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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, 25 August 20
INDIA'S IMPORTS FALL AS LOCKDOWNS IMPACT THE POWER AND INDUSTRIAL SECTORS - REPORT
India is the world’s second largest thermal coal consumer and importer, importing an estimated 211 million tonnes of thermal coal in 2019.&nb ...
Monday, 24 August 20
A COMBINATION OF DEVELOPMENTS DROVE THE FALLOFF COAL PRICES - CHIEF ECONOMIST’ OFFICE, AUSTRALIA
China, rising domestic production combined with subdued power demand;
India, a lockdown coupled with government directives that fav ...
Monday, 24 August 20
AUSTRALIA'S THERMAL COAL EXPORTS ARE FORECAST TO DROP FROM AN ESTIMATED $20 BILLION IN 2019-20 TO $16 BILLION IN 2020-21: REPORT
Thermal coal spot prices have fallen sharply as the impact of COVID-19 drives a contraction in seaborne trade for only the second time this century ...
Saturday, 22 August 20
REPORT SEES INDIA’S RELIANCE ON THERMAL POWER DROPPING TO 50% IN 2021, 43% IN 2026 - ET ENERGY | IEEFA
India’s dependence on thermal power will reduce to 50 per cent by 2021-22 and 43 per cent by 2026-27 on the back of renewable energy (RE) cap ...
Friday, 21 August 20
323 MILLION ELECTRIC VEHICLES WILL BE ON THE ROADS BY 2040 - WOOD MACKENZIE
Electric vehicle (EV) sales are expected to reach 45 million units per year by 2040, with a total global EV stock of 323 million, according to new ...
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- South Luzon Thermal Energy Corporation
- Holcim Trading Pte Ltd - Singapore
- Rashtriya Ispat Nigam Limited - India
- International Coal Ventures Pvt Ltd - India
- Bharathi Cement Corporation - India
- Deloitte Consulting - India
- Asmin Koalindo Tuhup - Indonesia
- Indonesian Coal Mining Association
- Kalimantan Lumbung Energi - Indonesia
- Agrawal Coal Company - India
- Independent Power Producers Association of India
- SMG Consultants - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Petron Corporation, Philippines
- Renaissance Capital - South Africa
- Coal and Oil Company - UAE
- Miang Besar Coal Terminal - Indonesia
- Toyota Tsusho Corporation, Japan
- Malabar Cements Ltd - India
- ICICI Bank Limited - India
- Banpu Public Company Limited - Thailand
- Wilmar Investment Holdings
- Goldman Sachs - Singapore
- Neyveli Lignite Corporation Ltd, - India
- Intertek Mineral Services - Indonesia
- Directorate Of Revenue Intelligence - India
- Ambuja Cements Ltd - India
- MS Steel International - UAE
- Romanian Commodities Exchange
- Medco Energi Mining Internasional
- Madhucon Powers Ltd - India
- Electricity Authority, New Zealand
- Global Green Power PLC Corporation, Philippines
- Siam City Cement - Thailand
- Borneo Indobara - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Australian Coal Association
- Price Waterhouse Coopers - Russia
- Videocon Industries ltd - India
- Siam City Cement PLC, Thailand
- Krishnapatnam Port Company Ltd. - India
- Gujarat Electricity Regulatory Commission - India
- Electricity Generating Authority of Thailand
- CNBM International Corporation - China
- Karaikal Port Pvt Ltd - India
- Coalindo Energy - Indonesia
- Bangladesh Power Developement Board
- Salva Resources Pvt Ltd - India
- Parry Sugars Refinery, India
- Anglo American - United Kingdom
- Jindal Steel & Power Ltd - India
- Sree Jayajothi Cements Limited - India
- GAC Shipping (India) Pvt Ltd
- Bhushan Steel Limited - India
- Kobexindo Tractors - Indoneisa
- Standard Chartered Bank - UAE
- Straits Asia Resources Limited - Singapore
- Mercator Lines Limited - India
- Minerals Council of Australia
- Jaiprakash Power Ventures ltd
- Oldendorff Carriers - Singapore
- GMR Energy Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Meenaskhi Energy Private Limited - India
- Semirara Mining Corp, Philippines
- Commonwealth Bank - Australia
- Chettinad Cement Corporation Ltd - India
- Mjunction Services Limited - India
- Posco Energy - South Korea
- White Energy Company Limited
- Pendopo Energi Batubara - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Ceylon Electricity Board - Sri Lanka
- Antam Resourcindo - Indonesia
- Vizag Seaport Private Limited - India
- Bhoruka Overseas - Indonesia
- Orica Australia Pty. Ltd.
