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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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- Rashtriya Ispat Nigam Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Sindya Power Generating Company Private Ltd
- Kalimantan Lumbung Energi - Indonesia
- Mintek Dendrill Indonesia
- Gujarat Electricity Regulatory Commission - India
- Toyota Tsusho Corporation, Japan
- Anglo American - United Kingdom
- Kapuas Tunggal Persada - Indonesia
- Mjunction Services Limited - India
- Meenaskhi Energy Private Limited - India
- Alfred C Toepfer International GmbH - Germany
- Coal and Oil Company - UAE
- SMC Global Power, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Pendopo Energi Batubara - Indonesia
- Indonesian Coal Mining Association
- Planning Commission, India
- Barasentosa Lestari - Indonesia
- Indo Tambangraya Megah - Indonesia
- Tamil Nadu electricity Board
- Goldman Sachs - Singapore
- Eastern Energy - Thailand
- GAC Shipping (India) Pvt Ltd
- Coalindo Energy - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Sarangani Energy Corporation, Philippines
- Larsen & Toubro Limited - India
- Australian Commodity Traders Exchange
- Ind-Barath Power Infra Limited - India
- India Bulls Power Limited - India
- Heidelberg Cement - Germany
- The University of Queensland
- Essar Steel Hazira Ltd - India
- Kobexindo Tractors - Indoneisa
- Bukit Asam (Persero) Tbk - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- IHS Mccloskey Coal Group - USA
- PTC India Limited - India
- Xindia Steels Limited - India
- Riau Bara Harum - Indonesia
- Ambuja Cements Ltd - India
- SN Aboitiz Power Inc, Philippines
- Electricity Generating Authority of Thailand
- Rio Tinto Coal - Australia
- Orica Mining Services - Indonesia
- Eastern Coal Council - USA
- Singapore Mercantile Exchange
- Central Electricity Authority - India
- Oldendorff Carriers - Singapore
- GN Power Mariveles Coal Plant, Philippines
- Trasteel International SA, Italy
- Antam Resourcindo - Indonesia
- McConnell Dowell - Australia
- Economic Council, Georgia
- Gujarat Mineral Development Corp Ltd - India
- SMG Consultants - Indonesia
- Posco Energy - South Korea
- Bangladesh Power Developement Board
- Global Coal Blending Company Limited - Australia
- Makarim & Taira - Indonesia
- Mercator Lines Limited - India
- Bulk Trading Sa - Switzerland
- Africa Commodities Group - South Africa
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kumho Petrochemical, South Korea
- Indian Energy Exchange, India
- TeaM Sual Corporation - Philippines
- Energy Link Ltd, New Zealand
- Carbofer General Trading SA - India
- Standard Chartered Bank - UAE
- Star Paper Mills Limited - India
- Grasim Industreis Ltd - India
- Global Business Power Corporation, Philippines
- Savvy Resources Ltd - HongKong
- Bhoruka Overseas - Indonesia
- Therma Luzon, Inc, Philippines
- Bhatia International Limited - India
- London Commodity Brokers - England
- VISA Power Limited - India
- Gujarat Sidhee Cement - India
- Directorate General of MIneral and Coal - Indonesia
- Siam City Cement PLC, Thailand
- Semirara Mining Corp, Philippines
- PowerSource Philippines DevCo
- European Bulk Services B.V. - Netherlands
- Independent Power Producers Association of India
- Karaikal Port Pvt Ltd - India
- Bukit Baiduri Energy - Indonesia
- Parliament of New Zealand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Formosa Plastics Group - Taiwan
- Siam City Cement - Thailand
- Parry Sugars Refinery, India
- Interocean Group of Companies - India
- Sakthi Sugars Limited - India
- Sojitz Corporation - Japan
- Agrawal Coal Company - India
- Madhucon Powers Ltd - India
- Ministry of Finance - Indonesia
- Ministry of Mines - Canada
- International Coal Ventures Pvt Ltd - India
- Port Waratah Coal Services - Australia
- Bharathi Cement Corporation - India
- The Treasury - Australian Government
- Energy Development Corp, Philippines
- Dalmia Cement Bharat India
