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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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Thursday, 10 February 22
EIA ANALYSIS CONSIDERS DIFFERENT OUTCOMES FOR COAL MARKETS IN INDIA AND SOUTHEAST ASIA
In our International Energy Outlook 2021 (IEO2021) Issues in Focus: Uncertainty in Coal Trade in India and Greater Southeast Asia, we analyze three ...
Wednesday, 09 February 22
OIL PRICES: "IT'S GOING TO BE VERY EASY" TO GET TO $100/BARREL, ANALYST SAYS - YAHOO FINANCE
Energy and oil prices have been on fire over the last six months — and expect them to go higher, says one analyst.
“For ...
Wednesday, 09 February 22
MARKET INSIGHT - INTERMODAL
Iron ore prices have jumped significantly in the week prior to the Chinese New Year with traders and producers stocking up on raw materials. China& ...
Wednesday, 09 February 22
FEBRUARY HBA HITS RECORD HIGH IN 2022 ON INDONESIA’S EXPORT BAN IN JANUARY, WORSEN SUPPLY, UKRAINE TENSIONS
COALspot.com: Indonesian Coal Price Reference for February in a steep climb from January 2022.
As expected in January the Indonesia ...
Wednesday, 09 February 22
CHINESE COAL MARKS BEST DAY IN 4 MONTHS ON TIGHT SUPPLY, HIGH DEMAND - REUTERS
China’s coal futures on Tuesday recorded their best session since Bejing’s mid-October intervention to cool runaway prices, aided by co ...
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- Port Waratah Coal Services - Australia
- Heidelberg Cement - Germany
- Dalmia Cement Bharat India
- LBH Netherlands Bv - Netherlands
- Miang Besar Coal Terminal - Indonesia
- Siam City Cement PLC, Thailand
- PNOC Exploration Corporation - Philippines
- Siam City Cement - Thailand
- Toyota Tsusho Corporation, Japan
- Pipit Mutiara Jaya. PT, Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Attock Cement Pakistan Limited
- Kideco Jaya Agung - Indonesia
- Kobexindo Tractors - Indoneisa
- Aditya Birla Group - India
- Bhoruka Overseas - Indonesia
- Energy Link Ltd, New Zealand
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bhushan Steel Limited - India
- Madhucon Powers Ltd - India
- Wood Mackenzie - Singapore
- SN Aboitiz Power Inc, Philippines
- Ministry of Transport, Egypt
- Sakthi Sugars Limited - India
- India Bulls Power Limited - India
- Lanco Infratech Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Metalloyd Limited - United Kingdom
- Indian Oil Corporation Limited
- Kapuas Tunggal Persada - Indonesia
- Chettinad Cement Corporation Ltd - India
- Power Finance Corporation Ltd., India
- Neyveli Lignite Corporation Ltd, - India
- White Energy Company Limited
- Pendopo Energi Batubara - Indonesia
- OPG Power Generation Pvt Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Sree Jayajothi Cements Limited - India
- Manunggal Multi Energi - Indonesia
- The State Trading Corporation of India Ltd
- Vedanta Resources Plc - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sindya Power Generating Company Private Ltd
- Makarim & Taira - Indonesia
- Cement Manufacturers Association - India
- Binh Thuan Hamico - Vietnam
- Maheswari Brothers Coal Limited - India
- Savvy Resources Ltd - HongKong
- Mjunction Services Limited - India
- Salva Resources Pvt Ltd - India
- The Treasury - Australian Government
- Videocon Industries ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Semirara Mining and Power Corporation, Philippines
- European Bulk Services B.V. - Netherlands
- Global Coal Blending Company Limited - Australia
- McConnell Dowell - Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Edison Trading Spa - Italy
- Tamil Nadu electricity Board
- Global Green Power PLC Corporation, Philippines
- Vizag Seaport Private Limited - India
- Sarangani Energy Corporation, Philippines
- Grasim Industreis Ltd - India
- Electricity Generating Authority of Thailand
- Chamber of Mines of South Africa
- Gujarat Electricity Regulatory Commission - India
- Coastal Gujarat Power Limited - India
- Independent Power Producers Association of India
- Petrochimia International Co. Ltd.- Taiwan
- Indogreen Group - Indonesia
- Commonwealth Bank - Australia
- Trasteel International SA, Italy
- Barasentosa Lestari - Indonesia
- Kaltim Prima Coal - Indonesia
- PowerSource Philippines DevCo
- Romanian Commodities Exchange
- Anglo American - United Kingdom
- Xindia Steels Limited - India
- Merrill Lynch Commodities Europe
- Jindal Steel & Power Ltd - India
- Malabar Cements Ltd - India
- Standard Chartered Bank - UAE
- Georgia Ports Authority, United States
- GN Power Mariveles Coal Plant, Philippines
- Meralco Power Generation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- The University of Queensland