- Xindia Steels Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Formosa Plastics Group - Taiwan
- Edison Trading Spa - Italy
- Mintek Dendrill Indonesia
- Sindya Power Generating Company Private Ltd
- Central Electricity Authority - India
- Port Waratah Coal Services - Australia
- Kohat Cement Company Ltd. - Pakistan
- Globalindo Alam Lestari - Indonesia
- Trasteel International SA, Italy
- Ind-Barath Power Infra Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Planning Commission, India
- Maheswari Brothers Coal Limited - India
- Indika Energy - Indonesia
- Larsen & Toubro Limited - India
- Essar Steel Hazira Ltd - India
- CIMB Investment Bank - Malaysia
- Baramulti Group, Indonesia
- Bhatia International Limited - India
- Cigading International Bulk Terminal - Indonesia
- Makarim & Taira - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Karbindo Abesyapradhi - Indoneisa
- Thai Mozambique Logistica
- SMC Global Power, Philippines
- Leighton Contractors Pty Ltd - Australia
- Gujarat Mineral Development Corp Ltd - India
- Tamil Nadu electricity Board
- Jorong Barutama Greston.PT - Indonesia
- Kepco SPC Power Corporation, Philippines
- Sarangani Energy Corporation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Energy Link Ltd, New Zealand
- Sakthi Sugars Limited - India
- Coastal Gujarat Power Limited - India
- Bayan Resources Tbk. - Indonesia
- PNOC Exploration Corporation - Philippines
- Lanco Infratech Ltd - India
- LBH Netherlands Bv - Netherlands
- Kideco Jaya Agung - Indonesia
- Kaltim Prima Coal - Indonesia
- Altura Mining Limited, Indonesia
- Indogreen Group - Indonesia
- Manunggal Multi Energi - Indonesia
- Star Paper Mills Limited - India
- Bukit Baiduri Energy - Indonesia
- PTC India Limited - India
- McConnell Dowell - Australia
- European Bulk Services B.V. - Netherlands
- Riau Bara Harum - Indonesia
- PowerSource Philippines DevCo
- Energy Development Corp, Philippines
- Dalmia Cement Bharat India
- Alfred C Toepfer International GmbH - Germany
- Eastern Energy - Thailand
- OPG Power Generation Pvt Ltd - India
- Binh Thuan Hamico - Vietnam
- The State Trading Corporation of India Ltd
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Parliament of New Zealand
- Sical Logistics Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- India Bulls Power Limited - India
- The University of Queensland
- Vedanta Resources Plc - India
- New Zealand Coal & Carbon
- Iligan Light & Power Inc, Philippines
- San Jose City I Power Corp, Philippines
- Bukit Makmur.PT - Indonesia
- Indian Oil Corporation Limited
- Georgia Ports Authority, United States
- Africa Commodities Group - South Africa
- Gujarat Sidhee Cement - India
- Timah Investasi Mineral - Indoneisa
- Marubeni Corporation - India
- Uttam Galva Steels Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Orica Mining Services - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Economic Council, Georgia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Wood Mackenzie - Singapore
- Bulk Trading Sa - Switzerland
- TeaM Sual Corporation - Philippines
- Interocean Group of Companies - India
- Samtan Co., Ltd - South Korea
- Singapore Mercantile Exchange
- VISA Power Limited - India
- Merrill Lynch Commodities Europe
- Barasentosa Lestari - Indonesia
- SN Aboitiz Power Inc, Philippines
- Kumho Petrochemical, South Korea
- Kapuas Tunggal Persada - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Simpson Spence & Young - Indonesia
- GVK Power & Infra Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Global Business Power Corporation, Philippines
- Semirara Mining and Power Corporation, Philippines
- Aboitiz Power Corporation - Philippines
- IHS Mccloskey Coal Group - USA
- London Commodity Brokers - England
- Indian Energy Exchange, India
- Aditya Birla Group - India
- Savvy Resources Ltd - HongKong
- Bank of Tokyo Mitsubishi UFJ Ltd
- Heidelberg Cement - Germany
- Tata Chemicals Ltd - India
- Rio Tinto Coal - Australia
- Meralco Power Generation, Philippines
- Sojitz Corporation - Japan
- PetroVietnam Power Coal Import and Supply Company
- Ministry of Mines - Canada
- GN Power Mariveles Coal Plant, Philippines
- The Treasury - Australian Government
- Mercuria Energy - Indonesia
- Ministry of Finance - Indonesia
- Cement Manufacturers Association - India
- Australian Commodity Traders Exchange
- Global Coal Blending Company Limited - Australia
- IEA Clean Coal Centre - UK
- Thiess Contractors Indonesia
- Eastern Coal Council - USA
- Carbofer General Trading SA - India
- Chamber of Mines of South Africa
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kartika Selabumi Mining - Indonesia
- Central Java Power - Indonesia
- Ministry of Transport, Egypt
- Metalloyd Limited - United Kingdom
- ASAPP Information Group - India
- Grasim Industreis Ltd - India
- Power Finance Corporation Ltd., India
- Therma Luzon, Inc, Philippines
- Indo Tambangraya Megah - Indonesia
- Latin American Coal - Colombia
- Attock Cement Pakistan Limited
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