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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, 27 January 22
2022 - A YEAR OF REBALANCING FOR METALS AND MINING - WOOD MACKENZIE
If 2021 was the year of rebound for metals and mining (M&M) commodities, then 2022 is shaping as the year of rebalance, says Wood Mackenzie, a ...
Wednesday, 26 January 22
MARKET INSIGHT - INTERMODAL
While it is logical that most of the S&P reports of the first weeks of the year are linked to very limited activity as reflected in the weekly ...
Wednesday, 26 January 22
INDONESIA: DME PROJECT IS ECONOMICALLY VIABLE AS STUDY DEMONSTRATES
The government is encouraging downstream coal processing or increase in coal added value, for example by turning coal into Dimethyl Ether (DME) to ...
Wednesday, 26 January 22
COMMODITY PRICES COULD SOAR IF THE RUSSIA-UKRAINE CRISIS ESCALATES - ING
It appears that a number of commodity markets are starting to at least price in some geopolitical risk around the growing tension between Russia an ...
Wednesday, 26 January 22
INDONESIA'S COAL BAN SENDS PRICES SOARING, OTHER EXPORTERS FAIL TO STEP UP - REUTERS
Indonesia’s short-lived ban on exporting coal has sent ructions through the seaborne market for the fuel in Asia, with the fallout likely to ...
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- Global Green Power PLC Corporation, Philippines
- Bhushan Steel Limited - India
- The Treasury - Australian Government
- Heidelberg Cement - Germany
- Coalindo Energy - Indonesia
- Bulk Trading Sa - Switzerland
- VISA Power Limited - India
- ICICI Bank Limited - India
- CNBM International Corporation - China
- Indo Tambangraya Megah - Indonesia
- Indika Energy - Indonesia
- The State Trading Corporation of India Ltd
- Sojitz Corporation - Japan
- Indian Oil Corporation Limited
- Aboitiz Power Corporation - Philippines
- Karaikal Port Pvt Ltd - India
- Samtan Co., Ltd - South Korea
- International Coal Ventures Pvt Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Simpson Spence & Young - Indonesia
- PowerSource Philippines DevCo
- Karbindo Abesyapradhi - Indoneisa
- Neyveli Lignite Corporation Ltd, - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- South Luzon Thermal Energy Corporation
- Mintek Dendrill Indonesia
- Videocon Industries ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- White Energy Company Limited
- Port Waratah Coal Services - Australia
- Sinarmas Energy and Mining - Indonesia
- Merrill Lynch Commodities Europe
- GMR Energy Limited - India
- AsiaOL BioFuels Corp., Philippines
- Star Paper Mills Limited - India
- Sree Jayajothi Cements Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Trasteel International SA, Italy
- Bukit Asam (Persero) Tbk - Indonesia
- Eastern Energy - Thailand
- Maheswari Brothers Coal Limited - India
- Grasim Industreis Ltd - India
- Uttam Galva Steels Limited - India
- Mjunction Services Limited - India
- New Zealand Coal & Carbon
- Jaiprakash Power Ventures ltd
- India Bulls Power Limited - India
- Central Java Power - Indonesia
- Indonesian Coal Mining Association
- Straits Asia Resources Limited - Singapore
- Independent Power Producers Association of India
- Tamil Nadu electricity Board
- Electricity Authority, New Zealand
- SMC Global Power, Philippines
- Metalloyd Limited - United Kingdom
- Antam Resourcindo - Indonesia
- Meralco Power Generation, Philippines
- Carbofer General Trading SA - India
- Bharathi Cement Corporation - India
- Kobexindo Tractors - Indoneisa
- Parliament of New Zealand
- Indian Energy Exchange, India
- Offshore Bulk Terminal Pte Ltd, Singapore
- European Bulk Services B.V. - Netherlands
- Singapore Mercantile Exchange
- Bukit Makmur.PT - Indonesia
- Lanco Infratech Ltd - India
- Baramulti Group, Indonesia
- Dalmia Cement Bharat India
- Leighton Contractors Pty Ltd - Australia
- Orica Mining Services - Indonesia
- Xindia Steels Limited - India
- Coal and Oil Company - UAE
- Bukit Baiduri Energy - Indonesia
- Kartika Selabumi Mining - Indonesia
- Ambuja Cements Ltd - India
- Global Coal Blending Company Limited - Australia
- Formosa Plastics Group - Taiwan
- Borneo Indobara - Indonesia
- MS Steel International - UAE
- Kohat Cement Company Ltd. - Pakistan
- Riau Bara Harum - Indonesia
- Holcim Trading Pte Ltd - Singapore
- San Jose City I Power Corp, Philippines
- Romanian Commodities Exchange
- Rio Tinto Coal - Australia
- SN Aboitiz Power Inc, Philippines
- The University of Queensland
- Mercuria Energy - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Australian Coal Association
- PNOC Exploration Corporation - Philippines
- Commonwealth Bank - Australia
- Power Finance Corporation Ltd., India
- Sarangani Energy Corporation, Philippines
- Thiess Contractors Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Altura Mining Limited, Indonesia
- Price Waterhouse Coopers - Russia
- SMG Consultants - Indonesia
- Larsen & Toubro Limited - India
- Tata Chemicals Ltd - India
- Meenaskhi Energy Private Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Sakthi Sugars Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Makarim & Taira - Indonesia
- Central Electricity Authority - India
- Global Business Power Corporation, Philippines
- Vedanta Resources Plc - India
- Medco Energi Mining Internasional
- Kumho Petrochemical, South Korea
- Energy Development Corp, Philippines
- Jorong Barutama Greston.PT - Indonesia
- LBH Netherlands Bv - Netherlands
- Parry Sugars Refinery, India
- Madhucon Powers Ltd - India
- Economic Council, Georgia
- Planning Commission, India
- Thai Mozambique Logistica
- Miang Besar Coal Terminal - Indonesia
- Globalindo Alam Lestari - Indonesia
- Interocean Group of Companies - India
- Orica Australia Pty. Ltd.
