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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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Monday, 29 March 21
MOODY'S: OUTLOOK FOR GLOBAL METALS AND MINING INDUSTRY TURNS POSITIVE ON HIGHER EBITDA IN PANDEMIC'S WAKE
- Demand for steel, iron ore and copper will rise, while aluminum, nickel and zinc will remain in surplus
- EBITDA is expected to ...
Thursday, 25 March 21
'OMNIBUS LAW' REGULATION ON INDONESIA’S ENERGY AND MINING SECTORS TO BOOST COAL PROCESSING BUT ALSO RAISES QUESTIONS - ABNR
February 2021 saw the issuance of a raft of new government regulations to give effect to the reformist Job Creation Law (colloquially known as the ...
Thursday, 25 March 21
PROPOSED SWITCH FROM COAL TO LNG THREATENS RENEWABLE ENERGY DEVELOPMENT IN ASIA - IEEFA
Renewables offer an ever cheaper, financially sustainable and energy secure alternative, better able to support developing nations
A ...
Thursday, 25 March 21
MAJOR INVESTMENT ADVISORS BLACKROCK AND MEKETA PROVIDE A FIDUCIARY PATH THROUGH THE ENERGY TRANSITION - IEEFA
BlackRock and Meketa say divestment from fossil fuels improves, not weakens, investment returns
Two major financial management firms ...
Thursday, 25 March 21
EUROPE PASSES MILESTONE WITH HALF OF COAL PLANTS CLOSED OR SET TO RETIRE BY 2030 - EURACTIV
Half of Europe’s 324 coal-fueled power plants have either closed or announced a retirement date before 2030, it emerged on Monday (22 March) ...
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- GAC Shipping (India) Pvt Ltd
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- Savvy Resources Ltd - HongKong
- International Coal Ventures Pvt Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- San Jose City I Power Corp, Philippines
- Sakthi Sugars Limited - India
- India Bulls Power Limited - India
- PTC India Limited - India
- Bangladesh Power Developement Board
- SMG Consultants - Indonesia
- GVK Power & Infra Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- PNOC Exploration Corporation - Philippines
- Siam City Cement - Thailand
- Jindal Steel & Power Ltd - India
- Power Finance Corporation Ltd., India
- Wilmar Investment Holdings
- Carbofer General Trading SA - India
- Commonwealth Bank - Australia
- New Zealand Coal & Carbon
- Malabar Cements Ltd - India
- Directorate Of Revenue Intelligence - India
- Edison Trading Spa - Italy
- Tata Chemicals Ltd - India
- Global Business Power Corporation, Philippines
- Eastern Energy - Thailand
- Manunggal Multi Energi - Indonesia
- Ambuja Cements Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Banpu Public Company Limited - Thailand
- Mintek Dendrill Indonesia
- TeaM Sual Corporation - Philippines
- Renaissance Capital - South Africa
- Ministry of Finance - Indonesia
- SMC Global Power, Philippines
- Eastern Coal Council - USA
- Standard Chartered Bank - UAE
- Marubeni Corporation - India
- South Luzon Thermal Energy Corporation
- Metalloyd Limited - United Kingdom
- Price Waterhouse Coopers - Russia
- Meenaskhi Energy Private Limited - India
- Kapuas Tunggal Persada - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Africa Commodities Group - South Africa
- Binh Thuan Hamico - Vietnam
- Aditya Birla Group - India
- Anglo American - United Kingdom
- Wood Mackenzie - Singapore
- Indo Tambangraya Megah - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Kohat Cement Company Ltd. - Pakistan
- Indonesian Coal Mining Association
- ICICI Bank Limited - India
- Orica Mining Services - Indonesia
- Attock Cement Pakistan Limited
- Sree Jayajothi Cements Limited - India
- London Commodity Brokers - England
- Siam City Cement PLC, Thailand
- The University of Queensland
- Oldendorff Carriers - Singapore
- Billiton Holdings Pty Ltd - Australia
- Port Waratah Coal Services - Australia
- Bukit Makmur.PT - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Georgia Ports Authority, United States
- Rio Tinto Coal - Australia
- McConnell Dowell - Australia
- Neyveli Lignite Corporation Ltd, - India
- Karbindo Abesyapradhi - Indoneisa
- Parliament of New Zealand
- Kobexindo Tractors - Indoneisa
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sarangani Energy Corporation, Philippines
- Goldman Sachs - Singapore
- Vizag Seaport Private Limited - India
- Iligan Light & Power Inc, Philippines
- Agrawal Coal Company - India
- PowerSource Philippines DevCo
- IEA Clean Coal Centre - UK
- Orica Australia Pty. Ltd.
