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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, 21 December 20
COAL'S PARTIAL RECOVERY IS SET TO FADE AFTER 2021 - IEA
Global coal consumption is estimated to have fallen by 7%, or over 500 million tonnes, between 2018 in 2020. A decline of this size over a two-year ...
Monday, 21 December 20
A REBOUND IN GLOBAL COAL DEMAND IN 2021 IS SET TO BE SHORT-LIVED, BUT NO IMMEDIATE DECLINE IN SIGHT - IEA
After a major drop in recent years, global coal demand is forecast to rise by 2.6% in 2021 before flattening out to 2025
A global ec ...
Friday, 18 December 20
AUSTRALIA PM WARNS OF ‘LOSE-LOSE’ IN ANY CHINA COAL SHIFT - REUTERS
Australian Prime Minister Scott Morrison said any shift by China away from importing high quality Australian coal would be a “lose-lose&rdquo ...
Friday, 18 December 20
BIG OIL AND COAL EXPORTERS FACE RECKONING AS PARIS AGREEMENT TURNS FIVE - CNA
On Dec 12, more than 70 global leaders came together at the UN’s Climate Ambition Summit, marking the fifth anniversary of the Paris Agreemen ...
Friday, 18 December 20
SOUTH AFRICAN COAL EXPORTERS LARGELY DEPENDENT ON THE ASIAN MARKETS - BANCHERO COSTA
South Africa is the fourth largest exporter of coal in the world, after Australia, Indonesia and Russia. In calendar 2019 the country exported a to ...
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- GVK Power & Infra Limited - India
- Videocon Industries ltd - India
- Ministry of Finance - Indonesia
- LBH Netherlands Bv - Netherlands
- Thiess Contractors Indonesia
- Kapuas Tunggal Persada - Indonesia
- Gujarat Sidhee Cement - India
- CIMB Investment Bank - Malaysia
- Global Coal Blending Company Limited - Australia
- Manunggal Multi Energi - Indonesia
- The State Trading Corporation of India Ltd
- Asmin Koalindo Tuhup - Indonesia
- Mercuria Energy - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Riau Bara Harum - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Mjunction Services Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Energy Development Corp, Philippines
- Bayan Resources Tbk. - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Karbindo Abesyapradhi - Indoneisa
- Aditya Birla Group - India
- ICICI Bank Limited - India
- Baramulti Group, Indonesia
- Barasentosa Lestari - Indonesia
- London Commodity Brokers - England
- Malabar Cements Ltd - India
- Coalindo Energy - Indonesia
- Chettinad Cement Corporation Ltd - India
- India Bulls Power Limited - India
- Formosa Plastics Group - Taiwan
- Tamil Nadu electricity Board
- PNOC Exploration Corporation - Philippines
- Deloitte Consulting - India
- VISA Power Limited - India
- Medco Energi Mining Internasional
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Electricity Generating Authority of Thailand
- Heidelberg Cement - Germany
- OPG Power Generation Pvt Ltd - India
- Indika Energy - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Wilmar Investment Holdings
- Sical Logistics Limited - India
- Global Green Power PLC Corporation, Philippines
- Bharathi Cement Corporation - India
- SMG Consultants - Indonesia
- SMC Global Power, Philippines
- AsiaOL BioFuels Corp., Philippines
- Altura Mining Limited, Indonesia
- Karaikal Port Pvt Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Kobexindo Tractors - Indoneisa
- Interocean Group of Companies - India
- Indonesian Coal Mining Association
- Energy Link Ltd, New Zealand
- Indogreen Group - Indonesia
- IHS Mccloskey Coal Group - USA
- Ministry of Mines - Canada
- Sindya Power Generating Company Private Ltd
- Independent Power Producers Association of India
- Directorate General of MIneral and Coal - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Grasim Industreis Ltd - India
- San Jose City I Power Corp, Philippines
- Star Paper Mills Limited - India
- Trasteel International SA, Italy
- Central Electricity Authority - India
- Tata Chemicals Ltd - India
- Standard Chartered Bank - UAE
- Georgia Ports Authority, United States
- Vedanta Resources Plc - India
- Edison Trading Spa - Italy
- Bukit Baiduri Energy - Indonesia
- Bukit Makmur.PT - Indonesia
- Metalloyd Limited - United Kingdom
- Australian Commodity Traders Exchange
- Minerals Council of Australia
- Makarim & Taira - Indonesia
- Kideco Jaya Agung - Indonesia
- New Zealand Coal & Carbon
- Anglo American - United Kingdom
- Carbofer General Trading SA - India
- PTC India Limited - India
- Sakthi Sugars Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Coal and Oil Company - UAE
- GAC Shipping (India) Pvt Ltd
- Bhoruka Overseas - Indonesia
- Miang Besar Coal Terminal - Indonesia
- PowerSource Philippines DevCo
- Sojitz Corporation - Japan
- GMR Energy Limited - India
- Ambuja Cements Ltd - India
- Dalmia Cement Bharat India
- Essar Steel Hazira Ltd - India
- Petron Corporation, Philippines
- Global Business Power Corporation, Philippines
- Posco Energy - South Korea
- Economic Council, Georgia
- Romanian Commodities Exchange
- Salva Resources Pvt Ltd - India
- White Energy Company Limited
- Marubeni Corporation - India
- Meralco Power Generation, Philippines
- Bulk Trading Sa - Switzerland
- Pipit Mutiara Jaya. PT, Indonesia
- Krishnapatnam Port Company Ltd. - India
- Oldendorff Carriers - Singapore
- Orica Australia Pty. Ltd.
