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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, 14 December 20
PHILIPPINE BANK RCBC TO STOP LENDING FOR NEW COAL-FIRED POWER PROJECTS - MANILA BULLETIN
Yuchengco-led Rizal Commercial Banking Corporation (RCBC) has forthrightly declared that it will no longer extend financing to new coal-fired power ...
Sunday, 13 December 20
LONGSTANDING DOWNSIDE RISKS TO TRADE OUTLOOK - BALTIC EXCHANGE
The OECD has attempted to put a positive spin on the trade message emanating from its latest economic outlook, released last week.
The ...
Sunday, 13 December 20
INDONESIA COAL OUTPUT AT 514 MILLION TONNES THIS YEAR, 2021 TARGET UNCHANGED - REUTERS
Indonesia coal output in the period to Dec. 10 stood at 514.2 million tonnes, official data from the energy ministry’s website showed.
&n ...
Thursday, 10 December 20
MALAYSIA'S CIMB ANNOUNCES COAL FINANCING PHASE-OUT BY 2040 AS ASIA'S FOSSIL FUEL DIVESTMENT DRIVE ACCELERATES - IEEFA
The first emerging markets bank to announce a progressive coal exit policy
Malaysia’s CIMB Group Holdings (CIMB) has announced ...
Wednesday, 09 December 20
MARKET INSIGHT - INTERMODAL
Heading towards the end of a difficult year and with the entire planet under the shadow of the covid-19 virus, it is interesting to proceed with a ...
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- Kartika Selabumi Mining - Indonesia
- Savvy Resources Ltd - HongKong
- Makarim & Taira - Indonesia
- Heidelberg Cement - Germany
- Kepco SPC Power Corporation, Philippines
- IEA Clean Coal Centre - UK
- Vijayanagar Sugar Pvt Ltd - India
- GVK Power & Infra Limited - India
- Kideco Jaya Agung - Indonesia
- Mercator Lines Limited - India
- Singapore Mercantile Exchange
- Bharathi Cement Corporation - India
- Anglo American - United Kingdom
- South Luzon Thermal Energy Corporation
- Indogreen Group - Indonesia
- Sindya Power Generating Company Private Ltd
- Jaiprakash Power Ventures ltd
- Orica Mining Services - Indonesia
- Kaltim Prima Coal - Indonesia
- ASAPP Information Group - India
- Petrochimia International Co. Ltd.- Taiwan
- Barasentosa Lestari - Indonesia
- Orica Australia Pty. Ltd.
- Kohat Cement Company Ltd. - Pakistan
- Ministry of Mines - Canada
- Tamil Nadu electricity Board
- Ind-Barath Power Infra Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Global Green Power PLC Corporation, Philippines
- Aboitiz Power Corporation - Philippines
- Sinarmas Energy and Mining - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Billiton Holdings Pty Ltd - Australia
- Power Finance Corporation Ltd., India
- SMG Consultants - Indonesia
- Sakthi Sugars Limited - India
- Economic Council, Georgia
- Asmin Koalindo Tuhup - Indonesia
- Pendopo Energi Batubara - Indonesia
- Timah Investasi Mineral - Indoneisa
- Price Waterhouse Coopers - Russia
- Karbindo Abesyapradhi - Indoneisa
- Bahari Cakrawala Sebuku - Indonesia
- Wilmar Investment Holdings
- Indo Tambangraya Megah - Indonesia
- Central Electricity Authority - India
- Coalindo Energy - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Lanco Infratech Ltd - India
- Vizag Seaport Private Limited - India
- Bhatia International Limited - India
- Larsen & Toubro Limited - India
- Kapuas Tunggal Persada - Indonesia
- Intertek Mineral Services - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Eastern Energy - Thailand
- Independent Power Producers Association of India
- Wood Mackenzie - Singapore
- Manunggal Multi Energi - Indonesia
- PTC India Limited - India
- Siam City Cement PLC, Thailand
- Edison Trading Spa - Italy
- Mercuria Energy - Indonesia
- Jindal Steel & Power Ltd - India
- Bukit Makmur.PT - Indonesia
- Carbofer General Trading SA - India
- Latin American Coal - Colombia
- Chamber of Mines of South Africa
- Parliament of New Zealand
- CNBM International Corporation - China
- India Bulls Power Limited - India
- Global Business Power Corporation, Philippines
- Bangladesh Power Developement Board
- Essar Steel Hazira Ltd - India
- Merrill Lynch Commodities Europe
- Ministry of Finance - Indonesia
- Goldman Sachs - Singapore
- Sree Jayajothi Cements Limited - India
- Standard Chartered Bank - UAE
- Australian Coal Association
- Kalimantan Lumbung Energi - Indonesia
- TeaM Sual Corporation - Philippines
- Directorate Of Revenue Intelligence - India
- Attock Cement Pakistan Limited
- New Zealand Coal & Carbon
- Kumho Petrochemical, South Korea
- PNOC Exploration Corporation - Philippines
- Sical Logistics Limited - India
- Baramulti Group, Indonesia
- Kobexindo Tractors - Indoneisa
