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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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Friday, 26 November 21
CHINA FINDS COMPLIANCE PROBLEMS IN COAL PRICE INDEX PROBE - REUTERS
China’s state planner on Wednesday said it had discovered some “noncompliant” behaviour among coal price index providers as it an ...
Thursday, 25 November 21
SE ASIA POWER DEMAND TO RISE AS STATE SUPPORT MITIGATES COVID-19 IMPACT - FITCH RATINGS
Electricity demand in south-east Asia is likely to increase in 2021, following slow growth or contraction in 2020, thanks to state support that has ...
Thursday, 25 November 21
FITCH RATINGS INCREASES MOST GLOBAL METALS AND MINING PRICE ASSUMPTIONS - FITCH RATINGS
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Thursday, 25 November 21
CHINA'S COAL PRICE DROPS IN MID-NOVEMBER AMID GOVERNMENT’S SWEEPING MEASURES - GLOBAL TIMES
China’s coal prices have dropped significantly in mid-November compared with the beginning of the month, with the price of coking coal and co ...
Wednesday, 24 November 21
MARKET INSIGHT - INTERMODAL
Inflation is the word that has dominated the meetings of foreign leaders and finance ministers in recent weeks, as rising energy costs, supply chai ...
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- Indika Energy - Indonesia
- Manunggal Multi Energi - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Deloitte Consulting - India
- Kalimantan Lumbung Energi - Indonesia
- GMR Energy Limited - India
- IEA Clean Coal Centre - UK
- Rashtriya Ispat Nigam Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Grasim Industreis Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- London Commodity Brokers - England
- India Bulls Power Limited - India
- Kumho Petrochemical, South Korea
- Malabar Cements Ltd - India
- Indonesian Coal Mining Association
- Energy Link Ltd, New Zealand
- European Bulk Services B.V. - Netherlands
- Timah Investasi Mineral - Indoneisa
- Heidelberg Cement - Germany
- PTC India Limited - India
- Chamber of Mines of South Africa
- Makarim & Taira - Indonesia
- The University of Queensland
- Cement Manufacturers Association - India
- Altura Mining Limited, Indonesia
- Minerals Council of Australia
- Africa Commodities Group - South Africa
- Asmin Koalindo Tuhup - Indonesia
- Antam Resourcindo - Indonesia
- GVK Power & Infra Limited - India
- Coastal Gujarat Power Limited - India
- Bukit Makmur.PT - Indonesia
- Thiess Contractors Indonesia
- Mercator Lines Limited - India
- Sojitz Corporation - Japan
- Kartika Selabumi Mining - Indonesia
- Singapore Mercantile Exchange
- Meralco Power Generation, Philippines
- Wilmar Investment Holdings
- Orica Australia Pty. Ltd.
- Petron Corporation, Philippines
- Oldendorff Carriers - Singapore
- Videocon Industries ltd - India
- Tata Chemicals Ltd - India
- Pendopo Energi Batubara - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Independent Power Producers Association of India
- Sree Jayajothi Cements Limited - India
- Aditya Birla Group - India
- VISA Power Limited - India
- Ind-Barath Power Infra Limited - India
- Coalindo Energy - Indonesia
- Sakthi Sugars Limited - India
- Banpu Public Company Limited - Thailand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- San Jose City I Power Corp, Philippines
- Merrill Lynch Commodities Europe
- GAC Shipping (India) Pvt Ltd
- Indian Energy Exchange, India
- Directorate Of Revenue Intelligence - India
- Barasentosa Lestari - Indonesia
- Vedanta Resources Plc - India
- Bhushan Steel Limited - India
- Central Electricity Authority - India
- Bangladesh Power Developement Board
- Kideco Jaya Agung - Indonesia
- Eastern Energy - Thailand
- Electricity Authority, New Zealand
- Bukit Baiduri Energy - Indonesia
- PNOC Exploration Corporation - Philippines
- Metalloyd Limited - United Kingdom
- White Energy Company Limited
- SMG Consultants - Indonesia
- MS Steel International - UAE
- Ambuja Cements Ltd - India
- Power Finance Corporation Ltd., India
- Siam City Cement - Thailand
- McConnell Dowell - Australia
- CIMB Investment Bank - Malaysia
- Carbofer General Trading SA - India
- PowerSource Philippines DevCo
- OPG Power Generation Pvt Ltd - India
- Australian Coal Association
- AsiaOL BioFuels Corp., Philippines
- Anglo American - United Kingdom
- Leighton Contractors Pty Ltd - Australia
- GN Power Mariveles Coal Plant, Philippines
- Uttam Galva Steels Limited - India
- SN Aboitiz Power Inc, Philippines
- Coal and Oil Company - UAE
- Sindya Power Generating Company Private Ltd