- Port Waratah Coal Services - Australia
- Siam City Cement - Thailand
- Bhushan Steel Limited - India
- Kepco SPC Power Corporation, Philippines
- Coastal Gujarat Power Limited - India
- Straits Asia Resources Limited - Singapore
- Merrill Lynch Commodities Europe
- MS Steel International - UAE
- Latin American Coal - Colombia
- Aboitiz Power Corporation - Philippines
- Indian Oil Corporation Limited
- Maheswari Brothers Coal Limited - India
- Samtan Co., Ltd - South Korea
- Rio Tinto Coal - Australia
- Kumho Petrochemical, South Korea
- Simpson Spence & Young - Indonesia
- Renaissance Capital - South Africa
- Australian Coal Association
- The Treasury - Australian Government
- Holcim Trading Pte Ltd - Singapore
- CNBM International Corporation - China
- Singapore Mercantile Exchange
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Larsen & Toubro Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Commonwealth Bank - Australia
- Neyveli Lignite Corporation Ltd, - India
- Globalindo Alam Lestari - Indonesia
- Parry Sugars Refinery, India
- Maharashtra Electricity Regulatory Commission - India
- Rashtriya Ispat Nigam Limited - India
- Madhucon Powers Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Pendopo Energi Batubara - Indonesia
- Sarangani Energy Corporation, Philippines
- Kartika Selabumi Mining - Indonesia
- Lanco Infratech Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Vizag Seaport Private Limited - India
- Ceylon Electricity Board - Sri Lanka
- International Coal Ventures Pvt Ltd - India
- Toyota Tsusho Corporation, Japan
- South Luzon Thermal Energy Corporation
- TeaM Sual Corporation - Philippines
- Chamber of Mines of South Africa
- Savvy Resources Ltd - HongKong
- Iligan Light & Power Inc, Philippines
- Bangladesh Power Developement Board
- Electricity Authority, New Zealand
- Gujarat Mineral Development Corp Ltd - India
- Central Java Power - Indonesia
- Banpu Public Company Limited - Thailand
- Siam City Cement PLC, Thailand
- Binh Thuan Hamico - Vietnam
- Meenaskhi Energy Private Limited - India
- Bhatia International Limited - India
- Eastern Energy - Thailand
- ASAPP Information Group - India
- Wood Mackenzie - Singapore
- Ministry of Transport, Egypt
- Indo Tambangraya Megah - Indonesia
- Uttam Galva Steels Limited - India
- Thai Mozambique Logistica
- Sinarmas Energy and Mining - Indonesia
- Intertek Mineral Services - Indonesia
- Xindia Steels Limited - India
- Cement Manufacturers Association - India
- Africa Commodities Group - South Africa
- SN Aboitiz Power Inc, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Sree Jayajothi Cements Limited - India
- The University of Queensland
- Power Finance Corporation Ltd., India
- Goldman Sachs - Singapore
- Semirara Mining and Power Corporation, Philippines
- McConnell Dowell - Australia
- Cigading International Bulk Terminal - Indonesia
- Antam Resourcindo - Indonesia
- Directorate Of Revenue Intelligence - India
- European Bulk Services B.V. - Netherlands
- Semirara Mining Corp, Philippines
- Jindal Steel & Power Ltd - India
- Attock Cement Pakistan Limited
- Planning Commission, India
- Mercator Lines Limited - India
- Parliament of New Zealand
- Billiton Holdings Pty Ltd - Australia
- Kalimantan Lumbung Energi - Indonesia
- Eastern Coal Council - USA
- Petrochimia International Co. Ltd.- Taiwan
- Vijayanagar Sugar Pvt Ltd - India
- Borneo Indobara - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Price Waterhouse Coopers - Russia
- Kaltim Prima Coal - Indonesia
- Therma Luzon, Inc, Philippines
- Jaiprakash Power Ventures ltd
- Ind-Barath Power Infra Limited - India
- Mintek Dendrill Indonesia
- Timah Investasi Mineral - Indoneisa
- Agrawal Coal Company - India
- Indian Energy Exchange, India
- Offshore Bulk Terminal Pte Ltd, Singapore
- IEA Clean Coal Centre - UK
- Orica Mining Services - Indonesia
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