- AsiaOL BioFuels Corp., Philippines
- Electricity Authority, New Zealand
- Rashtriya Ispat Nigam Limited - India
- Semirara Mining Corp, Philippines
- Agrawal Coal Company - India
- SMC Global Power, Philippines
- Formosa Plastics Group - Taiwan
- Aditya Birla Group - India
- IHS Mccloskey Coal Group - USA
- Coal and Oil Company - UAE
- Indonesian Coal Mining Association
- Bulk Trading Sa - Switzerland
- Electricity Generating Authority of Thailand
- The Treasury - Australian Government
- Rio Tinto Coal - Australia
- Xindia Steels Limited - India
- Renaissance Capital - South Africa
- Australian Commodity Traders Exchange
- Krishnapatnam Port Company Ltd. - India
- Jorong Barutama Greston.PT - Indonesia
- Altura Mining Limited, Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Indian Oil Corporation Limited
- PetroVietnam Power Coal Import and Supply Company
- London Commodity Brokers - England
- Ambuja Cements Ltd - India
- CIMB Investment Bank - Malaysia
- Globalindo Alam Lestari - Indonesia
- McConnell Dowell - Australia
- Ministry of Transport, Egypt
- Banpu Public Company Limited - Thailand
- Romanian Commodities Exchange
- Central Java Power - Indonesia
- Africa Commodities Group - South Africa
- Georgia Ports Authority, United States
- Posco Energy - South Korea
- Therma Luzon, Inc, Philippines
- Toyota Tsusho Corporation, Japan
- Mjunction Services Limited - India
- Planning Commission, India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Interocean Group of Companies - India
- Star Paper Mills Limited - India
- ICICI Bank Limited - India
- LBH Netherlands Bv - Netherlands
- Indian Energy Exchange, India
- Meenaskhi Energy Private Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- San Jose City I Power Corp, Philippines
- Madhucon Powers Ltd - India
- MS Steel International - UAE
- Medco Energi Mining Internasional
- PowerSource Philippines DevCo
- Binh Thuan Hamico - Vietnam
- Maharashtra Electricity Regulatory Commission - India
- Oldendorff Carriers - Singapore
- Bukit Baiduri Energy - Indonesia
- Commonwealth Bank - Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Borneo Indobara - Indonesia
- Global Coal Blending Company Limited - Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Simpson Spence & Young - Indonesia
- Vedanta Resources Plc - India
- Cement Manufacturers Association - India
- Indika Energy - Indonesia
- Eastern Coal Council - USA
- Thiess Contractors Indonesia
- Sarangani Energy Corporation, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Antam Resourcindo - Indonesia
- Maheswari Brothers Coal Limited - India
- Alfred C Toepfer International GmbH - Germany
- Minerals Council of Australia
- Holcim Trading Pte Ltd - Singapore
- Energy Development Corp, Philippines
- Energy Link Ltd, New Zealand
- Thai Mozambique Logistica
- White Energy Company Limited
- Chettinad Cement Corporation Ltd - India
- Coastal Gujarat Power Limited - India
- Cigading International Bulk Terminal - Indonesia
- Deloitte Consulting - India
- Salva Resources Pvt Ltd - India
- Sojitz Corporation - Japan
- Riau Bara Harum - Indonesia
- The State Trading Corporation of India Ltd
- The University of Queensland
- Straits Asia Resources Limited - Singapore
- Grasim Industreis Ltd - India
- Gujarat Sidhee Cement - India
- Videocon Industries ltd - India
- Meralco Power Generation, Philippines
- Marubeni Corporation - India
- TNB Fuel Sdn Bhd - Malaysia
- GN Power Mariveles Coal Plant, Philippines
- Siam City Cement - Thailand
- OPG Power Generation Pvt Ltd - India
- International Coal Ventures Pvt Ltd - India
- Bhushan Steel Limited - India
- Samtan Co., Ltd - South Korea
- Gujarat Mineral Development Corp Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Iligan Light & Power Inc, Philippines
- European Bulk Services B.V. - Netherlands
- Uttam Galva Steels Limited - India
- GAC Shipping (India) Pvt Ltd
- Port Waratah Coal Services - Australia
- Bhoruka Overseas - Indonesia
- Metalloyd Limited - United Kingdom
- Tata Chemicals Ltd - India
- VISA Power Limited - India
- Miang Besar Coal Terminal - Indonesia
- GMR Energy Limited - India
- Parry Sugars Refinery, India
- Petron Corporation, Philippines
- Mintek Dendrill Indonesia
- Bayan Resources Tbk. - Indonesia
- SN Aboitiz Power Inc, Philippines
- Semirara Mining and Power Corporation, Philippines
- Gujarat Electricity Regulatory Commission - India
- Karaikal Port Pvt Ltd - India
- Malabar Cements Ltd - India
- Dalmia Cement Bharat India
- Trasteel International SA, Italy
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