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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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Sunday, 18 April 21
INDONESIA LIKELY TO WITNESS 119 OIL AND GAS PROJECTS STARTS ACROSS VALUE CHAIN BY 2025, SAYS GLOBALDATA
Indonesia is expected to witness 119 oil and gas projects commencing their operations across value chain during 2021-2025, accounting for 6% of the ...
Sunday, 18 April 21
WORLDSTEEL RAISES 2021 STEEL DEMAND GROWTH FORECAST TO 5.8% - WORLDSTEEL
The World Steel Association (worldsteel) today released its Short Range Outlook (SRO) for 2021 and 2022. worldsteel forecasts that steel demand wil ...
Sunday, 18 April 21
CHINA'S Q1 COAL OUTPUT RISES 16% ON STRONG DEMAND FOR WINTER HEATING - REUTERS
China’s coal output rose 16% in the first quarter from the same period last year, bolstered by strong demand for winter heating and robust in ...
Wednesday, 14 April 21
INDIA HAS A RECORD LEVEL OF STOCKPILED COAL DAMPENING NEED FOR NEW DOMESTIC MINES - IEEFA
Proposed coal mining expansions at odds with excess supply
India has stockpiled a record 132 million tonnes of coal – enough t ...
Wednesday, 14 April 21
BANGLADESH NEEDS A RENEWABLES FOCUS, NOT A SWITCH FROM 'COAL TO GAS' - IEEFA
Renewables are cheaper and more sustainable than gas imports, and can provide better energy security in developing nations
The emerg ...
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- Jaiprakash Power Ventures ltd
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Uttam Galva Steels Limited - India
- Intertek Mineral Services - Indonesia
- Australian Commodity Traders Exchange
- Commonwealth Bank - Australia
- Petrochimia International Co. Ltd.- Taiwan
- PTC India Limited - India
- Chettinad Cement Corporation Ltd - India
- Coalindo Energy - Indonesia
- Central Electricity Authority - India
- Siam City Cement PLC, Thailand
- Posco Energy - South Korea
- Bayan Resources Tbk. - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Trasteel International SA, Italy
- Karbindo Abesyapradhi - Indoneisa
- Heidelberg Cement - Germany
- SN Aboitiz Power Inc, Philippines
- Georgia Ports Authority, United States
- Electricity Generating Authority of Thailand
- Minerals Council of Australia
- Vijayanagar Sugar Pvt Ltd - India
- The Treasury - Australian Government
- Toyota Tsusho Corporation, Japan
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Pendopo Energi Batubara - Indonesia
- Renaissance Capital - South Africa
- Borneo Indobara - Indonesia
- Independent Power Producers Association of India
- Mintek Dendrill Indonesia
- Africa Commodities Group - South Africa
- Orica Mining Services - Indonesia
- Sarangani Energy Corporation, Philippines
- Asmin Koalindo Tuhup - Indonesia
- CNBM International Corporation - China
- Indian Energy Exchange, India
- IEA Clean Coal Centre - UK
- Deloitte Consulting - India
- Indo Tambangraya Megah - Indonesia
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- Bukit Asam (Persero) Tbk - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kaltim Prima Coal - Indonesia
- Antam Resourcindo - Indonesia
- Coal and Oil Company - UAE
- GVK Power & Infra Limited - India
- Binh Thuan Hamico - Vietnam
- White Energy Company Limited
- Karaikal Port Pvt Ltd - India
- Vizag Seaport Private Limited - India
- Marubeni Corporation - India
- Siam City Cement - Thailand
- Sindya Power Generating Company Private Ltd
- Interocean Group of Companies - India
- Malabar Cements Ltd - India
- Ind-Barath Power Infra Limited - India
- Manunggal Multi Energi - Indonesia
- Tata Chemicals Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- San Jose City I Power Corp, Philippines
- Indian Oil Corporation Limited
- Indogreen Group - Indonesia
- Aboitiz Power Corporation - Philippines
- Carbofer General Trading SA - India
- Kideco Jaya Agung - Indonesia
- Bhushan Steel Limited - India
- Globalindo Alam Lestari - Indonesia
- Videocon Industries ltd - India
- Bhatia International Limited - India
- Cement Manufacturers Association - India
- Mercator Lines Limited - India
- TeaM Sual Corporation - Philippines
- Economic Council, Georgia
- Simpson Spence & Young - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Thai Mozambique Logistica
- Aditya Birla Group - India
- Latin American Coal - Colombia
- Standard Chartered Bank - UAE
- SMC Global Power, Philippines
- PowerSource Philippines DevCo
- Sical Logistics Limited - India
- OPG Power Generation Pvt Ltd - India
- Global Green Power PLC Corporation, Philippines
- Kepco SPC Power Corporation, Philippines
- Billiton Holdings Pty Ltd - Australia
