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