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