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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, 01 December 23
COAL MINERS GROUP EXPECTS INDONESIA’S 2023 COAL OUTPUT TO SURPASS TARGET - REUTERS
The Indonesian Coal Mining Association (ICMA) expects the country’s 2023 coal output to surpass the official target of 695 million metric ton ...
Friday, 24 November 23
COAL IMPORTS TO INDIA IN OCTOBER 2023 REACHED HIGHEST LEVELS IN NEARLY A YEAR AND A HALF - VESSELSVALUE, VESON NAUTICAL
In October, coal imports to India reached 13.8 mt in October 2023, according to Oceanbolt, a Veson Nautical solution, the highest level since May 2 ...
Friday, 24 November 23
COAL SHIPMENTS TO ADVANCED ECONOMIES DOWN 17% SO FAR IN 2023 - BIMCO
In the first ten months of 2023, coal shipments to advanced economies fell by 17% y/y, as demand for electricity declined and the share of electric ...
Friday, 24 November 23
INTELLIGENT COAL MINES CONTRIBUTE TO IMPROVING SAFETY STANDARDS - CHINA DAILY
Mechanization, automation and intelligent upgrades have contributed to improved safety in coal mines, though the level of development of intelligen ...
Friday, 24 November 23
WHY AUSTRALIA'S COAL MINES ARE GETTING BIGGER - IEEFA
Australia’s largest coal mines are getting larger. Mines in New South Wales (NSW) are ramping up production following the state’s recov ...
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- Asia Pacific Energy Resources Ventures Inc, Philippines
- OPG Power Generation Pvt Ltd - India
- TeaM Sual Corporation - Philippines
- Toyota Tsusho Corporation, Japan
- Kohat Cement Company Ltd. - Pakistan
- Singapore Mercantile Exchange
- Sojitz Corporation - Japan
- Parliament of New Zealand
- Leighton Contractors Pty Ltd - Australia
- Baramulti Group, Indonesia
- Chettinad Cement Corporation Ltd - India
- Rio Tinto Coal - Australia
- PNOC Exploration Corporation - Philippines
- Straits Asia Resources Limited - Singapore
- Asmin Koalindo Tuhup - Indonesia
- Port Waratah Coal Services - Australia
- Kapuas Tunggal Persada - Indonesia
- Ministry of Mines - Canada
- Directorate Of Revenue Intelligence - India
- Goldman Sachs - Singapore
- ICICI Bank Limited - India
- Marubeni Corporation - India
- Aboitiz Power Corporation - Philippines
- Jorong Barutama Greston.PT - Indonesia
- Deloitte Consulting - India
- Riau Bara Harum - Indonesia
- LBH Netherlands Bv - Netherlands
- Australian Coal Association
- Ambuja Cements Ltd - India
- Coal and Oil Company - UAE
- GMR Energy Limited - India
- Petron Corporation, Philippines
- IHS Mccloskey Coal Group - USA
- ASAPP Information Group - India
- Parry Sugars Refinery, India
- Independent Power Producers Association of India
- Jaiprakash Power Ventures ltd
- Offshore Bulk Terminal Pte Ltd, Singapore
- IEA Clean Coal Centre - UK
- Ind-Barath Power Infra Limited - India
- Xindia Steels Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Semirara Mining Corp, Philippines
- Electricity Generating Authority of Thailand
- Samtan Co., Ltd - South Korea
- Global Business Power Corporation, Philippines
- Holcim Trading Pte Ltd - Singapore
- Renaissance Capital - South Africa
- Manunggal Multi Energi - Indonesia
- Lanco Infratech Ltd - India
- Price Waterhouse Coopers - Russia
- Eastern Coal Council - USA
- Global Green Power PLC Corporation, Philippines
- Indonesian Coal Mining Association
- Kalimantan Lumbung Energi - Indonesia
- The State Trading Corporation of India Ltd
- Madhucon Powers Ltd - India
- Australian Commodity Traders Exchange
- Petrochimia International Co. Ltd.- Taiwan
- The University of Queensland
- Gujarat Electricity Regulatory Commission - India
- Star Paper Mills Limited - India
- Therma Luzon, Inc, Philippines
- International Coal Ventures Pvt Ltd - India
- Makarim & Taira - Indonesia
- Sarangani Energy Corporation, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Merrill Lynch Commodities Europe
- Vijayanagar Sugar Pvt Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Thiess Contractors Indonesia
- Kepco SPC Power Corporation, Philippines
- White Energy Company Limited
- GVK Power & Infra Limited - India
- Heidelberg Cement - Germany
- Maheswari Brothers Coal Limited - India
- Bukit Makmur.PT - Indonesia
- Trasteel International SA, Italy
- San Jose City I Power Corp, Philippines
- Wilmar Investment Holdings
- Formosa Plastics Group - Taiwan
- Bhushan Steel Limited - India
- European Bulk Services B.V. - Netherlands
- Aditya Birla Group - India
- India Bulls Power Limited - India
- Anglo American - United Kingdom
- Alfred C Toepfer International GmbH - Germany
- Mintek Dendrill Indonesia
- Malabar Cements Ltd - India
- Antam Resourcindo - Indonesia
- CNBM International Corporation - China
- Standard Chartered Bank - UAE
- Bukit Baiduri Energy - Indonesia
- Simpson Spence & Young - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Dalmia Cement Bharat India
- Sical Logistics Limited - India
- Economic Council, Georgia
- Interocean Group of Companies - India
- Indogreen Group - Indonesia
- Orica Australia Pty. Ltd.