- Wilmar Investment Holdings
- TNB Fuel Sdn Bhd - Malaysia
- Australian Commodity Traders Exchange
- Mercator Lines Limited - India
- Siam City Cement PLC, Thailand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- TeaM Sual Corporation - Philippines
- Bhoruka Overseas - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Eastern Coal Council - USA
- Directorate Of Revenue Intelligence - India
- Petron Corporation, Philippines
- Chamber of Mines of South Africa
- Essar Steel Hazira Ltd - India
- Georgia Ports Authority, United States
- Goldman Sachs - Singapore
- Krishnapatnam Port Company Ltd. - India
- Sical Logistics Limited - India
- ASAPP Information Group - India
- Manunggal Multi Energi - Indonesia
- Bhatia International Limited - India
- GAC Shipping (India) Pvt Ltd
- Semirara Mining Corp, Philippines
- Bayan Resources Tbk. - Indonesia
- Marubeni Corporation - India
- Alfred C Toepfer International GmbH - Germany
- GN Power Mariveles Coal Plant, Philippines
- Africa Commodities Group - South Africa
- Oldendorff Carriers - Singapore
- Asmin Koalindo Tuhup - Indonesia
- Savvy Resources Ltd - HongKong
- Siam City Cement - Thailand
- Ministry of Mines - Canada
- Ceylon Electricity Board - Sri Lanka
- IEA Clean Coal Centre - UK
- Bank of Tokyo Mitsubishi UFJ Ltd
- Directorate General of MIneral and Coal - Indonesia
- Deloitte Consulting - India
- GVK Power & Infra Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Toyota Tsusho Corporation, Japan
- Indogreen Group - Indonesia
- Vizag Seaport Private Limited - India
- Renaissance Capital - South Africa
- London Commodity Brokers - England
- Kepco SPC Power Corporation, Philippines
- CIMB Investment Bank - Malaysia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- IHS Mccloskey Coal Group - USA
- Coastal Gujarat Power Limited - India
- Therma Luzon, Inc, Philippines
- PTC India Limited - India
- Barasentosa Lestari - Indonesia
- Banpu Public Company Limited - Thailand
- Ministry of Finance - Indonesia
- Standard Chartered Bank - UAE
- Rashtriya Ispat Nigam Limited - India
- Aditya Birla Group - India
- Intertek Mineral Services - Indonesia
- Agrawal Coal Company - India
- Electricity Generating Authority of Thailand
- Iligan Light & Power Inc, Philippines
- Posco Energy - South Korea
- Gujarat Mineral Development Corp Ltd - India
- Sindya Power Generating Company Private Ltd
- Maharashtra Electricity Regulatory Commission - India
- Salva Resources Pvt Ltd - India
- Bangladesh Power Developement Board
- Cigading International Bulk Terminal - Indonesia
- Wood Mackenzie - Singapore
- Cement Manufacturers Association - India
- Chettinad Cement Corporation Ltd - India
- Ind-Barath Power Infra Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- OPG Power Generation Pvt Ltd - India
- Jindal Steel & Power Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Attock Cement Pakistan Limited
- Kideco Jaya Agung - Indonesia
- Pendopo Energi Batubara - Indonesia
- Energy Link Ltd, New Zealand
- Malabar Cements Ltd - India
- Edison Trading Spa - Italy
- Gujarat Sidhee Cement - India
- Ministry of Transport, Egypt
- Binh Thuan Hamico - Vietnam
- Timah Investasi Mineral - Indoneisa
- McConnell Dowell - Australia
- Kaltim Prima Coal - Indonesia
- Minerals Council of Australia
- Anglo American - United Kingdom
- Latin American Coal - Colombia
- Billiton Holdings Pty Ltd - Australia
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