- Holcim Trading Pte Ltd - Singapore
- International Coal Ventures Pvt Ltd - India
- European Bulk Services B.V. - Netherlands
- Alfred C Toepfer International GmbH - Germany
- MS Steel International - UAE
- Rio Tinto Coal - Australia
- Bhoruka Overseas - Indonesia
- Directorate Of Revenue Intelligence - India
- Pipit Mutiara Jaya. PT, Indonesia
- Sinarmas Energy and Mining - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Eastern Energy - Thailand
- Salva Resources Pvt Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Goldman Sachs - Singapore
- Wilmar Investment Holdings
- Coastal Gujarat Power Limited - India
- Eastern Coal Council - USA
- Planning Commission, India
- Attock Cement Pakistan Limited
- GMR Energy Limited - India
- Maheswari Brothers Coal Limited - India
- London Commodity Brokers - England
- Central Java Power - Indonesia
- Barasentosa Lestari - Indonesia
- The University of Queensland
- Madhucon Powers Ltd - India
- Energy Link Ltd, New Zealand
- Bukit Makmur.PT - Indonesia
- Jindal Steel & Power Ltd - India
- Banpu Public Company Limited - Thailand
- Jorong Barutama Greston.PT - Indonesia
- Kobexindo Tractors - Indoneisa
- Star Paper Mills Limited - India
- CIMB Investment Bank - Malaysia
- Singapore Mercantile Exchange
- Kalimantan Lumbung Energi - Indonesia
- Thiess Contractors Indonesia
- Baramulti Group, Indonesia
- Mercuria Energy - Indonesia
- Ministry of Mines - Canada
- SMG Consultants - Indonesia
- Straits Asia Resources Limited - Singapore
- Bangladesh Power Developement Board
- Dalmia Cement Bharat India
- Parliament of New Zealand
- Tamil Nadu electricity Board
- Lanco Infratech Ltd - India
- LBH Netherlands Bv - Netherlands
- Offshore Bulk Terminal Pte Ltd, Singapore
- Iligan Light & Power Inc, Philippines
- ICICI Bank Limited - India
- VISA Power Limited - India
- Australian Coal Association
- Bulk Trading Sa - Switzerland
- Bukit Baiduri Energy - Indonesia
- Agrawal Coal Company - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kumho Petrochemical, South Korea
- Semirara Mining and Power Corporation, Philippines
- Vedanta Resources Plc - India
- Therma Luzon, Inc, Philippines
- Meralco Power Generation, Philippines
- Orica Australia Pty. Ltd.
- Ministry of Finance - Indonesia
- Sakthi Sugars Limited - India
- Grasim Industreis Ltd - India
- Miang Besar Coal Terminal - Indonesia
- PNOC Exploration Corporation - Philippines
- Medco Energi Mining Internasional
- Power Finance Corporation Ltd., India
- South Luzon Thermal Energy Corporation
- Timah Investasi Mineral - Indoneisa
- The State Trading Corporation of India Ltd
- India Bulls Power Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- GAC Shipping (India) Pvt Ltd
- Anglo American - United Kingdom
- Bharathi Cement Corporation - India
- Cigading International Bulk Terminal - Indonesia
- Gujarat Sidhee Cement - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Samtan Co., Ltd - South Korea
- Xindia Steels Limited - India
- Kartika Selabumi Mining - Indonesia
- New Zealand Coal & Carbon
- Metalloyd Limited - United Kingdom
- Riau Bara Harum - Indonesia
- Indika Energy - Indonesia
- Port Waratah Coal Services - Australia
- Petron Corporation, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Chamber of Mines of South Africa
- Global Business Power Corporation, Philippines
- Ceylon Electricity Board - Sri Lanka
- Sojitz Corporation - Japan
- Oldendorff Carriers - Singapore
- Ministry of Transport, Egypt
- Mjunction Services Limited - India
- Romanian Commodities Exchange
- Ambuja Cements Ltd - India
- Global Coal Blending Company Limited - Australia
- IHS Mccloskey Coal Group - USA
- Meenaskhi Energy Private Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Altura Mining Limited, Indonesia
- Merrill Lynch Commodities Europe
- Savvy Resources Ltd - HongKong
- Parry Sugars Refinery, India
- Price Waterhouse Coopers - Russia
- McConnell Dowell - Australia
- Gujarat Electricity Regulatory Commission - India
- Larsen & Toubro Limited - India
- Indonesian Coal Mining Association
- Sree Jayajothi Cements Limited - India
- Edison Trading Spa - Italy
- Energy Development Corp, Philippines
- Maharashtra Electricity Regulatory Commission - India
- ASAPP Information Group - India
- Krishnapatnam Port Company Ltd. - India
- Wood Mackenzie - Singapore
- Gujarat Mineral Development Corp Ltd - India
- Electricity Authority, New Zealand
- Makarim & Taira - Indonesia
- Semirara Mining Corp, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Rashtriya Ispat Nigam Limited - India
- Formosa Plastics Group - Taiwan
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