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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, 29 March 22
MEMR OF INDONESIA HAS FIXED COAL PRICE AT US$ 90 PER TONNE FOR DOMESTIC INDUSTRIES EXCEPT SMELTER INDUSTRIES; FOR PLN USD 70 IS APPLICABLE
Minister of Energy and Mineral Resources (ESDM) Arifin Tasrif has set the selling price of coal for domestic, industrial except metal processing an ...
Monday, 21 March 22
A FORCE MAJEURE TO BE RECKONED WITH - BALTIC EXCHANGE
Sanctions cause payment confusion
This dispute in MUR Shipping BV v. RTI Ltd [2022] EWHC 467 (Comm) related to an owner’s purported exercis ...
Monday, 21 March 22
CHINA'S COAL OUTPUT UP 10.3 PCT IN FIRST TWO MONTHS - XINHUA
China’s raw coal output posted fast growth in the first two months of 2022, while coal imports continued to shrink, official data showed.
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Tuesday, 15 March 22
INDUSTRY VETERANS & ORGANIZATIONS HONOURED WITH THE PRESTIGIOUS SHIPTEK INTERNATIONAL AWARDS 2022
Press Release: The 15th edition of the prestigious ShipTek International Conference & Awards 2022 concluded successfully from March 7th - 8th 2 ...
Tuesday, 15 March 22
CHINA'S COAL OUTPUT GROWS TO STABILIZE MARKET SUPPLY - XINHUA
China’s coal market has seen growth in output since late February amid the country’s efforts to stabilize production and ensure supply, ...
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- Indogreen Group - Indonesia
- VISA Power Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Savvy Resources Ltd - HongKong
- Bulk Trading Sa - Switzerland
- IEA Clean Coal Centre - UK
- Wilmar Investment Holdings
- McConnell Dowell - Australia
- Heidelberg Cement - Germany
- Kumho Petrochemical, South Korea
- Therma Luzon, Inc, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Bayan Resources Tbk. - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Makarim & Taira - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Semirara Mining Corp, Philippines
- Lanco Infratech Ltd - India
- The Treasury - Australian Government
- Edison Trading Spa - Italy
- Eastern Energy - Thailand
- AsiaOL BioFuels Corp., Philippines
- Salva Resources Pvt Ltd - India
- Antam Resourcindo - Indonesia
- Latin American Coal - Colombia
- Kapuas Tunggal Persada - Indonesia
- Standard Chartered Bank - UAE
- Cement Manufacturers Association - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Uttam Galva Steels Limited - India
- Binh Thuan Hamico - Vietnam
- Baramulti Group, Indonesia
- CNBM International Corporation - China
- Independent Power Producers Association of India
- Rashtriya Ispat Nigam Limited - India
- Pendopo Energi Batubara - Indonesia
- Africa Commodities Group - South Africa
- Ind-Barath Power Infra Limited - India
- LBH Netherlands Bv - Netherlands
- European Bulk Services B.V. - Netherlands
- Commonwealth Bank - Australia
- GMR Energy Limited - India
- Kalimantan Lumbung Energi - Indonesia
- GAC Shipping (India) Pvt Ltd
- Sinarmas Energy and Mining - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Sindya Power Generating Company Private Ltd
- Mercator Lines Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Vijayanagar Sugar Pvt Ltd - India
- Agrawal Coal Company - India
- Kobexindo Tractors - Indoneisa
- Coalindo Energy - Indonesia
- Aditya Birla Group - India
- Bhatia International Limited - India
- Merrill Lynch Commodities Europe
- Riau Bara Harum - Indonesia
- Port Waratah Coal Services - Australia
- Global Business Power Corporation, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Manunggal Multi Energi - Indonesia
- Siam City Cement - Thailand
- Bhoruka Overseas - Indonesia
- Barasentosa Lestari - Indonesia
- Timah Investasi Mineral - Indoneisa
- Ministry of Finance - Indonesia
- Attock Cement Pakistan Limited
- Aboitiz Power Corporation - Philippines
- Kepco SPC Power Corporation, Philippines
- Trasteel International SA, Italy
- Minerals Council of Australia
- Toyota Tsusho Corporation, Japan
- Ceylon Electricity Board - Sri Lanka
- Cigading International Bulk Terminal - Indonesia
- Jaiprakash Power Ventures ltd
- London Commodity Brokers - England
- Thai Mozambique Logistica
- Krishnapatnam Port Company Ltd. - India
- Videocon Industries ltd - India
- Indian Energy Exchange, India
- Coastal Gujarat Power Limited - India
- GVK Power & Infra Limited - India
- Deloitte Consulting - India
- Maharashtra Electricity Regulatory Commission - India
- Sojitz Corporation - Japan
- Meenaskhi Energy Private Limited - India
- Billiton Holdings Pty Ltd - Australia
- Xindia Steels Limited - India
- Straits Asia Resources Limited - Singapore