- Mercator Lines Limited - India
- New Zealand Coal & Carbon
- Essar Steel Hazira Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Central Java Power - Indonesia
- Energy Development Corp, Philippines
- Power Finance Corporation Ltd., India
- Wood Mackenzie - Singapore
- Intertek Mineral Services - Indonesia
- Africa Commodities Group - South Africa
- Carbofer General Trading SA - India
- Agrawal Coal Company - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Larsen & Toubro Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Kaltim Prima Coal - Indonesia
- Barasentosa Lestari - Indonesia
- Bhatia International Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Ministry of Finance - Indonesia
- Kobexindo Tractors - Indoneisa
- Commonwealth Bank - Australia
- Cigading International Bulk Terminal - Indonesia
- Edison Trading Spa - Italy
- Medco Energi Mining Internasional
- VISA Power Limited - India
- Sree Jayajothi Cements Limited - India
- Orica Mining Services - Indonesia
- Bhoruka Overseas - Indonesia
- Planning Commission, India
- Semirara Mining and Power Corporation, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Posco Energy - South Korea
- Mjunction Services Limited - India
- Salva Resources Pvt Ltd - India
- Vedanta Resources Plc - India
- McConnell Dowell - Australia
- Cement Manufacturers Association - India
- Eastern Energy - Thailand
- Gujarat Sidhee Cement - India
- Borneo Indobara - Indonesia
- Chamber of Mines of South Africa
- Kartika Selabumi Mining - Indonesia
- Siam City Cement - Thailand
- Romanian Commodities Exchange
- Indo Tambangraya Megah - Indonesia
- MS Steel International - UAE
- Binh Thuan Hamico - Vietnam
- Siam City Cement PLC, Thailand
- Sindya Power Generating Company Private Ltd
- Bayan Resources Tbk. - Indonesia
- South Luzon Thermal Energy Corporation
- Videocon Industries ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Tata Chemicals Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Banpu Public Company Limited - Thailand
- Directorate General of MIneral and Coal - Indonesia
- Central Electricity Authority - India
- Ministry of Transport, Egypt
- Coalindo Energy - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Global Coal Blending Company Limited - Australia
- The Treasury - Australian Government
- Meralco Power Generation, Philippines
- Ceylon Electricity Board - Sri Lanka
- Mercuria Energy - Indonesia
- Karaikal Port Pvt Ltd - India
- Georgia Ports Authority, United States
- Bharathi Cement Corporation - India
- Altura Mining Limited, Indonesia
- Iligan Light & Power Inc, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Bulk Trading Sa - Switzerland
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bangladesh Power Developement Board
- Billiton Holdings Pty Ltd - Australia
- Oldendorff Carriers - Singapore
- Savvy Resources Ltd - HongKong
- Gujarat Mineral Development Corp Ltd - India
- Grasim Industreis Ltd - India
- Thai Mozambique Logistica
- CIMB Investment Bank - Malaysia
- PowerSource Philippines DevCo
- Tamil Nadu electricity Board
- Indika Energy - Indonesia
- Indian Energy Exchange, India
- Sinarmas Energy and Mining - Indonesia
- Minerals Council of Australia
- Uttam Galva Steels Limited - India
- Kideco Jaya Agung - Indonesia
- London Commodity Brokers - England
- Pendopo Energi Batubara - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- SMC Global Power, Philippines
- SMG Consultants - Indonesia
- Kumho Petrochemical, South Korea
- SN Aboitiz Power Inc, Philippines
- Coastal Gujarat Power Limited - India
- Attock Cement Pakistan Limited
- Timah Investasi Mineral - Indoneisa
- Metalloyd Limited - United Kingdom
- Jindal Steel & Power Ltd - India
- Meenaskhi Energy Private Limited - India
- Vizag Seaport Private Limited - India
- Sakthi Sugars Limited - India
- GAC Shipping (India) Pvt Ltd
- PTC India Limited - India
- Indian Oil Corporation Limited
- Electricity Authority, New Zealand
- Latin American Coal - Colombia
- Globalindo Alam Lestari - Indonesia
- Energy Link Ltd, New Zealand
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