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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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Friday, 31 July 20
BOTSWANA PLANS MORE COAL-FIRED POWER AS AFRICAN SOLAR ACCELERATES - IEEFA
An African economic leader like Botswana should embrace solar to reduce subsidies and tariff hikes
As Sub-Saharan solar ambition has ...
Wednesday, 29 July 20
2019 U.S. COAL PRODUCTION FALLS TO ITS LOWEST LEVEL SINCE 1978 - EIA
In 2019, U.S. coal production totaled 706 million short tons (MMst), a 7% decrease from the 756 MMst mined in 2018. Last year’s production wa ...
Wednesday, 29 July 20
MARKET INSIGHT - INTERMODAL
The dry bulk sector is beginning to recover from reduced SnP activity recorded in the first quarter of 2020. The table below illustrates that appro ...
Tuesday, 28 July 20
DEUTSCHE BANK TO END GLOBAL BUSINESS ACTIVITIES IN COAL MINING BY 2025 - REUTERS
Deutsche Bank, in a revamp of its policies for fossil fuels, said on Monday that it would end business activities worldwide related to coal mining ...
Monday, 27 July 20
IEEFA ENERGY FINANCE CONFERENCE 2020: COAL, LNG, PETROCHEMICAL SECTORS FACE POOR OUTLOOK AND UPHILL BATTLE FOR INVESTORS
Fossil fuel industries were becoming less financially attractive even before the global coronavirus pandemic
Three major fossil fuel ...
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- Australian Coal Association
- Posco Energy - South Korea
- Medco Energi Mining Internasional
- Kaltim Prima Coal - Indonesia
- Directorate Of Revenue Intelligence - India
- European Bulk Services B.V. - Netherlands
- Renaissance Capital - South Africa
- Bulk Trading Sa - Switzerland
- London Commodity Brokers - England
- Essar Steel Hazira Ltd - India
- Gujarat Electricity Regulatory Commission - India
- OPG Power Generation Pvt Ltd - India
- AsiaOL BioFuels Corp., Philippines
- CIMB Investment Bank - Malaysia
- Bhushan Steel Limited - India
- Jaiprakash Power Ventures ltd
- Kartika Selabumi Mining - Indonesia
- Orica Mining Services - Indonesia
- Eastern Coal Council - USA
- Sojitz Corporation - Japan
- Videocon Industries ltd - India
- Iligan Light & Power Inc, Philippines
- Electricity Authority, New Zealand
- Mintek Dendrill Indonesia
- Heidelberg Cement - Germany
- Ministry of Finance - Indonesia
- Tata Chemicals Ltd - India
- Eastern Energy - Thailand
- Altura Mining Limited, Indonesia
- Port Waratah Coal Services - Australia
- Madhucon Powers Ltd - India
- Makarim & Taira - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- ASAPP Information Group - India
- Tamil Nadu electricity Board
- Bukit Makmur.PT - Indonesia
- Borneo Indobara - Indonesia
- Global Coal Blending Company Limited - Australia
- Singapore Mercantile Exchange
- Therma Luzon, Inc, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Goldman Sachs - Singapore
- Sakthi Sugars Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Aditya Birla Group - India
- Uttam Galva Steels Limited - India
- Grasim Industreis Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- SN Aboitiz Power Inc, Philippines
- Intertek Mineral Services - Indonesia
- Karaikal Port Pvt Ltd - India
- Bhoruka Overseas - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Holcim Trading Pte Ltd - Singapore
- McConnell Dowell - Australia
- Global Business Power Corporation, Philippines
- Trasteel International SA, Italy
- Energy Development Corp, Philippines
- Sindya Power Generating Company Private Ltd
- PetroVietnam Power Coal Import and Supply Company
- San Jose City I Power Corp, Philippines
- Orica Australia Pty. Ltd.
