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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, 08 March 22
RUSSIA-UKRAINE CONFLICT ADDS IMPETUS TO ASIA'S ENERGY TRANSITION - IEEFA
Clean energy alternatives are a crucial hedge against future disruptions in global commodity markets
Russia’s invasion of Ukra ...
Tuesday, 08 March 22
THE HIGH COST OF INDONESIA’S DOWNSTREAM COAL PROJECTS IS UNDERESTIMATED - IEEFA
Three Indonesian ministries have come up with a DME purchase price of US$378/tonne fixed for 20 years compared to IEEFA’s US$601/tonne estima ...
Wednesday, 02 March 22
SHIPPING MARKET INSIGHT - INTERMODAL
The escalating confrontation between Russia and Ukraine has the potential to disrupt global order and set the world back a few decades. While count ...
Tuesday, 22 February 22
THE DRY BULK MARKET HAS MOVED ON A POSITIVE TRACK - ALLIED
The dry bulk market has moved on a positive track as of the past couple of weeks or so. Following the typical softening in freight conditions durin ...
Tuesday, 22 February 22
CHINA'S DAILY OUTPUT OF COAL REBOUNDS TO OVER 12 MLN TONNES - REUTERS
China’s coal output returned to more than 12 million tonnes per day as of Feb. 20, the country’s state planner said on Monday, a level ...
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- Bhushan Steel Limited - India
- Sojitz Corporation - Japan
- Maharashtra Electricity Regulatory Commission - India
- Mintek Dendrill Indonesia
- Indian Oil Corporation Limited
- Antam Resourcindo - Indonesia
- Vedanta Resources Plc - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- New Zealand Coal & Carbon
- Indogreen Group - Indonesia
- OPG Power Generation Pvt Ltd - India
- Aditya Birla Group - India
- IHS Mccloskey Coal Group - USA
- Price Waterhouse Coopers - Russia
- Intertek Mineral Services - Indonesia
- Orica Mining Services - Indonesia
- Minerals Council of Australia
- India Bulls Power Limited - India
- Larsen & Toubro Limited - India
- Kepco SPC Power Corporation, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Makarim & Taira - Indonesia
- Indonesian Coal Mining Association
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kalimantan Lumbung Energi - Indonesia
- Energy Development Corp, Philippines
- Energy Link Ltd, New Zealand
- Sindya Power Generating Company Private Ltd
- Coal and Oil Company - UAE
- Kohat Cement Company Ltd. - Pakistan
- Indian Energy Exchange, India
- London Commodity Brokers - England
- Salva Resources Pvt Ltd - India
- VISA Power Limited - India
- PTC India Limited - India
- Gujarat Electricity Regulatory Commission - India
- Madhucon Powers Ltd - India
- Baramulti Group, Indonesia
- Central Electricity Authority - India
- Australian Coal Association
- Sree Jayajothi Cements Limited - India
- Petron Corporation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Karaikal Port Pvt Ltd - India
- Australian Commodity Traders Exchange
- The Treasury - Australian Government
- Attock Cement Pakistan Limited
- Meralco Power Generation, Philippines
- Parry Sugars Refinery, India
- Aboitiz Power Corporation - Philippines
- Ambuja Cements Ltd - India
- Trasteel International SA, Italy
- Ministry of Mines - Canada
- CIMB Investment Bank - Malaysia
- SMG Consultants - Indonesia
- Coastal Gujarat Power Limited - India
- Tata Chemicals Ltd - India
- Jindal Steel & Power Ltd - India
- Electricity Generating Authority of Thailand
- Independent Power Producers Association of India
- Krishnapatnam Port Company Ltd. - India
- Asmin Koalindo Tuhup - Indonesia
- South Luzon Thermal Energy Corporation
- Electricity Authority, New Zealand
- Central Java Power - Indonesia
- Renaissance Capital - South Africa
- ASAPP Information Group - India
- Binh Thuan Hamico - Vietnam
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Semirara Mining Corp, Philippines
- Bharathi Cement Corporation - India
- Bahari Cakrawala Sebuku - Indonesia
- Kobexindo Tractors - Indoneisa
- Medco Energi Mining Internasional
- Africa Commodities Group - South Africa
- Formosa Plastics Group - Taiwan
- Vizag Seaport Private Limited - India
- Kideco Jaya Agung - Indonesia
- Gujarat Sidhee Cement - India
- Economic Council, Georgia
- Holcim Trading Pte Ltd - Singapore
- IEA Clean Coal Centre - UK
- CNBM International Corporation - China
- Siam City Cement - Thailand
- Standard Chartered Bank - UAE
- Pendopo Energi Batubara - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- San Jose City I Power Corp, Philippines
- Simpson Spence & Young - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- TeaM Sual Corporation - Philippines