- Indonesian Coal Mining Association
- Oldendorff Carriers - Singapore
- ICICI Bank Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Karaikal Port Pvt Ltd - India
- Global Coal Blending Company Limited - Australia
- SMC Global Power, Philippines
- Jindal Steel & Power Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- The State Trading Corporation of India Ltd
- Singapore Mercantile Exchange
- Bank of Tokyo Mitsubishi UFJ Ltd
- Larsen & Toubro Limited - India
- Banpu Public Company Limited - Thailand
- Bangladesh Power Developement Board
- Economic Council, Georgia
- Bukit Asam (Persero) Tbk - Indonesia
- Ministry of Mines - Canada
- Sarangani Energy Corporation, Philippines
- Intertek Mineral Services - Indonesia
- New Zealand Coal & Carbon
- Renaissance Capital - South Africa
- Gujarat Mineral Development Corp Ltd - India
- Energy Development Corp, Philippines
- Miang Besar Coal Terminal - Indonesia
- Directorate Of Revenue Intelligence - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Essar Steel Hazira Ltd - India
- Thiess Contractors Indonesia
- White Energy Company Limited
- Tamil Nadu electricity Board
- PNOC Exploration Corporation - Philippines
- Grasim Industreis Ltd - India
- International Coal Ventures Pvt Ltd - India
- Electricity Authority, New Zealand
- Iligan Light & Power Inc, Philippines
- Star Paper Mills Limited - India
- Madhucon Powers Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Orica Australia Pty. Ltd.
- Mercuria Energy - Indonesia
- Australian Commodity Traders Exchange
- CIMB Investment Bank - Malaysia
- TeaM Sual Corporation - Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- SMG Consultants - Indonesia
- Sakthi Sugars Limited - India
- ASAPP Information Group - India
- Anglo American - United Kingdom
- Jorong Barutama Greston.PT - Indonesia
- SN Aboitiz Power Inc, Philippines
- Dalmia Cement Bharat India
- Australian Coal Association
- Ambuja Cements Ltd - India
- Chamber of Mines of South Africa
- Pipit Mutiara Jaya. PT, Indonesia
- Bharathi Cement Corporation - India
- Semirara Mining and Power Corporation, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Globalindo Alam Lestari - Indonesia
- Formosa Plastics Group - Taiwan
- Bukit Baiduri Energy - Indonesia
- Parliament of New Zealand
- Mintek Dendrill Indonesia
- Chettinad Cement Corporation Ltd - India
- Planning Commission, India
- Kideco Jaya Agung - Indonesia
- Tata Chemicals Ltd - India
- Global Green Power PLC Corporation, Philippines
- Price Waterhouse Coopers - Russia
- India Bulls Power Limited - India
- Wood Mackenzie - Singapore
- Mjunction Services Limited - India
- Indian Oil Corporation Limited
- MS Steel International - UAE
- Kartika Selabumi Mining - Indonesia
- Bhushan Steel Limited - India
- Bukit Makmur.PT - Indonesia
- Energy Link Ltd, New Zealand
- Ministry of Transport, Egypt
- Altura Mining Limited, Indonesia
- Goldman Sachs - Singapore
- Kaltim Prima Coal - Indonesia
- Central Java Power - Indonesia
- IHS Mccloskey Coal Group - USA
- Orica Mining Services - Indonesia
- OPG Power Generation Pvt Ltd - India
- PTC India Limited - India
- Maheswari Brothers Coal Limited - India
- Rio Tinto Coal - Australia
- Georgia Ports Authority, United States
- PowerSource Philippines DevCo
- Gujarat Electricity Regulatory Commission - India
- Meralco Power Generation, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Power Finance Corporation Ltd., India
- Eastern Coal Council - USA
- The University of Queensland
- Samtan Co., Ltd - South Korea
- Romanian Commodities Exchange
- Sree Jayajothi Cements Limited - India
- Central Electricity Authority - India
- Posco Energy - South Korea
- Vizag Seaport Private Limited - India
- Medco Energi Mining Internasional
- Parry Sugars Refinery, India
- Indo Tambangraya Megah - Indonesia
- Simpson Spence & Young - Indonesia
- Indika Energy - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Gujarat Sidhee Cement - India
- Interocean Group of Companies - India
- San Jose City I Power Corp, Philippines
- South Luzon Thermal Energy Corporation
- Siam City Cement PLC, Thailand
- Metalloyd Limited - United Kingdom
- Petron Corporation, Philippines
- Neyveli Lignite Corporation Ltd, - India
- TNB Fuel Sdn Bhd - Malaysia
- GN Power Mariveles Coal Plant, Philippines
- Marubeni Corporation - India
- Borneo Indobara - Indonesia
- Coal and Oil Company - UAE
- Sical Logistics Limited - India
- Malabar Cements Ltd - India
- Electricity Generating Authority of Thailand
- Vedanta Resources Plc - India
- Carbofer General Trading SA - India
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