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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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Tuesday, 01 June 21
CHINA TAIYUAN COAL TRANSACTION PRICE INDEX DOWN 0.02 PCT - XINHUA
China Taiyuan coal transaction price index stood at 160.06 points Monday, down 0.02 percent week on week.
The index, released by Chi ...
Tuesday, 01 June 21
BUMA PRODUCED 11.4 MILLION TONNES OF COAL IN 4Q 2020, 5% LOWER COMPARED TO 12.2 MILLION TONNES IN 4Q 2019
PT Delta Dunia Makmur Tbk. presents its newsletter with consolidated financial and operating results that include its primary and wholly-owne ...
Sunday, 30 May 21
PAKISTAN IS PLANNING TO END COAL IMPORTS, WORSENING OUTLOOK FOR SOUTH AFRICAN COAL - IEEFA
The growing and irreversible risks being faced by South African coal exporters
As Thungela Resources’ CEO attempts to talk up ...
Sunday, 30 May 21
G7 COAL FINANCE EXIT AND WHY IT MATTERS FOR INDIA - IEEFA
While India doesn’t rely on export credit finance to fund new coal plants, there are material implications
The commitment by the Group o ...
Saturday, 29 May 21
SKULD’S IMO 2020 SULPHUR CAP EXPERIENCE
More than a year has passed since the International Maritime Organization (IMO) mandate for the 0.50% sulphur cap for marine fuel (MARPOL Annex VI) ...
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- Salva Resources Pvt Ltd - India
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- Medco Energi Mining Internasional
- Pipit Mutiara Jaya. PT, Indonesia
- Global Coal Blending Company Limited - Australia
- Indogreen Group - Indonesia
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- Power Finance Corporation Ltd., India
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- Wilmar Investment Holdings
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- Neyveli Lignite Corporation Ltd, - India
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- Orica Australia Pty. Ltd.
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- Rashtriya Ispat Nigam Limited - India
- The Treasury - Australian Government
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- The University of Queensland
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- Africa Commodities Group - South Africa
- Kideco Jaya Agung - Indonesia
- Merrill Lynch Commodities Europe
- IEA Clean Coal Centre - UK
- Intertek Mineral Services - Indonesia
- Siam City Cement PLC, Thailand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- MS Steel International - UAE
- Ministry of Finance - Indonesia
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- Wood Mackenzie - Singapore
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- Billiton Holdings Pty Ltd - Australia
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- Eastern Coal Council - USA
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- Interocean Group of Companies - India
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- Romanian Commodities Exchange
- Mercuria Energy - Indonesia
- Edison Trading Spa - Italy
- Price Waterhouse Coopers - Russia
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- Directorate General of MIneral and Coal - Indonesia
- Semirara Mining Corp, Philippines
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- Orica Mining Services - Indonesia
- Videocon Industries ltd - India
- Gujarat Electricity Regulatory Commission - India
- SN Aboitiz Power Inc, Philippines
- Energy Link Ltd, New Zealand
- Samtan Co., Ltd - South Korea
- Maharashtra Electricity Regulatory Commission - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Sree Jayajothi Cements Limited - India
- Larsen & Toubro Limited - India
- Bangladesh Power Developement Board
- Leighton Contractors Pty Ltd - Australia
- Directorate Of Revenue Intelligence - India
- Mercator Lines Limited - India
- Deloitte Consulting - India
- Vedanta Resources Plc - India
- PTC India Limited - India
- London Commodity Brokers - England
- Meralco Power Generation, Philippines
- Sarangani Energy Corporation, Philippines
- Coal and Oil Company - UAE
- Bulk Trading Sa - Switzerland
- Parry Sugars Refinery, India
- Singapore Mercantile Exchange
- Barasentosa Lestari - Indonesia
- Siam City Cement - Thailand
- Kohat Cement Company Ltd. - Pakistan
- Minerals Council of Australia
- Energy Development Corp, Philippines
- Simpson Spence & Young - Indonesia
- CNBM International Corporation - China
- Straits Asia Resources Limited - Singapore
- India Bulls Power Limited - India
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- Holcim Trading Pte Ltd - Singapore
- Iligan Light & Power Inc, Philippines
- Therma Luzon, Inc, Philippines
- South Luzon Thermal Energy Corporation
- Cigading International Bulk Terminal - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Central Java Power - Indonesia
- Global Green Power PLC Corporation, Philippines
- Bharathi Cement Corporation - India
- Commonwealth Bank - Australia
- PetroVietnam Power Coal Import and Supply Company
- Sical Logistics Limited - India
- Economic Council, Georgia
- Toyota Tsusho Corporation, Japan
- Indian Oil Corporation Limited
- White Energy Company Limited
- Baramulti Group, Indonesia
- Anglo American - United Kingdom
- Chettinad Cement Corporation Ltd - India
- Agrawal Coal Company - India
- Attock Cement Pakistan Limited
- Petron Corporation, Philippines
- VISA Power Limited - India
- Thai Mozambique Logistica
- Parliament of New Zealand
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- Mintek Dendrill Indonesia
- Chamber of Mines of South Africa
- Jindal Steel & Power Ltd - India
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- Tata Chemicals Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Coastal Gujarat Power Limited - India
- New Zealand Coal & Carbon
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- Bahari Cakrawala Sebuku - Indonesia
- Antam Resourcindo - Indonesia
- Ambuja Cements Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Xindia Steels Limited - India
- Mjunction Services Limited - India
- Indian Energy Exchange, India
- Oldendorff Carriers - Singapore
- TeaM Sual Corporation - Philippines
- Standard Chartered Bank - UAE
- Bayan Resources Tbk. - Indonesia
- Meenaskhi Energy Private Limited - India
- Formosa Plastics Group - Taiwan
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- European Bulk Services B.V. - Netherlands
- Sakthi Sugars Limited - India
- International Coal Ventures Pvt Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Savvy Resources Ltd - HongKong
- Eastern Energy - Thailand
- ICICI Bank Limited - India
- Indonesian Coal Mining Association
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- Filglen & Citicon Mining (HK) Ltd - Hong Kong
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- Altura Mining Limited, Indonesia
- The State Trading Corporation of India Ltd
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- Manunggal Multi Energi - Indonesia
- Heidelberg Cement - Germany
- Ceylon Electricity Board - Sri Lanka
- McConnell Dowell - Australia
- Independent Power Producers Association of India
- Maheswari Brothers Coal Limited - India
- GMR Energy Limited - India
- Sindya Power Generating Company Private Ltd
- Grasim Industreis Ltd - India
- Metalloyd Limited - United Kingdom
- Kumho Petrochemical, South Korea
- Bhoruka Overseas - Indonesia
- Aboitiz Power Corporation - Philippines
- Riau Bara Harum - Indonesia
- Australian Coal Association
- Goldman Sachs - Singapore
- Thiess Contractors Indonesia
- Alfred C Toepfer International GmbH - Germany
- Tamil Nadu electricity Board
- Bhatia International Limited - India
- Australian Commodity Traders Exchange
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- Banpu Public Company Limited - Thailand
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- LBH Netherlands Bv - Netherlands
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