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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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Wednesday, 13 October 21
MARKET INSIGHT - INTERMODAL
Following up on our insight on May 2021, where we discussed about the Capesize market outlook for the second half of the year, we are pleased to se ...
Wednesday, 13 October 21
FBX INDEX: THE IMPOSSIBILITY OF SHORT-TERM FORECASTING - LARS JENSEN
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Wednesday, 13 October 21
CHINA FLOODS: COAL PRICE HITS FRESH HIGH AS MINES SHUT - BBC
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Tuesday, 12 October 21
BUMA SIGNS CONDITIONAL AGREEMENT FOR AUSTRALIAN ASSET ACQUISITION
PT Tbk. announced that its subsidiary, PT Bukit Makmur Mandiri Utama, through its newly incorporated Australian subsidiary, BUMA International Pty ...
Tuesday, 12 October 21
INDONESIA'S COAL-BASED POWER PLANTS ARE SUBJECT TO CARBON TAX NEXT YEAR, ELECTRICITY COSTS COULD RISE! - CNBC
The Indonesian government is planning plans to implement a carbon tax of IDR 30 per kilogram (kg) of carbon dioxide equivalent (CO2e) or equivalent ...
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- Sojitz Corporation - Japan
- Siam City Cement - Thailand
- Energy Link Ltd, New Zealand
- IEA Clean Coal Centre - UK
- Thai Mozambique Logistica
- Timah Investasi Mineral - Indoneisa
- Petrochimia International Co. Ltd.- Taiwan
- Jindal Steel & Power Ltd - India
- India Bulls Power Limited - India
- New Zealand Coal & Carbon
- Madhucon Powers Ltd - India
- Xindia Steels Limited - India
- Ambuja Cements Ltd - India
- Indogreen Group - Indonesia
- Indika Energy - Indonesia
- PTC India Limited - India
- Essar Steel Hazira Ltd - India
- Anglo American - United Kingdom
- Deloitte Consulting - India
- Bulk Trading Sa - Switzerland
- Agrawal Coal Company - India
- SMC Global Power, Philippines
- Therma Luzon, Inc, Philippines
- Romanian Commodities Exchange
- Cement Manufacturers Association - India
- GN Power Mariveles Coal Plant, Philippines
- Global Business Power Corporation, Philippines
- Uttam Galva Steels Limited - India
- GAC Shipping (India) Pvt Ltd
- Jorong Barutama Greston.PT - Indonesia
- GVK Power & Infra Limited - India
- ASAPP Information Group - India
- Vedanta Resources Plc - India
- Africa Commodities Group - South Africa
- Latin American Coal - Colombia
- Mercuria Energy - Indonesia
- Coastal Gujarat Power Limited - India
- Australian Coal Association
- Parliament of New Zealand
- SMG Consultants - Indonesia
- Sarangani Energy Corporation, Philippines
- Global Coal Blending Company Limited - Australia
- Kaltim Prima Coal - Indonesia
- Salva Resources Pvt Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Aditya Birla Group - India
- Samtan Co., Ltd - South Korea
- Intertek Mineral Services - Indonesia
- Bukit Baiduri Energy - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Bukit Makmur.PT - Indonesia
- Metalloyd Limited - United Kingdom
- PetroVietnam Power Coal Import and Supply Company
- Gujarat Sidhee Cement - India
- Electricity Generating Authority of Thailand
- Indo Tambangraya Megah - Indonesia
- Minerals Council of Australia
- Parry Sugars Refinery, India
- Goldman Sachs - Singapore
- Independent Power Producers Association of India
- TNB Fuel Sdn Bhd - Malaysia
- Bayan Resources Tbk. - Indonesia
- Standard Chartered Bank - UAE
- Offshore Bulk Terminal Pte Ltd, Singapore
- Georgia Ports Authority, United States
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Rashtriya Ispat Nigam Limited - India
- Bangladesh Power Developement Board
- Planning Commission, India
- Simpson Spence & Young - Indonesia
- Videocon Industries ltd - India
- Commonwealth Bank - Australia
- Borneo Indobara - Indonesia
- Chettinad Cement Corporation Ltd - India
- Karaikal Port Pvt Ltd - India
- McConnell Dowell - Australia
- VISA Power Limited - India
- Indian Energy Exchange, India
- Alfred C Toepfer International GmbH - Germany
- Singapore Mercantile Exchange
- Savvy Resources Ltd - HongKong
- London Commodity Brokers - England
- Directorate General of MIneral and Coal - Indonesia
- Sree Jayajothi Cements Limited - India
- Dalmia Cement Bharat India
- Bhoruka Overseas - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- LBH Netherlands Bv - Netherlands
- Central Java Power - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Tamil Nadu electricity Board
- Barasentosa Lestari - Indonesia
- Mercator Lines Limited - India
