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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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Thursday, 25 January 24
THE RED SEA ESCALATION IMPLICATIONS ON GLOBAL SEABORNE TRADE - MARIA BERTZELETOU
In recent days, discussions have intensified about the potential impact on the seaborne trade and ton-miles due to the evolving dynamics of market ...
Thursday, 25 January 24
RED SEA SHIPPING DISRUPTIONS KEEP GEOPOLITICAL PREMIUM FOR COMMODITIES - FITCH RATINGS
Shipping disruptions and re-routing away from the Red Sea will maintain the geopolitical premium in the main commodity markets, including for oil a ...
Friday, 19 January 24
INDONESIA TARGETS 710 MLN METRIC TONS COAL OUTPUT IN 2024 AFTER RECORD 2023 - REUTERS
Indonesia, a major thermal coal exporter, aims to produce 710 million metric tons of coal in 2024, its mining minister said on Monday, after postin ...
Friday, 19 January 24
DRUMMOND COLOMBIA COAL OUTPUT ROSE 7.1% IN 2023 - REUTERS
Coal production from miner Drummond’s Colombia operations rose 7.1% in 2023 to 29.5 million metric tons, while exports declined by 2.6% to 27 ...
Friday, 19 January 24
CHINA'S 2023 COAL OUTPUT HITS RECORD HIGH - REUTERS
China’s coal output reached a record high in 2023, data from the statistics bureau showed on Wednesday, amid an ongoing focus on energy secur ...
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- Banpu Public Company Limited - Thailand
- India Bulls Power Limited - India
- Gujarat Sidhee Cement - India
- Rio Tinto Coal - Australia
- Jaiprakash Power Ventures ltd
- Electricity Authority, New Zealand
- Kideco Jaya Agung - Indonesia
- Larsen & Toubro Limited - India
- Price Waterhouse Coopers - Russia
- International Coal Ventures Pvt Ltd - India
- Chettinad Cement Corporation Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Eastern Energy - Thailand
- Krishnapatnam Port Company Ltd. - India
- New Zealand Coal & Carbon
- Kobexindo Tractors - Indoneisa
- Globalindo Alam Lestari - Indonesia
- Samtan Co., Ltd - South Korea
- Thiess Contractors Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Anglo American - United Kingdom
- Ambuja Cements Ltd - India
- Deloitte Consulting - India
- Indonesian Coal Mining Association
- Chamber of Mines of South Africa
- CNBM International Corporation - China
- Coastal Gujarat Power Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Gujarat Mineral Development Corp Ltd - India
- Wood Mackenzie - Singapore
- CIMB Investment Bank - Malaysia
- Marubeni Corporation - India
- Star Paper Mills Limited - India
- Kapuas Tunggal Persada - Indonesia
- Aboitiz Power Corporation - Philippines
- Lanco Infratech Ltd - India
- Barasentosa Lestari - Indonesia
- Orica Mining Services - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Heidelberg Cement - Germany
- Karaikal Port Pvt Ltd - India
- Goldman Sachs - Singapore
- Neyveli Lignite Corporation Ltd, - India
- Cement Manufacturers Association - India
- Miang Besar Coal Terminal - Indonesia
- Ministry of Transport, Egypt
- ASAPP Information Group - India
- GAC Shipping (India) Pvt Ltd
- Uttam Galva Steels Limited - India
- Timah Investasi Mineral - Indoneisa
- Bharathi Cement Corporation - India
- Global Green Power PLC Corporation, Philippines
- Toyota Tsusho Corporation, Japan
- Port Waratah Coal Services - Australia
- Pendopo Energi Batubara - Indonesia
- Makarim & Taira - Indonesia
- Thai Mozambique Logistica
- Coal and Oil Company - UAE
- Bahari Cakrawala Sebuku - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Trasteel International SA, Italy
- Commonwealth Bank - Australia
- Tata Chemicals Ltd - India
- Mjunction Services Limited - India
- Essar Steel Hazira Ltd - India
- Standard Chartered Bank - UAE
- Mintek Dendrill Indonesia
- Binh Thuan Hamico - Vietnam
- Asmin Koalindo Tuhup - Indonesia
- Altura Mining Limited, Indonesia
- SN Aboitiz Power Inc, Philippines
- Electricity Generating Authority of Thailand
- Vijayanagar Sugar Pvt Ltd - India
- Xindia Steels Limited - India
- Kumho Petrochemical, South Korea
- Simpson Spence & Young - Indonesia
- Indian Oil Corporation Limited
- Latin American Coal - Colombia
- Siam City Cement - Thailand
- Indian Energy Exchange, India
- Meenaskhi Energy Private Limited - India
- Holcim Trading Pte Ltd - Singapore
- The State Trading Corporation of India Ltd
- Bukit Baiduri Energy - Indonesia
- Energy Development Corp, Philippines
- Singapore Mercantile Exchange
- Vizag Seaport Private Limited - India
- Sree Jayajothi Cements Limited - India
- VISA Power Limited - India
- Central Java Power - Indonesia
- Posco Energy - South Korea
- Metalloyd Limited - United Kingdom
- Coalindo Energy - Indonesia
- PowerSource Philippines DevCo
- PTC India Limited - India
- Orica Australia Pty. Ltd.
