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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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Friday, 05 January 24
BANGLADESH’S 2023 COAL-FIRED POWER OUTPUT TRIPLED, EASING SHORTAGES - REUTERS
Bangladesh nearly tripled its coal-fired power output in 2023, a Reuters analysis of government data showed, helping it tide over the worst power s ...
Tuesday, 02 January 24
COAL TRADE CONTINUES TO HEAD EAST - BALTIC EXCHANGE
The global coal trade, once concentrated in the Pacific and Atlantic basins, is undergoing a significant transformation, as highlighted in the Inte ...
Tuesday, 02 January 24
COAL CARGOES: AVOIDING EXPLOSION AND SELF-HEATING - GARD
KNOWLEDGE TO ELEVATE
Despite its contribution to greenhouse gas emissions, global coal consumption climbed to an all-time high in 2022 and is ...
Tuesday, 02 January 24
SINOPEC FORECASTS CHINA’S COAL CONSUMPTION TO PEAK AROUND 2025 - REUTERS
China Petrochemical Corp, or Sinopec, expects coal consumption to peak around 2025 at 4.37 billion metric tons, the state energy group said in an o ...
Thursday, 07 December 23
CHINA TO SET UP COAL PRODUCTION RESERVE TO STABILISE PRICES - REUTERS
China will establish a back-up coal production system by 2027 to stabilise prices and secure coal supply, the state planner said on Wednesday, even ...
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- Xindia Steels Limited - India
- ASAPP Information Group - India
- Global Business Power Corporation, Philippines
- South Luzon Thermal Energy Corporation
- Bhoruka Overseas - Indonesia
- Power Finance Corporation Ltd., India
- Bharathi Cement Corporation - India
- Iligan Light & Power Inc, Philippines
- Sical Logistics Limited - India
- Kumho Petrochemical, South Korea
- Formosa Plastics Group - Taiwan
- Manunggal Multi Energi - Indonesia
- Samtan Co., Ltd - South Korea
- Agrawal Coal Company - India
- Metalloyd Limited - United Kingdom
- SMG Consultants - Indonesia
- Deloitte Consulting - India
- Uttam Galva Steels Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Straits Asia Resources Limited - Singapore
- Kartika Selabumi Mining - Indonesia
- Siam City Cement PLC, Thailand
- Energy Link Ltd, New Zealand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Coal and Oil Company - UAE
- Karaikal Port Pvt Ltd - India
- Star Paper Mills Limited - India
- Pendopo Energi Batubara - Indonesia
- Gujarat Sidhee Cement - India
- Global Coal Blending Company Limited - Australia
- Makarim & Taira - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Sojitz Corporation - Japan
- Bukit Makmur.PT - Indonesia
- Baramulti Group, Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Indo Tambangraya Megah - Indonesia
- Meralco Power Generation, Philippines
- Economic Council, Georgia
- New Zealand Coal & Carbon
- Rashtriya Ispat Nigam Limited - India
- Ind-Barath Power Infra Limited - India
- Siam City Cement - Thailand
- Indian Energy Exchange, India
- Edison Trading Spa - Italy
- Kaltim Prima Coal - Indonesia
- ICICI Bank Limited - India
- Intertek Mineral Services - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Rio Tinto Coal - Australia
- Global Green Power PLC Corporation, Philippines
- Bangladesh Power Developement Board
- Aboitiz Power Corporation - Philippines
- Bukit Baiduri Energy - Indonesia
- Renaissance Capital - South Africa
- Jindal Steel & Power Ltd - India
- Barasentosa Lestari - Indonesia
- Central Electricity Authority - India
- Karbindo Abesyapradhi - Indoneisa
- Directorate Of Revenue Intelligence - India
- Sakthi Sugars Limited - India
- Sree Jayajothi Cements Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Orica Mining Services - Indonesia
- Cement Manufacturers Association - India
- Electricity Authority, New Zealand
- Coastal Gujarat Power Limited - India
- Port Waratah Coal Services - Australia
- Indogreen Group - Indonesia
- McConnell Dowell - Australia
- Thiess Contractors Indonesia
- Ministry of Mines - Canada
- Marubeni Corporation - India
- TeaM Sual Corporation - Philippines
- San Jose City I Power Corp, Philippines
- Commonwealth Bank - Australia
- Wilmar Investment Holdings
- Gujarat Electricity Regulatory Commission - India
- Lanco Infratech Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Posco Energy - South Korea
- Bahari Cakrawala Sebuku - Indonesia
- Simpson Spence & Young - Indonesia
- India Bulls Power Limited - India
- Parliament of New Zealand
- Binh Thuan Hamico - Vietnam
- SN Aboitiz Power Inc, Philippines
- Salva Resources Pvt Ltd - India
- The Treasury - Australian Government
