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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, 12 May 21
U.S. COAL PRODUCTION TO INCREASE BY 43 MMST IN 2021 TOTAL 582 MILLION SHORT TONS - EIA
U.S. energy Information Administration expects U.S. coal production to total 582 million short tons (MMst) in 2021, 43 MMst (8%) more than in 2020. ...
Wednesday, 12 May 21
MARKET INSIGHT - INTERMODAL
Tanker S&P is finally back!
For an extended period, Dry bulk & Wet market rates have been diverging, with the SnP deals on each sect ...
Monday, 10 May 21
PAKISTAN: COAL GASIFICATION AND LIQUEFACTION HARMFUL TO ECONOMY - IEEFA
There is no second life for coal
Pakistan’s intention to use coal for power production through gasification and liquefaction technologie ...
Sunday, 09 May 21
HERE'S WHY INVESTORS ARE POURING MONEY INTO COAL, DESPITE ITS BLEAK FUTURE - FORBES
Coal stocks have surged this year – along with the wider energy sector – but experts warn these are likely short-term gains for an indu ...
Sunday, 09 May 21
MAYBANK TO STOP COAL FINANCING - BERNAMA
Malayan Banking Bhd (Maybank) will stop financing new coal activities as part of its sustainable agenda.
Currently, coal financing m ...
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- Renaissance Capital - South Africa
- Minerals Council of Australia
- ICICI Bank Limited - India
- Tata Chemicals Ltd - India
- Goldman Sachs - Singapore
- Eastern Coal Council - USA
- TeaM Sual Corporation - Philippines
- Mercuria Energy - Indonesia
- Australian Commodity Traders Exchange
- Directorate Of Revenue Intelligence - India
- Siam City Cement - Thailand
- Timah Investasi Mineral - Indoneisa
- Metalloyd Limited - United Kingdom
- Bayan Resources Tbk. - Indonesia
- VISA Power Limited - India
- Videocon Industries ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Agrawal Coal Company - India
- Intertek Mineral Services - Indonesia
- Pendopo Energi Batubara - Indonesia
- Singapore Mercantile Exchange
- Holcim Trading Pte Ltd - Singapore
- Gujarat Electricity Regulatory Commission - India
- Bangladesh Power Developement Board
- Commonwealth Bank - Australia
- Vizag Seaport Private Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Romanian Commodities Exchange
- Central Electricity Authority - India
- New Zealand Coal & Carbon
- Toyota Tsusho Corporation, Japan
- Malabar Cements Ltd - India
- Siam City Cement PLC, Thailand
- PowerSource Philippines DevCo
- Bulk Trading Sa - Switzerland
- White Energy Company Limited
- Tamil Nadu electricity Board
- Chettinad Cement Corporation Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Madhucon Powers Ltd - India
- SMG Consultants - Indonesia
- Iligan Light & Power Inc, Philippines
- Jaiprakash Power Ventures ltd
- Baramulti Group, Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Posco Energy - South Korea
- Bhatia International Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Global Coal Blending Company Limited - Australia
- ASAPP Information Group - India
- Salva Resources Pvt Ltd - India
- Rio Tinto Coal - Australia
- Ministry of Transport, Egypt
- Petron Corporation, Philippines
- San Jose City I Power Corp, Philippines
- Riau Bara Harum - Indonesia
- LBH Netherlands Bv - Netherlands
- Uttam Galva Steels Limited - India
- Energy Link Ltd, New Zealand
- Ind-Barath Power Infra Limited - India
- GMR Energy Limited - India
- Sinarmas Energy and Mining - Indonesia
- Therma Luzon, Inc, Philippines
- Interocean Group of Companies - India
- CNBM International Corporation - China
- Economic Council, Georgia
- Sical Logistics Limited - India
- Medco Energi Mining Internasional
- Thai Mozambique Logistica
- India Bulls Power Limited - India
- Standard Chartered Bank - UAE
- Power Finance Corporation Ltd., India
- Ambuja Cements Ltd - India
- International Coal Ventures Pvt Ltd - India
- Chamber of Mines of South Africa
- Sakthi Sugars Limited - India
- Kaltim Prima Coal - Indonesia
- Sindya Power Generating Company Private Ltd
- Oldendorff Carriers - Singapore
- Central Java Power - Indonesia
- Electricity Generating Authority of Thailand
- Parry Sugars Refinery, India
- Petrochimia International Co. Ltd.- Taiwan
- Parliament of New Zealand
- Banpu Public Company Limited - Thailand
- GVK Power & Infra Limited - India
- Dalmia Cement Bharat India
- Kartika Selabumi Mining - Indonesia
- Simpson Spence & Young - Indonesia
- Altura Mining Limited, Indonesia
- Georgia Ports Authority, United States
- Globalindo Alam Lestari - Indonesia
