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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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- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Meenaskhi Energy Private Limited - India
- Parliament of New Zealand
- Kohat Cement Company Ltd. - Pakistan
- Directorate Of Revenue Intelligence - India
- Posco Energy - South Korea
- Coastal Gujarat Power Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Ceylon Electricity Board - Sri Lanka
- Bhushan Steel Limited - India
- VISA Power Limited - India
- Thiess Contractors Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Sakthi Sugars Limited - India
- Sical Logistics Limited - India
- CNBM International Corporation - China
- Independent Power Producers Association of India
- Neyveli Lignite Corporation Ltd, - India
- Dalmia Cement Bharat India
- Australian Coal Association
- Anglo American - United Kingdom
- Mercator Lines Limited - India
- Banpu Public Company Limited - Thailand
- Petrochimia International Co. Ltd.- Taiwan
- Madhucon Powers Ltd - India
- Intertek Mineral Services - Indonesia
- Grasim Industreis Ltd - India
- Goldman Sachs - Singapore
- Manunggal Multi Energi - Indonesia
- Ministry of Transport, Egypt
- Uttam Galva Steels Limited - India
- Cigading International Bulk Terminal - Indonesia
- Jaiprakash Power Ventures ltd
- Kapuas Tunggal Persada - Indonesia
- SMG Consultants - Indonesia
- European Bulk Services B.V. - Netherlands
- Pipit Mutiara Jaya. PT, Indonesia
- Agrawal Coal Company - India
- ICICI Bank Limited - India
- Wood Mackenzie - Singapore
- Globalindo Alam Lestari - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Indonesian Coal Mining Association
- Eastern Energy - Thailand
- Gujarat Mineral Development Corp Ltd - India
- Chamber of Mines of South Africa
- Parry Sugars Refinery, India
- Bayan Resources Tbk. - Indonesia
- Romanian Commodities Exchange
- Sinarmas Energy and Mining - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Makarim & Taira - Indonesia
- Malabar Cements Ltd - India
- Port Waratah Coal Services - Australia
- Lanco Infratech Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Oldendorff Carriers - Singapore
- Africa Commodities Group - South Africa
- Karbindo Abesyapradhi - Indoneisa
- Wilmar Investment Holdings
- Sindya Power Generating Company Private Ltd
- Energy Link Ltd, New Zealand
- San Jose City I Power Corp, Philippines
- Attock Cement Pakistan Limited
- Maheswari Brothers Coal Limited - India
- Electricity Authority, New Zealand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Straits Asia Resources Limited - Singapore
- PowerSource Philippines DevCo
- Tamil Nadu electricity Board
- Standard Chartered Bank - UAE
- India Bulls Power Limited - India
- Mintek Dendrill Indonesia
- Sarangani Energy Corporation, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Planning Commission, India
- Ministry of Mines - Canada
- Kobexindo Tractors - Indoneisa
- Bharathi Cement Corporation - India
- TNB Fuel Sdn Bhd - Malaysia
- Chettinad Cement Corporation Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Jorong Barutama Greston.PT - Indonesia
- MS Steel International - UAE
- Energy Development Corp, Philippines
- Deloitte Consulting - India
- Semirara Mining and Power Corporation, Philippines
- Orica Australia Pty. Ltd.
