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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, 31 January 24
CHINA'S INNER MONGOLIA COAL OUTPUT HIT 1.21B TONS IN 2023 - XINHUA
North China’s Inner Mongolia autonomous region churned out 1.21 billion tons of coal in 2023 as it strives to guarantee the country’s e ...
Wednesday, 31 January 24
GAS EXPORTS COST U.S. CONSUMERS MORE THAN $100 BILLION OVER 16-MONTH PERIOD - IEEFA
Limited Demand Growth Could Dampen the Dry Bulk Market in the Coming Months BIMCOStarting in late 2021—before its invasion of Ukraine—R ...
Tuesday, 30 January 24
LIMITED DEMAND GROWTH COULD DAMPEN THE DRY BULK MARKET IN THE COMING MONTHS - BIMCO
Demand
In our base scenario, we expect cargo demand to grow by 0-1% in 2024 and 0.5-1.5% in 2025. This is a 0.5 percentage point reduction for ...
Friday, 26 January 24
RED SEA DIVERSIONS ADD NEARLY A MILLION DOLLARS PER VOYAGE TO SHIPPING COSTS WHILE DOUBLING TRANSIT TIME - LSEG
The incremental costs of diverting a tanker from Asia to NW Europe via the Cape of Good Hope is accounting for an extra $932,905 USD per voyage whi ...
Friday, 26 January 24
HARD COAL GUARDIAN ANGEL OF THE ENERGY SUPPLY - GERMANY COAL IMPORTERS ASSOCIATION
- No security of supply without hard coal
- The Substitute Power Plant Provision Act (EKBG) must be extended
- Higher grid fees due to the ...
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- Siam City Cement PLC, Thailand
- PTC India Limited - India
- Vedanta Resources Plc - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Power Finance Corporation Ltd., India
- Coalindo Energy - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Baramulti Group, Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Ceylon Electricity Board - Sri Lanka
- Miang Besar Coal Terminal - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Cement Manufacturers Association - India
- Indo Tambangraya Megah - Indonesia
- Bukit Baiduri Energy - Indonesia
- Sojitz Corporation - Japan
- Directorate Of Revenue Intelligence - India
- Leighton Contractors Pty Ltd - Australia
- Bahari Cakrawala Sebuku - Indonesia
- Medco Energi Mining Internasional
- Thiess Contractors Indonesia
- Energy Development Corp, Philippines
- Mintek Dendrill Indonesia
- IEA Clean Coal Centre - UK
- PowerSource Philippines DevCo
- Bhushan Steel Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Neyveli Lignite Corporation Ltd, - India
- Renaissance Capital - South Africa
- Anglo American - United Kingdom
- Madhucon Powers Ltd - India
- Port Waratah Coal Services - Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ministry of Finance - Indonesia
- LBH Netherlands Bv - Netherlands
- Kideco Jaya Agung - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Alfred C Toepfer International GmbH - Germany
- SN Aboitiz Power Inc, Philippines
- Savvy Resources Ltd - HongKong
- Binh Thuan Hamico - Vietnam
- Georgia Ports Authority, United States
- Deloitte Consulting - India
- Uttam Galva Steels Limited - India
- Antam Resourcindo - Indonesia
- Parliament of New Zealand
- ICICI Bank Limited - India
- Dalmia Cement Bharat India
- Bangladesh Power Developement Board
- Mercuria Energy - Indonesia
- Semirara Mining and Power Corporation, Philippines
- CIMB Investment Bank - Malaysia
- Orica Australia Pty. Ltd.
