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