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