- Malabar Cements Ltd - India
- South Luzon Thermal Energy Corporation
- Larsen & Toubro Limited - India
- Central Java Power - Indonesia
- Metalloyd Limited - United Kingdom
- Coal and Oil Company - UAE
- SMC Global Power, Philippines
- Interocean Group of Companies - India
- Mjunction Services Limited - India
- Cigading International Bulk Terminal - Indonesia
- European Bulk Services B.V. - Netherlands
- San Jose City I Power Corp, Philippines
- Intertek Mineral Services - Indonesia
- Edison Trading Spa - Italy
- SMG Consultants - Indonesia
- Grasim Industreis Ltd - India
- Aboitiz Power Corporation - Philippines
- Global Coal Blending Company Limited - Australia
- Sinarmas Energy and Mining - Indonesia
- Global Green Power PLC Corporation, Philippines
- Parry Sugars Refinery, India
- White Energy Company Limited
- Trasteel International SA, Italy
- Ind-Barath Power Infra Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- McConnell Dowell - Australia
- Bharathi Cement Corporation - India
- Salva Resources Pvt Ltd - India
- Jaiprakash Power Ventures ltd
- Directorate General of MIneral and Coal - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Kumho Petrochemical, South Korea
- Borneo Indobara - Indonesia
- International Coal Ventures Pvt Ltd - India
- Xindia Steels Limited - India
- Semirara Mining Corp, Philippines
- Orica Mining Services - Indonesia
- Standard Chartered Bank - UAE
- Tamil Nadu electricity Board
- Eastern Energy - Thailand
- Independent Power Producers Association of India
- Indian Oil Corporation Limited
- Bukit Asam (Persero) Tbk - Indonesia
- Altura Mining Limited, Indonesia
- Romanian Commodities Exchange
- Timah Investasi Mineral - Indoneisa
- Coastal Gujarat Power Limited - India
- Agrawal Coal Company - India
- Price Waterhouse Coopers - Russia
- The University of Queensland
- Vijayanagar Sugar Pvt Ltd - India
- Economic Council, Georgia
- Attock Cement Pakistan Limited
- Singapore Mercantile Exchange
- Straits Asia Resources Limited - Singapore
- Indika Energy - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Globalindo Alam Lestari - Indonesia
- Wood Mackenzie - Singapore
- Energy Link Ltd, New Zealand
- Central Electricity Authority - India
- Videocon Industries ltd - India
- Kaltim Prima Coal - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Carbofer General Trading SA - India
- Electricity Generating Authority of Thailand
- GMR Energy Limited - India
- Bhoruka Overseas - Indonesia
- Banpu Public Company Limited - Thailand
- Sindya Power Generating Company Private Ltd
- CNBM International Corporation - China
- Kobexindo Tractors - Indoneisa
- Latin American Coal - Colombia
- Pendopo Energi Batubara - Indonesia
- ASAPP Information Group - India
- PetroVietnam Power Coal Import and Supply Company
- Eastern Coal Council - USA
- Global Business Power Corporation, Philippines
- Billiton Holdings Pty Ltd - Australia
- Riau Bara Harum - Indonesia
- Petron Corporation, Philippines
- Makarim & Taira - Indonesia
- Gujarat Sidhee Cement - India
- Pipit Mutiara Jaya. PT, Indonesia
- Australian Coal Association
- VISA Power Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Meralco Power Generation, Philippines
- Mercator Lines Limited - India
- Wilmar Investment Holdings
- Chettinad Cement Corporation Ltd - India
- Maheswari Brothers Coal Limited - India
- Gujarat Electricity Regulatory Commission - India
- Commonwealth Bank - Australia
- OPG Power Generation Pvt Ltd - India
- PNOC Exploration Corporation - Philippines
- Barasentosa Lestari - Indonesia
- Jindal Steel & Power Ltd - India
- Essar Steel Hazira Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Electricity Authority, New Zealand
- Kepco SPC Power Corporation, Philippines
- The Treasury - Australian Government
- Vizag Seaport Private Limited - India
- Indogreen Group - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Manunggal Multi Energi - Indonesia
- Ministry of Transport, Egypt
- Ambuja Cements Ltd - India
- New Zealand Coal & Carbon
- Tata Chemicals Ltd - India
- Oldendorff Carriers - Singapore
- Iligan Light & Power Inc, Philippines
- Simpson Spence & Young - Indonesia
- Indonesian Coal Mining Association
- AsiaOL BioFuels Corp., Philippines
- Thai Mozambique Logistica
- Toyota Tsusho Corporation, Japan
- Bayan Resources Tbk. - Indonesia
- Planning Commission, India
- India Bulls Power Limited - India
- Goldman Sachs - Singapore
- Formosa Plastics Group - Taiwan
- Meenaskhi Energy Private Limited - India
- Africa Commodities Group - South Africa
- Asmin Koalindo Tuhup - Indonesia
- Heidelberg Cement - Germany
- Sarangani Energy Corporation, Philippines
- Karaikal Port Pvt Ltd - India
- Siam City Cement - Thailand
- London Commodity Brokers - England
- Sical Logistics Limited - India
- MS Steel International - UAE
- Samtan Co., Ltd - South Korea
- Chamber of Mines of South Africa
- Kapuas Tunggal Persada - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Australian Commodity Traders Exchange
- Sakthi Sugars Limited - India
- Posco Energy - South Korea
- Sree Jayajothi Cements Limited - India
- Merrill Lynch Commodities Europe
- Rio Tinto Coal - Australia
- Krishnapatnam Port Company Ltd. - India
- TeaM Sual Corporation - Philippines
- Bhatia International Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Bulk Trading Sa - Switzerland
- GAC Shipping (India) Pvt Ltd
- Kartika Selabumi Mining - Indonesia
- Aditya Birla Group - India
- Marubeni Corporation - India
- Therma Luzon, Inc, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Star Paper Mills Limited - India
- IHS Mccloskey Coal Group - USA
- Minerals Council of Australia
- The State Trading Corporation of India Ltd
- Lanco Infratech Ltd - India
- Bukit Makmur.PT - Indonesia
- GVK Power & Infra Limited - India
- Indian Energy Exchange, India
- Ministry of Mines - Canada
- Maharashtra Electricity Regulatory Commission - India
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