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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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Tuesday, 14 November 23
CHINA'S BELT AND ROAD INITIATIVE TURNS AWAY FROM COAL - WOOD MACKENZIE
Ambitious, contentious and big spending, China’s Belt and Road Initiative (BRI) is 10 years old. In that time, China has splashed more than U ...
Friday, 10 November 23
THE COMMODITIES FEED: OIL UNDER PRESSURE - ING
Energy – Brent plummets
The oil market came under significant pressure yesterday. ICE Brent settled 4.19% lower on the day and ...
Friday, 10 November 23
COAL USE AT U.S. POWER PLANTS CONTINUES DOWNWARD SPIRAL; FULL IMPACT ON MINES TO BE FELT IN 2024 - IEEFA
This year, the use of coal by the U.S.’s power producers has been so anemic that the fuel has not achieved a 20% market share in any month so ...
Friday, 10 November 23
INDIA: NATIONAL COAL INDEX RISES 3.83 POINTS IN SEPTEMBER AMID HIGHER DEMAND - LIVEMINT
The National Coal Index (NCI) rose 3.83 points to 143.91 in September amid growing demand for coal.
The union coal ministry on Tuesd ...
Thursday, 09 November 23
WE'RE PRODUCING TOO MUCH COAL, OIL AND GAS, REPORT SAYS - WSJ
World leaders pledged in 2015 to reduce emissions in a combined effort to limit climate change.
Now they are stepping up production ...
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- Bukit Baiduri Energy - Indonesia
- Power Finance Corporation Ltd., India
- Central Java Power - Indonesia
- South Luzon Thermal Energy Corporation
- Ministry of Transport, Egypt
- Formosa Plastics Group - Taiwan
- Independent Power Producers Association of India
- Orica Mining Services - Indonesia
- Economic Council, Georgia
- Thiess Contractors Indonesia
- Global Business Power Corporation, Philippines
- Wilmar Investment Holdings
- Kartika Selabumi Mining - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Pipit Mutiara Jaya. PT, Indonesia
- Orica Australia Pty. Ltd.
- Indian Oil Corporation Limited
- Leighton Contractors Pty Ltd - Australia
- Indo Tambangraya Megah - Indonesia
- Africa Commodities Group - South Africa
- Siam City Cement - Thailand
- Maharashtra Electricity Regulatory Commission - India
- Bharathi Cement Corporation - India
- Electricity Authority, New Zealand
- Sakthi Sugars Limited - India
- Goldman Sachs - Singapore
- Salva Resources Pvt Ltd - India
- Grasim Industreis Ltd - India
- SMC Global Power, Philippines
- Mintek Dendrill Indonesia
- Essar Steel Hazira Ltd - India
- Renaissance Capital - South Africa
- Sree Jayajothi Cements Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- IHS Mccloskey Coal Group - USA
- Eastern Energy - Thailand
- The State Trading Corporation of India Ltd
- Ministry of Finance - Indonesia
- Trasteel International SA, Italy
- Indonesian Coal Mining Association
- CIMB Investment Bank - Malaysia
- Marubeni Corporation - India
- Parry Sugars Refinery, India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bhatia International Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Aditya Birla Group - India
- Sinarmas Energy and Mining - Indonesia
- Jaiprakash Power Ventures ltd
- GN Power Mariveles Coal Plant, Philippines
- Semirara Mining Corp, Philippines
- The Treasury - Australian Government
- Interocean Group of Companies - India
- Metalloyd Limited - United Kingdom
- Chamber of Mines of South Africa
- Sindya Power Generating Company Private Ltd
- Kaltim Prima Coal - Indonesia
- Ind-Barath Power Infra Limited - India
- The University of Queensland
- Gujarat Sidhee Cement - India
- Kumho Petrochemical, South Korea
- Altura Mining Limited, Indonesia
- Ambuja Cements Ltd - India
- GMR Energy Limited - India
- Planning Commission, India
- White Energy Company Limited
- Tata Chemicals Ltd - India
- Coastal Gujarat Power Limited - India
- IEA Clean Coal Centre - UK
- Alfred C Toepfer International GmbH - Germany
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Bangladesh Power Developement Board
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Antam Resourcindo - Indonesia
- Meralco Power Generation, Philippines
- Deloitte Consulting - India
- Petron Corporation, Philippines
- Rio Tinto Coal - Australia
- Mercuria Energy - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Holcim Trading Pte Ltd - Singapore
- New Zealand Coal & Carbon
- Minerals Council of Australia
- Pendopo Energi Batubara - Indonesia
- Merrill Lynch Commodities Europe
- Karaikal Port Pvt Ltd - India
- Chettinad Cement Corporation Ltd - India
- Straits Asia Resources Limited - Singapore