- Commonwealth Bank - Australia
- PetroVietnam Power Coal Import and Supply Company
- Bulk Trading Sa - Switzerland
- The Treasury - Australian Government
- White Energy Company Limited
- CIMB Investment Bank - Malaysia
- London Commodity Brokers - England
- Coalindo Energy - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Renaissance Capital - South Africa
- Star Paper Mills Limited - India
- Minerals Council of Australia
- Orica Mining Services - Indonesia
- Rio Tinto Coal - Australia
- Baramulti Group, Indonesia
- Global Coal Blending Company Limited - Australia
- Pendopo Energi Batubara - Indonesia
- Petron Corporation, Philippines
- Jindal Steel & Power Ltd - India
- Australian Commodity Traders Exchange
- TeaM Sual Corporation - Philippines
- Bahari Cakrawala Sebuku - Indonesia
- The State Trading Corporation of India Ltd
- Savvy Resources Ltd - HongKong
- Formosa Plastics Group - Taiwan
- Bangladesh Power Developement Board
- Indian Energy Exchange, India
- PNOC Exploration Corporation - Philippines
- Semirara Mining Corp, Philippines
- Power Finance Corporation Ltd., India
- Miang Besar Coal Terminal - Indonesia
- Global Business Power Corporation, Philippines
- Antam Resourcindo - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Kaltim Prima Coal - Indonesia
- Medco Energi Mining Internasional
- Global Green Power PLC Corporation, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Carbofer General Trading SA - India
- Trasteel International SA, Italy
- Bukit Asam (Persero) Tbk - Indonesia
- Mercuria Energy - Indonesia
- SMC Global Power, Philippines
- Indogreen Group - Indonesia
- IEA Clean Coal Centre - UK
- Vedanta Resources Plc - India
- Central Electricity Authority - India
- Samtan Co., Ltd - South Korea
- Coal and Oil Company - UAE
- Kartika Selabumi Mining - Indonesia
- GMR Energy Limited - India
- Simpson Spence & Young - Indonesia
- Toyota Tsusho Corporation, Japan
- Metalloyd Limited - United Kingdom
- Bhoruka Overseas - Indonesia
- Eastern Coal Council - USA
- Singapore Mercantile Exchange
- Price Waterhouse Coopers - Russia
- Timah Investasi Mineral - Indoneisa
- Cement Manufacturers Association - India
- Thai Mozambique Logistica
- SN Aboitiz Power Inc, Philippines
- PTC India Limited - India
- Gujarat Sidhee Cement - India
- Aboitiz Power Corporation - Philippines
- The University of Queensland
- New Zealand Coal & Carbon
- Ind-Barath Power Infra Limited - India
- Sojitz Corporation - Japan
- Salva Resources Pvt Ltd - India
- Aditya Birla Group - India
- ASAPP Information Group - India
- Vijayanagar Sugar Pvt Ltd - India
- Electricity Generating Authority of Thailand
- Bhatia International Limited - India
- IHS Mccloskey Coal Group - USA
- Riau Bara Harum - Indonesia
- Mjunction Services Limited - India
- Georgia Ports Authority, United States
- Videocon Industries ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Meralco Power Generation, Philippines
- Tata Chemicals Ltd - India
- Central Java Power - Indonesia
- Binh Thuan Hamico - Vietnam
- Indika Energy - Indonesia
- Xindia Steels Limited - India
- Latin American Coal - Colombia
- LBH Netherlands Bv - Netherlands
- Rashtriya Ispat Nigam Limited - India
- International Coal Ventures Pvt Ltd - India
- Kideco Jaya Agung - Indonesia
- Iligan Light & Power Inc, Philippines
- Directorate General of MIneral and Coal - Indonesia
- OPG Power Generation Pvt Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Bukit Baiduri Energy - Indonesia
- Siam City Cement - Thailand
- Bukit Makmur.PT - Indonesia
- Siam City Cement PLC, Thailand
- Vizag Seaport Private Limited - India
- Interocean Group of Companies - India
- AsiaOL BioFuels Corp., Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Merrill Lynch Commodities Europe
- Barasentosa Lestari - Indonesia
- Indo Tambangraya Megah - Indonesia
- Ambuja Cements Ltd - India
- Marubeni Corporation - India
- Gujarat Electricity Regulatory Commission - India
- GAC Shipping (India) Pvt Ltd
- Essar Steel Hazira Ltd - India
- Altura Mining Limited, Indonesia
- Larsen & Toubro Limited - India
- Economic Council, Georgia
- Therma Luzon, Inc, Philippines
- Edison Trading Spa - Italy
- Borneo Indobara - Indonesia
- Karaikal Port Pvt Ltd - India
- Kumho Petrochemical, South Korea
- Sree Jayajothi Cements Limited - India
- South Luzon Thermal Energy Corporation
- Indian Oil Corporation Limited
- Kepco SPC Power Corporation, Philippines
- McConnell Dowell - Australia
- Ministry of Finance - Indonesia
- Heidelberg Cement - Germany
- GVK Power & Infra Limited - India
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