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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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Monday, 09 August 21
AIIB MAY OFFICIALLY END COAL FINANCING IN 2022 - CHINA DAILY
The Asian Infrastructure Investment Bank may officially rule out coal projects if it updates its energy strategy next year, after shunning funding ...
Monday, 09 August 21
CHINA COAL INVENTORY THINS AMID PEAK POWER DEMAND- STATE MEDIA : REUTERS
China’s coal inventories have dropped to near historic lows since August due to peak summer electricity demand and transportation bottlenecks ...
Wednesday, 04 August 21
THE INDONESIAN COAL PRICE REFERENCE SURGED TO A FRESH RECORD HIGH OF USD 130.99 A TON IN AUGUST 2021
COALspot.com: The Indonesian Coal Price Reference ( HBA) surged to a fresh record high of USD 130.99 a ton in August 2021.
The ...
Wednesday, 04 August 21
MARKET INSIGHT - INTERMODAL
Unlike the Dry Bulk and Container sectors where freight rates have surged into 2021, the tankers market continues to experience lackluster earnings ...
Sunday, 01 August 21
SEABORNE HARD COAL TRADE IN 2020 DECREASED BY 149 MILLION MT, OR 12.1%, TO 1,083 MILLION MT - GERMAN COAL IMPORTERS ASSOCIATION
- Reduced coal-fired power plant fleet secures Germany’s power supply in severe winter of 2020/2021; little wind availability and hence stron ...
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- Coal and Oil Company - UAE
- Toyota Tsusho Corporation, Japan
- Vizag Seaport Private Limited - India
- Heidelberg Cement - Germany
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Tamil Nadu electricity Board
- Kartika Selabumi Mining - Indonesia
- Sical Logistics Limited - India
- Romanian Commodities Exchange
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Trasteel International SA, Italy
- Riau Bara Harum - Indonesia
- Australian Coal Association
- Global Business Power Corporation, Philippines
- Coastal Gujarat Power Limited - India
- Banpu Public Company Limited - Thailand
- Indogreen Group - Indonesia
- Savvy Resources Ltd - HongKong
- Holcim Trading Pte Ltd - Singapore
- Thiess Contractors Indonesia
- Gujarat Mineral Development Corp Ltd - India
- TeaM Sual Corporation - Philippines
- Bharathi Cement Corporation - India
- GN Power Mariveles Coal Plant, Philippines
- PTC India Limited - India
- Mintek Dendrill Indonesia
- Directorate Of Revenue Intelligence - India
- Ministry of Transport, Egypt
- Electricity Generating Authority of Thailand
- OPG Power Generation Pvt Ltd - India
- Simpson Spence & Young - Indonesia
- Bulk Trading Sa - Switzerland
- Bahari Cakrawala Sebuku - Indonesia
- Wood Mackenzie - Singapore
- Petron Corporation, Philippines
- Deloitte Consulting - India
- GAC Shipping (India) Pvt Ltd
- Renaissance Capital - South Africa
- Baramulti Group, Indonesia
- Essar Steel Hazira Ltd - India
- Merrill Lynch Commodities Europe
- Billiton Holdings Pty Ltd - Australia
- Kumho Petrochemical, South Korea
- Cigading International Bulk Terminal - Indonesia
- The State Trading Corporation of India Ltd
- Sakthi Sugars Limited - India
- PowerSource Philippines DevCo
- Intertek Mineral Services - Indonesia
- Mercator Lines Limited - India
- Cement Manufacturers Association - India
- Leighton Contractors Pty Ltd - Australia
- Global Green Power PLC Corporation, Philippines
- Power Finance Corporation Ltd., India
- Grasim Industreis Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Coalindo Energy - Indonesia
- Chamber of Mines of South Africa
- Madhucon Powers Ltd - India
- Jaiprakash Power Ventures ltd
- Xindia Steels Limited - India
- Kaltim Prima Coal - Indonesia
- Antam Resourcindo - Indonesia
- Borneo Indobara - Indonesia
- Oldendorff Carriers - Singapore
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Ministry of Mines - Canada
- London Commodity Brokers - England
- Kideco Jaya Agung - Indonesia
- Aboitiz Power Corporation - Philippines
- Parliament of New Zealand
- Central Java Power - Indonesia
- Sojitz Corporation - Japan
- Globalindo Alam Lestari - Indonesia
- Iligan Light & Power Inc, Philippines
- VISA Power Limited - India
- Kepco SPC Power Corporation, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Planning Commission, India
- Larsen & Toubro Limited - India
- Metalloyd Limited - United Kingdom
- Indian Energy Exchange, India
- Bhatia International Limited - India
- Gujarat Electricity Regulatory Commission - India
- The University of Queensland
- Carbofer General Trading SA - India
- Kohat Cement Company Ltd. - Pakistan
- Aditya Birla Group - India
- Energy Link Ltd, New Zealand
- Singapore Mercantile Exchange