- Gujarat Mineral Development Corp Ltd - India
- Vizag Seaport Private Limited - India
- Videocon Industries ltd - India
- Eastern Coal Council - USA
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Siam City Cement PLC, Thailand
- Iligan Light & Power Inc, Philippines
- Indika Energy - Indonesia
- Anglo American - United Kingdom
- Thai Mozambique Logistica
- Savvy Resources Ltd - HongKong
- SN Aboitiz Power Inc, Philippines
- Binh Thuan Hamico - Vietnam
- Heidelberg Cement - Germany
- Bulk Trading Sa - Switzerland
- Samtan Co., Ltd - South Korea
- GVK Power & Infra Limited - India
- Mjunction Services Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- McConnell Dowell - Australia
- PTC India Limited - India
- Semirara Mining and Power Corporation, Philippines
- London Commodity Brokers - England
- Therma Luzon, Inc, Philippines
- Indian Energy Exchange, India
- Barasentosa Lestari - Indonesia
- Sarangani Energy Corporation, Philippines
- Bhushan Steel Limited - India
- Manunggal Multi Energi - Indonesia
- Larsen & Toubro Limited - India
- Uttam Galva Steels Limited - India
- Price Waterhouse Coopers - Russia
- Vijayanagar Sugar Pvt Ltd - India
- VISA Power Limited - India
- Attock Cement Pakistan Limited
- AsiaOL BioFuels Corp., Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Coalindo Energy - Indonesia
- Baramulti Group, Indonesia
- Standard Chartered Bank - UAE
- Jorong Barutama Greston.PT - Indonesia
- Meenaskhi Energy Private Limited - India
- Ministry of Mines - Canada
- Toyota Tsusho Corporation, Japan
- Bukit Asam (Persero) Tbk - Indonesia
- International Coal Ventures Pvt Ltd - India
- Madhucon Powers Ltd - India
- Global Green Power PLC Corporation, Philippines
- European Bulk Services B.V. - Netherlands
- Parliament of New Zealand
- Star Paper Mills Limited - India
- Oldendorff Carriers - Singapore
- PNOC Exploration Corporation - Philippines
- Jindal Steel & Power Ltd - India
- CNBM International Corporation - China
- Bhoruka Overseas - Indonesia
- TeaM Sual Corporation - Philippines
- Kapuas Tunggal Persada - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Australian Coal Association
- GAC Shipping (India) Pvt Ltd
- Port Waratah Coal Services - Australia
- Energy Link Ltd, New Zealand
- Sojitz Corporation - Japan
- Romanian Commodities Exchange
- Simpson Spence & Young - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Commonwealth Bank - Australia
- LBH Netherlands Bv - Netherlands
- Malabar Cements Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Coal and Oil Company - UAE
- MS Steel International - UAE
- Globalindo Alam Lestari - Indonesia
- Dalmia Cement Bharat India
- India Bulls Power Limited - India
- Miang Besar Coal Terminal - Indonesia
- Georgia Ports Authority, United States
- Mercator Lines Limited - India
- ICICI Bank Limited - India
- Directorate Of Revenue Intelligence - India
- Vedanta Resources Plc - India
- Bukit Makmur.PT - Indonesia
- Posco Energy - South Korea
- Riau Bara Harum - Indonesia
- Bayan Resources Tbk. - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Borneo Indobara - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Timah Investasi Mineral - Indoneisa
- Medco Energi Mining Internasional
- Latin American Coal - Colombia
- Sical Logistics Limited - India
- Electricity Generating Authority of Thailand
- Banpu Public Company Limited - Thailand
- Karbindo Abesyapradhi - Indoneisa
- Intertek Mineral Services - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Tamil Nadu electricity Board
- Asmin Koalindo Tuhup - Indonesia
- Singapore Mercantile Exchange
- Edison Trading Spa - Italy
- Indogreen Group - Indonesia
- PowerSource Philippines DevCo
- Australian Commodity Traders Exchange
- Makarim & Taira - Indonesia
- San Jose City I Power Corp, Philippines
- Lanco Infratech Ltd - India
- Maheswari Brothers Coal Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Wood Mackenzie - Singapore
- ASAPP Information Group - India
- Aboitiz Power Corporation - Philippines
- Agrawal Coal Company - India
- Global Coal Blending Company Limited - Australia
- Cement Manufacturers Association - India
- Energy Development Corp, Philippines
- SMG Consultants - Indonesia
- Carbofer General Trading SA - India
- Neyveli Lignite Corporation Ltd, - India
- Kideco Jaya Agung - Indonesia
- OPG Power Generation Pvt Ltd - India
- Xindia Steels Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Ceylon Electricity Board - Sri Lanka
- Kepco SPC Power Corporation, Philippines
- Kobexindo Tractors - Indoneisa
- Central Electricity Authority - India
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