
- Thiess Contractors Indonesia
- Kideco Jaya Agung - Indonesia
- Anglo American - United Kingdom
- European Bulk Services B.V. - Netherlands
- PowerSource Philippines DevCo
- IHS Mccloskey Coal Group - USA
- Baramulti Group, Indonesia
- New Zealand Coal & Carbon
- Energy Development Corp, Philippines
- Bharathi Cement Corporation - India
- Attock Cement Pakistan Limited
- Global Green Power PLC Corporation, Philippines
- Gujarat Electricity Regulatory Commission - India
- Toyota Tsusho Corporation, Japan
- Coastal Gujarat Power Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Rashtriya Ispat Nigam Limited - India
- Karaikal Port Pvt Ltd - India
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