- Karaikal Port Pvt Ltd - India
- Globalindo Alam Lestari - Indonesia
- Star Paper Mills Limited - India
- New Zealand Coal & Carbon
- Kobexindo Tractors - Indoneisa
- Gujarat Sidhee Cement - India
- Mjunction Services Limited - India
- Global Business Power Corporation, Philippines
- Tamil Nadu electricity Board
- TeaM Sual Corporation - Philippines
- Dalmia Cement Bharat India
- Karbindo Abesyapradhi - Indoneisa
- Miang Besar Coal Terminal - Indonesia
- Aboitiz Power Corporation - Philippines
- Bharathi Cement Corporation - India
- Gujarat Mineral Development Corp Ltd - India
- Maheswari Brothers Coal Limited - India
- Parliament of New Zealand
- Madhucon Powers Ltd - India
- Salva Resources Pvt Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Parry Sugars Refinery, India
- ASAPP Information Group - India
- Trasteel International SA, Italy
- Interocean Group of Companies - India
- Sarangani Energy Corporation, Philippines
- Vizag Seaport Private Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Krishnapatnam Port Company Ltd. - India
- Wood Mackenzie - Singapore
- Baramulti Group, Indonesia
- Port Waratah Coal Services - Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Thai Mozambique Logistica
- Gujarat Electricity Regulatory Commission - India
- Samtan Co., Ltd - South Korea
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bayan Resources Tbk. - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Essar Steel Hazira Ltd - India
- Intertek Mineral Services - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Ministry of Transport, Egypt
- Ministry of Mines - Canada
- PetroVietnam Power Coal Import and Supply Company
- Kepco SPC Power Corporation, Philippines
- Orica Mining Services - Indonesia
- Romanian Commodities Exchange
- Bukit Asam (Persero) Tbk - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Bulk Trading Sa - Switzerland
- Bhatia International Limited - India
- Global Green Power PLC Corporation, Philippines
- Commonwealth Bank - Australia
- Therma Luzon, Inc, Philippines
- Holcim Trading Pte Ltd - Singapore
- Formosa Plastics Group - Taiwan
- Latin American Coal - Colombia
- Jindal Steel & Power Ltd - India
- Lanco Infratech Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Global Coal Blending Company Limited - Australia
- Renaissance Capital - South Africa
- International Coal Ventures Pvt Ltd - India
- Jaiprakash Power Ventures ltd
- IHS Mccloskey Coal Group - USA
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Ministry of Finance - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Rio Tinto Coal - Australia
- Indo Tambangraya Megah - Indonesia
- Borneo Indobara - Indonesia
- Planning Commission, India
- Energy Development Corp, Philippines
- Mintek Dendrill Indonesia
- Riau Bara Harum - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Standard Chartered Bank - UAE
- Semirara Mining Corp, Philippines
- South Luzon Thermal Energy Corporation
- Bank of Tokyo Mitsubishi UFJ Ltd
- Directorate General of MIneral and Coal - Indonesia
- Toyota Tsusho Corporation, Japan
- Marubeni Corporation - India
- Larsen & Toubro Limited - India
- Cigading International Bulk Terminal - Indonesia
- Meenaskhi Energy Private Limited - India
- Straits Asia Resources Limited - Singapore
- Economic Council, Georgia
- Binh Thuan Hamico - Vietnam
- ICICI Bank Limited - India
- Bhoruka Overseas - Indonesia
- Simpson Spence & Young - Indonesia
- Kapuas Tunggal Persada - Indonesia
- SMC Global Power, Philippines
- Attock Cement Pakistan Limited
- Goldman Sachs - Singapore
- Savvy Resources Ltd - HongKong
- Vijayanagar Sugar Pvt Ltd - India
- Eastern Coal Council - USA
- Chettinad Cement Corporation Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Indian Oil Corporation Limited
- Electricity Generating Authority of Thailand
- The State Trading Corporation of India Ltd
- Indogreen Group - Indonesia
- Posco Energy - South Korea
- Australian Commodity Traders Exchange
- CNBM International Corporation - China
- Edison Trading Spa - Italy
- Alfred C Toepfer International GmbH - Germany
- Xindia Steels Limited - India
- Agrawal Coal Company - India
- Siam City Cement PLC, Thailand
- Mercuria Energy - Indonesia
- Medco Energi Mining Internasional
- LBH Netherlands Bv - Netherlands
- Central Java Power - Indonesia
- Price Waterhouse Coopers - Russia
- Kaltim Prima Coal - Indonesia
- Sical Logistics Limited - India
- The Treasury - Australian Government
- Georgia Ports Authority, United States
- Iligan Light & Power Inc, Philippines
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