- Bukit Asam (Persero) Tbk - Indonesia
- Australian Commodity Traders Exchange
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Minerals Council of Australia
- Sakthi Sugars Limited - India
- Kepco SPC Power Corporation, Philippines
- Renaissance Capital - South Africa
- Intertek Mineral Services - Indonesia
- Therma Luzon, Inc, Philippines
- Sojitz Corporation - Japan
- Karbindo Abesyapradhi - Indoneisa
- Maharashtra Electricity Regulatory Commission - India
- Energy Link Ltd, New Zealand
- Mercator Lines Limited - India
- Ind-Barath Power Infra Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Semirara Mining and Power Corporation, Philippines
- Tamil Nadu electricity Board
- Oldendorff Carriers - Singapore
- Formosa Plastics Group - Taiwan
- Grasim Industreis Ltd - India
- Global Coal Blending Company Limited - Australia
- Iligan Light & Power Inc, Philippines
- Ministry of Finance - Indonesia
- Leighton Contractors Pty Ltd - Australia
- London Commodity Brokers - England
- Dalmia Cement Bharat India
- Wilmar Investment Holdings
- McConnell Dowell - Australia
- Medco Energi Mining Internasional
- Central Electricity Authority - India
- Malabar Cements Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bulk Trading Sa - Switzerland
- Agrawal Coal Company - India
- Sarangani Energy Corporation, Philippines
- Madhucon Powers Ltd - India
- Planning Commission, India
- Indogreen Group - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- OPG Power Generation Pvt Ltd - India
- Africa Commodities Group - South Africa
- Offshore Bulk Terminal Pte Ltd, Singapore
- Interocean Group of Companies - India
- Indo Tambangraya Megah - Indonesia
- Siam City Cement PLC, Thailand
- The University of Queensland
- Antam Resourcindo - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Jorong Barutama Greston.PT - Indonesia
- Bhushan Steel Limited - India
- AsiaOL BioFuels Corp., Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Edison Trading Spa - Italy
- Savvy Resources Ltd - HongKong
- Attock Cement Pakistan Limited
- Sical Logistics Limited - India
- Borneo Indobara - Indonesia
- SMG Consultants - Indonesia
- Petron Corporation, Philippines
- Salva Resources Pvt Ltd - India
- Vedanta Resources Plc - India
- Kalimantan Lumbung Energi - Indonesia
- White Energy Company Limited
- Global Business Power Corporation, Philippines
- GVK Power & Infra Limited - India
- GMR Energy Limited - India
- LBH Netherlands Bv - Netherlands
- Directorate Of Revenue Intelligence - India
- The Treasury - Australian Government
- San Jose City I Power Corp, Philippines
- Merrill Lynch Commodities Europe
- PNOC Exploration Corporation - Philippines
- Indika Energy - Indonesia
- Carbofer General Trading SA - India
- Meralco Power Generation, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Straits Asia Resources Limited - Singapore
- Semirara Mining Corp, Philippines
- Independent Power Producers Association of India
- European Bulk Services B.V. - Netherlands
- Romanian Commodities Exchange
- Ministry of Mines - Canada
- Australian Coal Association
- MS Steel International - UAE
- Sinarmas Energy and Mining - Indonesia
- Baramulti Group, Indonesia
- Economic Council, Georgia
- ICICI Bank Limited - India
- Georgia Ports Authority, United States
- Parry Sugars Refinery, India
- Manunggal Multi Energi - Indonesia
- Bangladesh Power Developement Board
- Aditya Birla Group - India
- Sindya Power Generating Company Private Ltd
- Bayan Resources Tbk. - Indonesia
- Cigading International Bulk Terminal - Indonesia
- IHS Mccloskey Coal Group - USA
- Mercuria Energy - Indonesia
- Kaltim Prima Coal - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Eastern Coal Council - USA
- South Luzon Thermal Energy Corporation
- Bhoruka Overseas - Indonesia
- Parliament of New Zealand
- Riau Bara Harum - Indonesia
- Bukit Makmur.PT - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Kartika Selabumi Mining - Indonesia
- Power Finance Corporation Ltd., India
- Videocon Industries ltd - India
- Bhatia International Limited - India
- Jindal Steel & Power Ltd - India
- Maheswari Brothers Coal Limited - India
- IEA Clean Coal Centre - UK
- Gujarat Electricity Regulatory Commission - India
- SMC Global Power, Philippines
- TeaM Sual Corporation - Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
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