- Parry Sugars Refinery, India
- CNBM International Corporation - China
- Karaikal Port Pvt Ltd - India
- Coastal Gujarat Power Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Planning Commission, India
- Merrill Lynch Commodities Europe
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Altura Mining Limited, Indonesia
- Kepco SPC Power Corporation, Philippines
- Miang Besar Coal Terminal - Indonesia
- Jaiprakash Power Ventures ltd
- Star Paper Mills Limited - India
- European Bulk Services B.V. - Netherlands
- Dalmia Cement Bharat India
- Kartika Selabumi Mining - Indonesia
- Kideco Jaya Agung - Indonesia
- Sojitz Corporation - Japan
- Jorong Barutama Greston.PT - Indonesia
- Borneo Indobara - Indonesia
- Electricity Authority, New Zealand
- Kumho Petrochemical, South Korea
- Asmin Koalindo Tuhup - Indonesia
- Globalindo Alam Lestari - Indonesia
- Singapore Mercantile Exchange
- White Energy Company Limited
- Petrochimia International Co. Ltd.- Taiwan
- Bhoruka Overseas - Indonesia
- Bharathi Cement Corporation - India
- Timah Investasi Mineral - Indoneisa
- Mercuria Energy - Indonesia
- Electricity Generating Authority of Thailand
- Semirara Mining Corp, Philippines
- Cigading International Bulk Terminal - Indonesia
- Global Coal Blending Company Limited - Australia
- Global Green Power PLC Corporation, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Bahari Cakrawala Sebuku - Indonesia
- Economic Council, Georgia
- ASAPP Information Group - India
- Pendopo Energi Batubara - Indonesia
- Ind-Barath Power Infra Limited - India
- Toyota Tsusho Corporation, Japan
- Chamber of Mines of South Africa
- Vijayanagar Sugar Pvt Ltd - India
- Simpson Spence & Young - Indonesia
- IHS Mccloskey Coal Group - USA
- Holcim Trading Pte Ltd - Singapore
- Salva Resources Pvt Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Australian Coal Association
- Essar Steel Hazira Ltd - India
- Bhatia International Limited - India
- Makarim & Taira - Indonesia
- Madhucon Powers Ltd - India
- VISA Power Limited - India
- The State Trading Corporation of India Ltd
- AsiaOL BioFuels Corp., Philippines
- Posco Energy - South Korea
- PetroVietnam Power Coal Import and Supply Company
- Ministry of Transport, Egypt
- Minerals Council of Australia
- Uttam Galva Steels Limited - India
- Interocean Group of Companies - India
- Therma Luzon, Inc, Philippines
- Deloitte Consulting - India
- Lanco Infratech Ltd - India
- CIMB Investment Bank - Malaysia
- Central Java Power - Indonesia
- Chettinad Cement Corporation Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Cement Manufacturers Association - India
- Bayan Resources Tbk. - Indonesia
- Thiess Contractors Indonesia
- Latin American Coal - Colombia
- Bhushan Steel Limited - India
- Formosa Plastics Group - Taiwan
- Bulk Trading Sa - Switzerland
- Energy Link Ltd, New Zealand
- Straits Asia Resources Limited - Singapore
- Medco Energi Mining Internasional
- Indian Oil Corporation Limited
- Indian Energy Exchange, India
- Mercator Lines Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Baramulti Group, Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Meralco Power Generation, Philippines
- The Treasury - Australian Government
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Riau Bara Harum - Indonesia
- Independent Power Producers Association of India
- Energy Development Corp, Philippines
- Rashtriya Ispat Nigam Limited - India
- Gujarat Electricity Regulatory Commission - India
- Samtan Co., Ltd - South Korea
- Larsen & Toubro Limited - India
- Bukit Baiduri Energy - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Mjunction Services Limited - India
- Heidelberg Cement - Germany
- Semirara Mining and Power Corporation, Philippines
- OPG Power Generation Pvt Ltd - India
- Coal and Oil Company - UAE
- Intertek Mineral Services - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kaltim Prima Coal - Indonesia
- Ministry of Mines - Canada
- Tamil Nadu electricity Board
- Australian Commodity Traders Exchange
- SN Aboitiz Power Inc, Philippines
- Romanian Commodities Exchange
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Indogreen Group - Indonesia
- Sindya Power Generating Company Private Ltd
- Coalindo Energy - Indonesia
- Gujarat Sidhee Cement - India
- Videocon Industries ltd - India
- LBH Netherlands Bv - Netherlands
- MS Steel International - UAE
- Trasteel International SA, Italy
- Petron Corporation, Philippines
- GMR Energy Limited - India
- Aboitiz Power Corporation - Philippines
- Central Electricity Authority - India
- Vedanta Resources Plc - India
- Sical Logistics Limited - India
- Thai Mozambique Logistica
- Maheswari Brothers Coal Limited - India
- Xindia Steels Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Grasim Industreis Ltd - India
- Antam Resourcindo - Indonesia
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