- Bayan Resources Tbk. - Indonesia
- Indonesian Coal Mining Association
- Ministry of Transport, Egypt
- Anglo American - United Kingdom
- Merrill Lynch Commodities Europe
- Riau Bara Harum - Indonesia
- LBH Netherlands Bv - Netherlands
- Lanco Infratech Ltd - India
- Maheswari Brothers Coal Limited - India
- Baramulti Group, Indonesia
- Cigading International Bulk Terminal - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Oldendorff Carriers - Singapore
- Bhatia International Limited - India
- Edison Trading Spa - Italy
- Samtan Co., Ltd - South Korea
- Energy Link Ltd, New Zealand
- International Coal Ventures Pvt Ltd - India
- Indo Tambangraya Megah - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Bukit Baiduri Energy - Indonesia
- Bangladesh Power Developement Board
- Coastal Gujarat Power Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Dalmia Cement Bharat India
- Rio Tinto Coal - Australia
- Power Finance Corporation Ltd., India
- Formosa Plastics Group - Taiwan
- Siam City Cement - Thailand
- GMR Energy Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Deloitte Consulting - India
- Parry Sugars Refinery, India
- Central Electricity Authority - India
- Minerals Council of Australia
- Star Paper Mills Limited - India
- Sarangani Energy Corporation, Philippines
- Metalloyd Limited - United Kingdom
- Mjunction Services Limited - India
- SMG Consultants - Indonesia
- GVK Power & Infra Limited - India
- CNBM International Corporation - China
- Timah Investasi Mineral - Indoneisa
- Aboitiz Power Corporation - Philippines
- Coal and Oil Company - UAE
- Bharathi Cement Corporation - India
- Maharashtra Electricity Regulatory Commission - India
- GAC Shipping (India) Pvt Ltd
- Vedanta Resources Plc - India
- Gujarat Sidhee Cement - India
- Bahari Cakrawala Sebuku - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Indian Oil Corporation Limited
- Sree Jayajothi Cements Limited - India
- Siam City Cement PLC, Thailand
- India Bulls Power Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Agrawal Coal Company - India
- Semirara Mining Corp, Philippines
- Straits Asia Resources Limited - Singapore
- Kumho Petrochemical, South Korea
- Kohat Cement Company Ltd. - Pakistan
- New Zealand Coal & Carbon
- Leighton Contractors Pty Ltd - Australia
- Central Java Power - Indonesia
- Antam Resourcindo - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Price Waterhouse Coopers - Russia
- Australian Commodity Traders Exchange
- Xindia Steels Limited - India
- Africa Commodities Group - South Africa
- Romanian Commodities Exchange
- Electricity Generating Authority of Thailand
- Larsen & Toubro Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Meralco Power Generation, Philippines
- PNOC Exploration Corporation - Philippines
- Chamber of Mines of South Africa
- Malabar Cements Ltd - India
- Coalindo Energy - Indonesia
- PTC India Limited - India
- IHS Mccloskey Coal Group - USA
- Planning Commission, India
- Savvy Resources Ltd - HongKong
- Miang Besar Coal Terminal - Indonesia
- Kepco SPC Power Corporation, Philippines
- Billiton Holdings Pty Ltd - Australia
- Wilmar Investment Holdings
- The University of Queensland
- PowerSource Philippines DevCo
- Sinarmas Energy and Mining - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Marubeni Corporation - India
- TeaM Sual Corporation - Philippines
- Commonwealth Bank - Australia
- Petrochimia International Co. Ltd.- Taiwan
- Thai Mozambique Logistica
- Meenaskhi Energy Private Limited - India
- Kobexindo Tractors - Indoneisa
- Parliament of New Zealand
- Economic Council, Georgia
- Thiess Contractors Indonesia
- Barasentosa Lestari - Indonesia
- Mercator Lines Limited - India
- IEA Clean Coal Centre - UK
- The State Trading Corporation of India Ltd
- Simpson Spence & Young - Indonesia
- White Energy Company Limited
- Globalindo Alam Lestari - Indonesia
- Indian Energy Exchange, India
- Ministry of Mines - Canada
- Interocean Group of Companies - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- MS Steel International - UAE
- Indika Energy - Indonesia
- Cement Manufacturers Association - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- SMC Global Power, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Sical Logistics Limited - India
- Attock Cement Pakistan Limited
- Kapuas Tunggal Persada - Indonesia
- VISA Power Limited - India
- Binh Thuan Hamico - Vietnam
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Chettinad Cement Corporation Ltd - India
- Georgia Ports Authority, United States
- Pendopo Energi Batubara - Indonesia
- Banpu Public Company Limited - Thailand
- Jindal Steel & Power Ltd - India
- Independent Power Producers Association of India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Pipit Mutiara Jaya. PT, Indonesia
- Salva Resources Pvt Ltd - India
- Global Green Power PLC Corporation, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Ind-Barath Power Infra Limited - India
- Indogreen Group - Indonesia
- Mercuria Energy - Indonesia
- Ambuja Cements Ltd - India
- Petron Corporation, Philippines
- Latin American Coal - Colombia
- Standard Chartered Bank - UAE
- Directorate General of MIneral and Coal - Indonesia
- South Luzon Thermal Energy Corporation
- Krishnapatnam Port Company Ltd. - India
- Manunggal Multi Energi - Indonesia
- ICICI Bank Limited - India
- Toyota Tsusho Corporation, Japan
- Vizag Seaport Private Limited - India
- Kideco Jaya Agung - Indonesia
- Wood Mackenzie - Singapore
- The Treasury - Australian Government
- Carbofer General Trading SA - India
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