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