- Krishnapatnam Port Company Ltd. - India
- GN Power Mariveles Coal Plant, Philippines
- Ceylon Electricity Board - Sri Lanka
- Semirara Mining and Power Corporation, Philippines
- Indonesian Coal Mining Association
- Heidelberg Cement - Germany
- The Treasury - Australian Government
- SMC Global Power, Philippines
- Aditya Birla Group - India
- Indika Energy - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Carbofer General Trading SA - India
- Edison Trading Spa - Italy
- Price Waterhouse Coopers - Russia
- Indian Energy Exchange, India
- Wilmar Investment Holdings
- Planning Commission, India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Eastern Energy - Thailand
- Attock Cement Pakistan Limited
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Orica Mining Services - Indonesia
- Antam Resourcindo - Indonesia
- Larsen & Toubro Limited - India
- Kumho Petrochemical, South Korea
- Ministry of Finance - Indonesia
- Anglo American - United Kingdom
- OPG Power Generation Pvt Ltd - India
- Kobexindo Tractors - Indoneisa
- Grasim Industreis Ltd - India
- CIMB Investment Bank - Malaysia
- Sojitz Corporation - Japan
- Latin American Coal - Colombia
- Sarangani Energy Corporation, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Indogreen Group - Indonesia
- Aboitiz Power Corporation - Philippines
- Global Green Power PLC Corporation, Philippines
- Karaikal Port Pvt Ltd - India
- IEA Clean Coal Centre - UK
- Meralco Power Generation, Philippines
- Meenaskhi Energy Private Limited - India
- PetroVietnam Power Coal Import and Supply Company
- London Commodity Brokers - England
- Electricity Authority, New Zealand
- Sree Jayajothi Cements Limited - India
- Orica Australia Pty. Ltd.
- Bhushan Steel Limited - India
- Mjunction Services Limited - India
- Essar Steel Hazira Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Jindal Steel & Power Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Neyveli Lignite Corporation Ltd, - India
- Africa Commodities Group - South Africa
- Gujarat Mineral Development Corp Ltd - India
- Energy Development Corp, Philippines
- South Luzon Thermal Energy Corporation
- Jorong Barutama Greston.PT - Indonesia
- IHS Mccloskey Coal Group - USA
- Bahari Cakrawala Sebuku - Indonesia
- Bharathi Cement Corporation - India
- Samtan Co., Ltd - South Korea
- Bukit Makmur.PT - Indonesia
- The University of Queensland
- Makarim & Taira - Indonesia
- Indian Oil Corporation Limited
- Kapuas Tunggal Persada - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Independent Power Producers Association of India
- Kepco SPC Power Corporation, Philippines
- Bukit Baiduri Energy - Indonesia
- Vedanta Resources Plc - India
- Maharashtra Electricity Regulatory Commission - India
- Directorate General of MIneral and Coal - Indonesia
- McConnell Dowell - Australia
- Formosa Plastics Group - Taiwan
- Lanco Infratech Ltd - India
- Thiess Contractors Indonesia
- Mercator Lines Limited - India
- Merrill Lynch Commodities Europe
- Gujarat Sidhee Cement - India
- Marubeni Corporation - India
- Rashtriya Ispat Nigam Limited - India
- MS Steel International - UAE
- Port Waratah Coal Services - Australia
- Global Business Power Corporation, Philippines
- Coastal Gujarat Power Limited - India
- Mintek Dendrill Indonesia
- Borneo Indobara - Indonesia
- Maheswari Brothers Coal Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Straits Asia Resources Limited - Singapore
- Wood Mackenzie - Singapore
- Barasentosa Lestari - Indonesia
- Bhoruka Overseas - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Bank of Tokyo Mitsubishi UFJ Ltd
- Semirara Mining Corp, Philippines
- Ministry of Mines - Canada
- PTC India Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Bukit Asam (Persero) Tbk - Indonesia
- Cement Manufacturers Association - India
- Savvy Resources Ltd - HongKong
- PNOC Exploration Corporation - Philippines
- Trasteel International SA, Italy
- European Bulk Services B.V. - Netherlands
- Miang Besar Coal Terminal - Indonesia
- GAC Shipping (India) Pvt Ltd
- Indo Tambangraya Megah - Indonesia
- Binh Thuan Hamico - Vietnam
- Coal and Oil Company - UAE
- Australian Coal Association
- Manunggal Multi Energi - Indonesia
- Coalindo Energy - Indonesia
- SN Aboitiz Power Inc, Philippines
- Alfred C Toepfer International GmbH - Germany
- Star Paper Mills Limited - India
- Xindia Steels Limited - India
- The State Trading Corporation of India Ltd
- Deloitte Consulting - India
- Kideco Jaya Agung - Indonesia
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