- Dalmia Cement Bharat India
- CNBM International Corporation - China
- Billiton Holdings Pty Ltd - Australia
- Meenaskhi Energy Private Limited - India
- Independent Power Producers Association of India
- Grasim Industreis Ltd - India
- Oldendorff Carriers - Singapore
- Indian Oil Corporation Limited
- Sindya Power Generating Company Private Ltd
- GN Power Mariveles Coal Plant, Philippines
- Kepco SPC Power Corporation, Philippines
- Mjunction Services Limited - India
- Essar Steel Hazira Ltd - India
- Banpu Public Company Limited - Thailand
- Standard Chartered Bank - UAE
- Alfred C Toepfer International GmbH - Germany
- Globalindo Alam Lestari - Indonesia
- Wood Mackenzie - Singapore
- IEA Clean Coal Centre - UK
- Indika Energy - Indonesia
- Africa Commodities Group - South Africa
- Vizag Seaport Private Limited - India
- Sarangani Energy Corporation, Philippines
- Romanian Commodities Exchange
- Trasteel International SA, Italy
- LBH Netherlands Bv - Netherlands
- Vijayanagar Sugar Pvt Ltd - India
- Mercuria Energy - Indonesia
- Heidelberg Cement - Germany
- IHS Mccloskey Coal Group - USA
- GVK Power & Infra Limited - India
- Cigading International Bulk Terminal - Indonesia
- Mintek Dendrill Indonesia
- Timah Investasi Mineral - Indoneisa
- Anglo American - United Kingdom
- Singapore Mercantile Exchange
- Australian Coal Association
- Toyota Tsusho Corporation, Japan
- Electricity Generating Authority of Thailand
- SMC Global Power, Philippines
- Orica Australia Pty. Ltd.
- OPG Power Generation Pvt Ltd - India
- Kobexindo Tractors - Indoneisa
- Semirara Mining Corp, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Bhushan Steel Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Videocon Industries ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Eastern Energy - Thailand
- Krishnapatnam Port Company Ltd. - India
- Altura Mining Limited, Indonesia
- Merrill Lynch Commodities Europe
- Goldman Sachs - Singapore
- Chettinad Cement Corporation Ltd - India
- Eastern Coal Council - USA
- Chamber of Mines of South Africa
- Maheswari Brothers Coal Limited - India
- The State Trading Corporation of India Ltd
- Mercator Lines Limited - India
- Malabar Cements Ltd - India
- Minerals Council of Australia
- Georgia Ports Authority, United States
- Therma Luzon, Inc, Philippines
- Miang Besar Coal Terminal - Indonesia
- Indonesian Coal Mining Association
- Ambuja Cements Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- MS Steel International - UAE
- Tamil Nadu electricity Board
- AsiaOL BioFuels Corp., Philippines
- European Bulk Services B.V. - Netherlands
- Ministry of Transport, Egypt
- Petron Corporation, Philippines
- Kapuas Tunggal Persada - Indonesia
- Price Waterhouse Coopers - Russia
- Parry Sugars Refinery, India
- Sinarmas Energy and Mining - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Borneo Indobara - Indonesia
- Vedanta Resources Plc - India
- GAC Shipping (India) Pvt Ltd
- Interocean Group of Companies - India
- Kohat Cement Company Ltd. - Pakistan
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Bhatia International Limited - India
- CIMB Investment Bank - Malaysia
- Kalimantan Lumbung Energi - Indonesia
- London Commodity Brokers - England
- Riau Bara Harum - Indonesia
- Ministry of Finance - Indonesia
- Carbofer General Trading SA - India
- Savvy Resources Ltd - HongKong
- Latin American Coal - Colombia
- GMR Energy Limited - India
- Australian Commodity Traders Exchange
- Madhucon Powers Ltd - India
- Coalindo Energy - Indonesia
- White Energy Company Limited
- Aditya Birla Group - India
- Neyveli Lignite Corporation Ltd, - India
- Energy Development Corp, Philippines
- Antam Resourcindo - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- The University of Queensland
- Leighton Contractors Pty Ltd - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- VISA Power Limited - India
- Central Java Power - Indonesia
- PTC India Limited - India
- Bayan Resources Tbk. - Indonesia
- Planning Commission, India
- Thai Mozambique Logistica
- Bulk Trading Sa - Switzerland
- Directorate General of MIneral and Coal - Indonesia
- PowerSource Philippines DevCo
- Attock Cement Pakistan Limited
- Larsen & Toubro Limited - India
- PNOC Exploration Corporation - Philippines
- International Coal Ventures Pvt Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Jaiprakash Power Ventures ltd
- Medco Energi Mining Internasional
- Tata Chemicals Ltd - India
- Kideco Jaya Agung - Indonesia
- Maharashtra Electricity Regulatory Commission - India
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