- Lanco Infratech Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Africa Commodities Group - South Africa
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bukit Baiduri Energy - Indonesia
- Independent Power Producers Association of India
- Mjunction Services Limited - India
- GMR Energy Limited - India
- Straits Asia Resources Limited - Singapore
- Ambuja Cements Ltd - India
- IHS Mccloskey Coal Group - USA
- Makarim & Taira - Indonesia
- Bukit Makmur.PT - Indonesia
- Energy Development Corp, Philippines
- Rio Tinto Coal - Australia
- Sarangani Energy Corporation, Philippines
- Samtan Co., Ltd - South Korea
- Meenaskhi Energy Private Limited - India
- ASAPP Information Group - India
- Malabar Cements Ltd - India
- Interocean Group of Companies - India
- Port Waratah Coal Services - Australia
- Karaikal Port Pvt Ltd - India
- Sindya Power Generating Company Private Ltd
- CNBM International Corporation - China
- Neyveli Lignite Corporation Ltd, - India
- Binh Thuan Hamico - Vietnam
- Altura Mining Limited, Indonesia
- Rashtriya Ispat Nigam Limited - India
- Commonwealth Bank - Australia
- Dalmia Cement Bharat India
- Standard Chartered Bank - UAE
- Directorate General of MIneral and Coal - Indonesia
- Gujarat Sidhee Cement - India
- Australian Commodity Traders Exchange
- Alfred C Toepfer International GmbH - Germany
- Mercuria Energy - Indonesia
- Ceylon Electricity Board - Sri Lanka
- SMC Global Power, Philippines
- Attock Cement Pakistan Limited
- Timah Investasi Mineral - Indoneisa
- Siam City Cement PLC, Thailand
- Electricity Authority, New Zealand
- ICICI Bank Limited - India
- Siam City Cement - Thailand
- Ministry of Finance - Indonesia
- Maheswari Brothers Coal Limited - India
- AsiaOL BioFuels Corp., Philippines
- Manunggal Multi Energi - Indonesia
- Thai Mozambique Logistica
- MS Steel International - UAE
- Vijayanagar Sugar Pvt Ltd - India
- Semirara Mining Corp, Philippines
- Minerals Council of Australia
- Parry Sugars Refinery, India
- Kapuas Tunggal Persada - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- LBH Netherlands Bv - Netherlands
- Sree Jayajothi Cements Limited - India
- IEA Clean Coal Centre - UK
- White Energy Company Limited
- Eastern Energy - Thailand
- Edison Trading Spa - Italy
- South Luzon Thermal Energy Corporation
- Semirara Mining and Power Corporation, Philippines
- Bhushan Steel Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- CIMB Investment Bank - Malaysia
- Orica Australia Pty. Ltd.
- Karbindo Abesyapradhi - Indoneisa
- The Treasury - Australian Government
- Indonesian Coal Mining Association
- European Bulk Services B.V. - Netherlands
- Uttam Galva Steels Limited - India
- Indika Energy - Indonesia
- Indian Oil Corporation Limited
- Wilmar Investment Holdings
- SMG Consultants - Indonesia
- Meralco Power Generation, Philippines
- Georgia Ports Authority, United States
- Marubeni Corporation - India
- Anglo American - United Kingdom
- Bhoruka Overseas - Indonesia
- Global Coal Blending Company Limited - Australia
- Barasentosa Lestari - Indonesia
- Goldman Sachs - Singapore
- Bayan Resources Tbk. - Indonesia
- Economic Council, Georgia
- San Jose City I Power Corp, Philippines
- McConnell Dowell - Australia
- Tata Chemicals Ltd - India
- Vedanta Resources Plc - India
- Jindal Steel & Power Ltd - India
- Chettinad Cement Corporation Ltd - India
- GVK Power & Infra Limited - India
- Star Paper Mills Limited - India
- India Bulls Power Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Latin American Coal - Colombia
- Sinarmas Energy and Mining - Indonesia
- Ind-Barath Power Infra Limited - India
- Salva Resources Pvt Ltd - India
- Bangladesh Power Developement Board
- Central Electricity Authority - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Posco Energy - South Korea
- Kobexindo Tractors - Indoneisa
- Pendopo Energi Batubara - Indonesia
- Therma Luzon, Inc, Philippines
- Orica Mining Services - Indonesia
- Indo Tambangraya Megah - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Formosa Plastics Group - Taiwan
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Medco Energi Mining Internasional
- Jorong Barutama Greston.PT - Indonesia
- Price Waterhouse Coopers - Russia
- PNOC Exploration Corporation - Philippines
- TNB Fuel Sdn Bhd - Malaysia
- SN Aboitiz Power Inc, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Agrawal Coal Company - India
- New Zealand Coal & Carbon
- Videocon Industries ltd - India
- Eastern Coal Council - USA
- PetroVietnam Power Coal Import and Supply Company
- International Coal Ventures Pvt Ltd - India
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