- Grasim Industreis Ltd - India
- Kumho Petrochemical, South Korea
- Jorong Barutama Greston.PT - Indonesia
- Bukit Makmur.PT - Indonesia
- Dalmia Cement Bharat India
- Timah Investasi Mineral - Indoneisa
- Toyota Tsusho Corporation, Japan
- Merrill Lynch Commodities Europe
- Sarangani Energy Corporation, Philippines
- Borneo Indobara - Indonesia
- Agrawal Coal Company - India
- Parliament of New Zealand
- Videocon Industries ltd - India
- Kartika Selabumi Mining - Indonesia
- Ministry of Finance - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Tamil Nadu electricity Board
- PNOC Exploration Corporation - Philippines
- Coalindo Energy - Indonesia
- Carbofer General Trading SA - India
- Oldendorff Carriers - Singapore
- Malabar Cements Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- GAC Shipping (India) Pvt Ltd
- PetroVietnam Power Coal Import and Supply Company
- Planning Commission, India
- Therma Luzon, Inc, Philippines
- Chamber of Mines of South Africa
- Thiess Contractors Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Billiton Holdings Pty Ltd - Australia
- McConnell Dowell - Australia
- Interocean Group of Companies - India
- Global Green Power PLC Corporation, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Siam City Cement PLC, Thailand
- Ministry of Transport, Egypt
- Uttam Galva Steels Limited - India
- Romanian Commodities Exchange
- Mjunction Services Limited - India
- Metalloyd Limited - United Kingdom
- Samtan Co., Ltd - South Korea
- LBH Netherlands Bv - Netherlands
- Sakthi Sugars Limited - India
- The University of Queensland
- SN Aboitiz Power Inc, Philippines
- Savvy Resources Ltd - HongKong
- Edison Trading Spa - Italy
- Bangladesh Power Developement Board
- International Coal Ventures Pvt Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Ind-Barath Power Infra Limited - India
- Globalindo Alam Lestari - Indonesia
- Deloitte Consulting - India
- Chettinad Cement Corporation Ltd - India
- Eastern Coal Council - USA
- Georgia Ports Authority, United States
- Posco Energy - South Korea
- Iligan Light & Power Inc, Philippines
- White Energy Company Limited
- Manunggal Multi Energi - Indonesia
- Jaiprakash Power Ventures ltd
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Wilmar Investment Holdings
- Port Waratah Coal Services - Australia
- GMR Energy Limited - India
- Riau Bara Harum - Indonesia
- Orica Australia Pty. Ltd.
- Mercuria Energy - Indonesia
- Eastern Energy - Thailand
- Mercator Lines Limited - India
- Sinarmas Energy and Mining - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Neyveli Lignite Corporation Ltd, - India
- The State Trading Corporation of India Ltd
- Anglo American - United Kingdom
- Wood Mackenzie - Singapore
- Thai Mozambique Logistica
- Rio Tinto Coal - Australia
- ICICI Bank Limited - India
- GVK Power & Infra Limited - India
- Power Finance Corporation Ltd., India
- Cement Manufacturers Association - India
- Bulk Trading Sa - Switzerland
- Leighton Contractors Pty Ltd - Australia
- Star Paper Mills Limited - India
- Bukit Baiduri Energy - Indonesia
- Marubeni Corporation - India
- Goldman Sachs - Singapore
- European Bulk Services B.V. - Netherlands
- Indika Energy - Indonesia
- Indo Tambangraya Megah - Indonesia
- Kaltim Prima Coal - Indonesia
- Global Coal Blending Company Limited - Australia
- GN Power Mariveles Coal Plant, Philippines
- Altura Mining Limited, Indonesia
- Directorate Of Revenue Intelligence - India
- Sical Logistics Limited - India
- Global Business Power Corporation, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Singapore Mercantile Exchange
- AsiaOL BioFuels Corp., Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Commonwealth Bank - Australia
- Rashtriya Ispat Nigam Limited - India
- Straits Asia Resources Limited - Singapore
- Meenaskhi Energy Private Limited - India
- Lanco Infratech Ltd - India
- Latin American Coal - Colombia
- Xindia Steels Limited - India
- Kapuas Tunggal Persada - Indonesia
- Essar Steel Hazira Ltd - India
- Bayan Resources Tbk. - Indonesia
- Semirara Mining and Power Corporation, Philippines
- MS Steel International - UAE
- PowerSource Philippines DevCo
- Heidelberg Cement - Germany
- Banpu Public Company Limited - Thailand
- Bhatia International Limited - India
- Barasentosa Lestari - Indonesia
- Miang Besar Coal Terminal - Indonesia
- SMC Global Power, Philippines
- Maheswari Brothers Coal Limited - India
- Bhoruka Overseas - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Ceylon Electricity Board - Sri Lanka
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