- Mintek Dendrill Indonesia
- Intertek Mineral Services - Indonesia
- Planning Commission, India
- CNBM International Corporation - China
- Timah Investasi Mineral - Indoneisa
- Parliament of New Zealand
- Eastern Energy - Thailand
- Cigading International Bulk Terminal - Indonesia
- ICICI Bank Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bangladesh Power Developement Board
- Carbofer General Trading SA - India
- Meenaskhi Energy Private Limited - India
- Bhatia International Limited - India
- Ceylon Electricity Board - Sri Lanka
- Karbindo Abesyapradhi - Indoneisa
- Orica Mining Services - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Bukit Baiduri Energy - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Indo Tambangraya Megah - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Therma Luzon, Inc, Philippines
- Iligan Light & Power Inc, Philippines
- Semirara Mining Corp, Philippines
- Aboitiz Power Corporation - Philippines
- Larsen & Toubro Limited - India
- Samtan Co., Ltd - South Korea
- GVK Power & Infra Limited - India
- Interocean Group of Companies - India
- MS Steel International - UAE
- Sinarmas Energy and Mining - Indonesia
- Alfred C Toepfer International GmbH - Germany
- CIMB Investment Bank - Malaysia
- GMR Energy Limited - India
- SMC Global Power, Philippines
- Eastern Coal Council - USA
- Uttam Galva Steels Limited - India
- Antam Resourcindo - Indonesia
- Bulk Trading Sa - Switzerland
- Bahari Cakrawala Sebuku - Indonesia
- Ministry of Finance - Indonesia
- VISA Power Limited - India
- AsiaOL BioFuels Corp., Philippines
- Billiton Holdings Pty Ltd - Australia
- Oldendorff Carriers - Singapore
- Marubeni Corporation - India
- Ind-Barath Power Infra Limited - India
- Central Electricity Authority - India
- Sojitz Corporation - Japan
- Banpu Public Company Limited - Thailand
- Wilmar Investment Holdings
- Latin American Coal - Colombia
- Indika Energy - Indonesia
- IHS Mccloskey Coal Group - USA
- Formosa Plastics Group - Taiwan
- Riau Bara Harum - Indonesia
- Posco Energy - South Korea
- Sical Logistics Limited - India
- PTC India Limited - India
- Goldman Sachs - Singapore
- Coal and Oil Company - UAE
- Bayan Resources Tbk. - Indonesia
- Thai Mozambique Logistica
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- GAC Shipping (India) Pvt Ltd
- Agrawal Coal Company - India
- Tata Chemicals Ltd - India
- Bharathi Cement Corporation - India
- International Coal Ventures Pvt Ltd - India
- TeaM Sual Corporation - Philippines
- Parry Sugars Refinery, India
- Essar Steel Hazira Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- San Jose City I Power Corp, Philippines
- London Commodity Brokers - England
- Minerals Council of Australia
- Renaissance Capital - South Africa
- PetroVietnam Power Coal Import and Supply Company
- Coalindo Energy - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- IEA Clean Coal Centre - UK
- Australian Commodity Traders Exchange
- Indian Energy Exchange, India
- Karaikal Port Pvt Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Global Business Power Corporation, Philippines
- Thiess Contractors Indonesia
- Africa Commodities Group - South Africa
- Directorate Of Revenue Intelligence - India
- Star Paper Mills Limited - India
- South Luzon Thermal Energy Corporation
- New Zealand Coal & Carbon
- Mercuria Energy - Indonesia
- Kepco SPC Power Corporation, Philippines
- Energy Development Corp, Philippines
- Altura Mining Limited, Indonesia
- Bukit Makmur.PT - Indonesia
- Borneo Indobara - Indonesia
- Indonesian Coal Mining Association
- Singapore Mercantile Exchange
- Asmin Koalindo Tuhup - Indonesia
- Baramulti Group, Indonesia
- Petron Corporation, Philippines
- Economic Council, Georgia
- Kartika Selabumi Mining - Indonesia
- Ministry of Mines - Canada
- Maharashtra Electricity Regulatory Commission - India
- SMG Consultants - Indonesia
- Mercator Lines Limited - India
- Orica Australia Pty. Ltd.
- Gujarat Sidhee Cement - India
- Price Waterhouse Coopers - Russia
- ASAPP Information Group - India
- Medco Energi Mining Internasional
- Kumho Petrochemical, South Korea
- Vijayanagar Sugar Pvt Ltd - India
- Australian Coal Association
- Simpson Spence & Young - Indonesia
- Straits Asia Resources Limited - Singapore
- Rio Tinto Coal - Australia
- Globalindo Alam Lestari - Indonesia
- Deloitte Consulting - India
- Jaiprakash Power Ventures ltd
- Electricity Authority, New Zealand
- Jorong Barutama Greston.PT - Indonesia
- Central Java Power - Indonesia
- Ambuja Cements Ltd - India
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