- Indian Oil Corporation Limited
- Australian Commodity Traders Exchange
- Eastern Energy - Thailand
- Globalindo Alam Lestari - Indonesia
- Merrill Lynch Commodities Europe
- Maharashtra Electricity Regulatory Commission - India
- Central Electricity Authority - India
- Kartika Selabumi Mining - Indonesia
- Eastern Coal Council - USA
- OPG Power Generation Pvt Ltd - India
- The State Trading Corporation of India Ltd
- The University of Queensland
- Baramulti Group, Indonesia
- Sindya Power Generating Company Private Ltd
- Oldendorff Carriers - Singapore
- The Treasury - Australian Government
- Indonesian Coal Mining Association
- South Luzon Thermal Energy Corporation
- Karbindo Abesyapradhi - Indoneisa
- Ind-Barath Power Infra Limited - India
- CIMB Investment Bank - Malaysia
- Cigading International Bulk Terminal - Indonesia
- Manunggal Multi Energi - Indonesia
- Bharathi Cement Corporation - India
- Ministry of Mines - Canada
- IHS Mccloskey Coal Group - USA
- Kideco Jaya Agung - Indonesia
- Jaiprakash Power Ventures ltd
- Straits Asia Resources Limited - Singapore
- Carbofer General Trading SA - India
- Meenaskhi Energy Private Limited - India
- Iligan Light & Power Inc, Philippines
- Tata Chemicals Ltd - India
- Makarim & Taira - Indonesia
- Altura Mining Limited, Indonesia
- Semirara Mining and Power Corporation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Binh Thuan Hamico - Vietnam
- ICICI Bank Limited - India
- PowerSource Philippines DevCo
- Meralco Power Generation, Philippines
- Rio Tinto Coal - Australia
- Banpu Public Company Limited - Thailand
- Directorate Of Revenue Intelligence - India
- Malabar Cements Ltd - India
- Economic Council, Georgia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- PNOC Exploration Corporation - Philippines
- Orica Mining Services - Indonesia
- Energy Development Corp, Philippines
- Petron Corporation, Philippines
- Pendopo Energi Batubara - Indonesia
- Coal and Oil Company - UAE
- Coalindo Energy - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Star Paper Mills Limited - India
- Medco Energi Mining Internasional
- MS Steel International - UAE
- Asmin Koalindo Tuhup - Indonesia
- International Coal Ventures Pvt Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Ceylon Electricity Board - Sri Lanka
- Holcim Trading Pte Ltd - Singapore
- Leighton Contractors Pty Ltd - Australia
- Interocean Group of Companies - India
- Global Green Power PLC Corporation, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Aboitiz Power Corporation - Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Bhushan Steel Limited - India
- Ministry of Finance - Indonesia
- Ministry of Transport, Egypt
- Port Waratah Coal Services - Australia
- CNBM International Corporation - China
- Toyota Tsusho Corporation, Japan
- Antam Resourcindo - Indonesia
- Maheswari Brothers Coal Limited - India
- European Bulk Services B.V. - Netherlands
- Pipit Mutiara Jaya. PT, Indonesia
- Semirara Mining Corp, Philippines
- Bhatia International Limited - India
- Posco Energy - South Korea
- Kapuas Tunggal Persada - Indonesia
- Marubeni Corporation - India
- Sakthi Sugars Limited - India
- Electricity Authority, New Zealand
- Power Finance Corporation Ltd., India
- Larsen & Toubro Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Mintek Dendrill Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- White Energy Company Limited
- Sical Logistics Limited - India
- Mjunction Services Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- TeaM Sual Corporation - Philippines
- Price Waterhouse Coopers - Russia
- Wood Mackenzie - Singapore
- Kobexindo Tractors - Indoneisa
- Heidelberg Cement - Germany
- Vizag Seaport Private Limited - India
- Kumho Petrochemical, South Korea
- Riau Bara Harum - Indonesia
- Thiess Contractors Indonesia
- Lanco Infratech Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Miang Besar Coal Terminal - Indonesia
- Trasteel International SA, Italy
- Wilmar Investment Holdings
- Edison Trading Spa - Italy
- Attock Cement Pakistan Limited
- SN Aboitiz Power Inc, Philippines
- GMR Energy Limited - India
- Renaissance Capital - South Africa
- Kepco SPC Power Corporation, Philippines
- San Jose City I Power Corp, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Chamber of Mines of South Africa
- Grasim Industreis Ltd - India
- Formosa Plastics Group - Taiwan
- Orica Australia Pty. Ltd.
- Siam City Cement PLC, Thailand
- Krishnapatnam Port Company Ltd. - India
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