- Kartika Selabumi Mining - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- TNB Fuel Sdn Bhd - Malaysia
- Neyveli Lignite Corporation Ltd, - India
- ASAPP Information Group - India
- Billiton Holdings Pty Ltd - Australia
- CNBM International Corporation - China
- Kideco Jaya Agung - Indonesia
- Jindal Steel & Power Ltd - India
- Price Waterhouse Coopers - Russia
- White Energy Company Limited
- The State Trading Corporation of India Ltd
- Cigading International Bulk Terminal - Indonesia
- Jaiprakash Power Ventures ltd
- Wood Mackenzie - Singapore
- Kohat Cement Company Ltd. - Pakistan
- ICICI Bank Limited - India
- Globalindo Alam Lestari - Indonesia
- Mercuria Energy - Indonesia
- Samtan Co., Ltd - South Korea
- Intertek Mineral Services - Indonesia
- PNOC Exploration Corporation - Philippines
- MS Steel International - UAE
- Manunggal Multi Energi - Indonesia
- Australian Coal Association
- Bukit Makmur.PT - Indonesia
- Bayan Resources Tbk. - Indonesia
- CIMB Investment Bank - Malaysia
- LBH Netherlands Bv - Netherlands
- Medco Energi Mining Internasional
- Iligan Light & Power Inc, Philippines
- Kaltim Prima Coal - Indonesia
- Banpu Public Company Limited - Thailand
- IEA Clean Coal Centre - UK
- Malabar Cements Ltd - India
- Simpson Spence & Young - Indonesia
- Bhushan Steel Limited - India
- Leighton Contractors Pty Ltd - Australia
- Straits Asia Resources Limited - Singapore
- Thiess Contractors Indonesia
- Sree Jayajothi Cements Limited - India
- Uttam Galva Steels Limited - India
- Marubeni Corporation - India
- Ministry of Transport, Egypt
- Timah Investasi Mineral - Indoneisa
- Aditya Birla Group - India
- Electricity Authority, New Zealand
- Cement Manufacturers Association - India
- Lanco Infratech Ltd - India
- Central Java Power - Indonesia
- Deloitte Consulting - India
- New Zealand Coal & Carbon
- Karbindo Abesyapradhi - Indoneisa
- GVK Power & Infra Limited - India
- Sinarmas Energy and Mining - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Indika Energy - Indonesia
- Tata Chemicals Ltd - India
- Kepco SPC Power Corporation, Philippines
- Indian Oil Corporation Limited
- Orica Australia Pty. Ltd.
- Vedanta Resources Plc - India
- Latin American Coal - Colombia
- Baramulti Group, Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Aboitiz Power Corporation - Philippines
- Maharashtra Electricity Regulatory Commission - India
- Chamber of Mines of South Africa
- Binh Thuan Hamico - Vietnam
- Minerals Council of Australia
- AsiaOL BioFuels Corp., Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Metalloyd Limited - United Kingdom
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Coastal Gujarat Power Limited - India
- Meralco Power Generation, Philippines
- Georgia Ports Authority, United States
- Offshore Bulk Terminal Pte Ltd, Singapore
- GMR Energy Limited - India
- Ceylon Electricity Board - Sri Lanka
- Salva Resources Pvt Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Directorate Of Revenue Intelligence - India
- San Jose City I Power Corp, Philippines
- OPG Power Generation Pvt Ltd - India
- Commonwealth Bank - Australia
- South Luzon Thermal Energy Corporation
- Edison Trading Spa - Italy
- Petron Corporation, Philippines
- Attock Cement Pakistan Limited
- Indogreen Group - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Altura Mining Limited, Indonesia
- Merrill Lynch Commodities Europe
- Vizag Seaport Private Limited - India
- Maheswari Brothers Coal Limited - India
- Videocon Industries ltd - India
- Wilmar Investment Holdings
- Borneo Indobara - Indonesia
- Global Green Power PLC Corporation, Philippines
- Miang Besar Coal Terminal - Indonesia
- Renaissance Capital - South Africa
- Krishnapatnam Port Company Ltd. - India
- Sical Logistics Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Thai Mozambique Logistica
- Romanian Commodities Exchange
- Chettinad Cement Corporation Ltd - India
- Power Finance Corporation Ltd., India
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