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