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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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Sunday, 10 September 23
CHINA AUGUST COAL IMPORTS OF 44.3 MLN T HIT RECORD - REUTERS
China, the world’s top coal consumer, imported 44.3 million metric tons of the fuel last month, customs data showed, the highest amount in an ...
Tuesday, 22 August 23
CHINA'S COAL PRODUCTION LOGS STEADY GROWTH IN JANUARY-JULY: XINHUA
China’s output of raw coal went up 3.6 percent year on year in the first seven months of this year, official data showed.
The ...
Sunday, 13 August 23
THE COMMODITIES FEED: LNG SUPPLY RISKS LINGER - ING
Energy – OPEC sees deficit over remainder of 2023
Oil prices came under some pressure yesterday with ICE Brent settling a litt ...
Wednesday, 09 August 23
COAL TRADE TO RETURN TO 2019 LEVELS - BALTIC EXCHANGE
The International Energy Agency’s mid-year Coal Market Update for 2023 brings both positive and concerning news for the global coal industry. ...
Sunday, 23 July 23
ANALYSIS-INDIA'S COAL MINING BET STUMBLES AS WARY BANKS WEIGH RISING RISKS - REUTERS
India’s drive to ramp up coal output to meet growing energy demand is faltering due to banks’ reluctance to finance newly auctioned min ...
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- Alfred C Toepfer International GmbH - Germany
- Altura Mining Limited, Indonesia
- Kartika Selabumi Mining - Indonesia
- Dalmia Cement Bharat India
- Mercuria Energy - Indonesia
- Antam Resourcindo - Indonesia
- Siam City Cement - Thailand
- Essar Steel Hazira Ltd - India
- Kaltim Prima Coal - Indonesia
- Standard Chartered Bank - UAE
- Semirara Mining Corp, Philippines
- Energy Development Corp, Philippines
- The Treasury - Australian Government
- Billiton Holdings Pty Ltd - Australia
- Bukit Baiduri Energy - Indonesia
- Grasim Industreis Ltd - India
- Uttam Galva Steels Limited - India
- Central Electricity Authority - India
- Barasentosa Lestari - Indonesia
- Tata Chemicals Ltd - India
- Interocean Group of Companies - India
- Bhatia International Limited - India
- Renaissance Capital - South Africa
- Orica Mining Services - Indonesia
- Commonwealth Bank - Australia
- MS Steel International - UAE
- Independent Power Producers Association of India
- Latin American Coal - Colombia
- Port Waratah Coal Services - Australia
- Bukit Asam (Persero) Tbk - Indonesia
- Bukit Makmur.PT - Indonesia
- Vizag Seaport Private Limited - India
- Oldendorff Carriers - Singapore
- Marubeni Corporation - India
- Maharashtra Electricity Regulatory Commission - India
- Thai Mozambique Logistica
- Mjunction Services Limited - India
- New Zealand Coal & Carbon
- Bharathi Cement Corporation - India
- McConnell Dowell - Australia
- Electricity Authority, New Zealand
- GN Power Mariveles Coal Plant, Philippines
- Bangladesh Power Developement Board
- Anglo American - United Kingdom
- Coalindo Energy - Indonesia
- LBH Netherlands Bv - Netherlands
- Formosa Plastics Group - Taiwan
- Sree Jayajothi Cements Limited - India
- Sical Logistics Limited - India
- Eastern Energy - Thailand
- Salva Resources Pvt Ltd - India
- Indo Tambangraya Megah - Indonesia
- CIMB Investment Bank - Malaysia
- Aditya Birla Group - India
- Kumho Petrochemical, South Korea
- Indogreen Group - Indonesia
- Meenaskhi Energy Private Limited - India
- Deloitte Consulting - India
- South Luzon Thermal Energy Corporation
- Goldman Sachs - Singapore
- Karbindo Abesyapradhi - Indoneisa
- Kobexindo Tractors - Indoneisa
- Aboitiz Power Corporation - Philippines
- Indika Energy - Indonesia
- GMR Energy Limited - India
- PNOC Exploration Corporation - Philippines
- GAC Shipping (India) Pvt Ltd
- GVK Power & Infra Limited - India
- AsiaOL BioFuels Corp., Philippines
- ASAPP Information Group - India
- Sakthi Sugars Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Global Coal Blending Company Limited - Australia
- Indian Oil Corporation Limited
- Kohat Cement Company Ltd. - Pakistan
- Star Paper Mills Limited - India
- Xindia Steels Limited - India
- Kapuas Tunggal Persada - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Globalindo Alam Lestari - Indonesia
- Orica Australia Pty. Ltd.
- Australian Commodity Traders Exchange
- Coal and Oil Company - UAE
- Iligan Light & Power Inc, Philippines
- Indian Energy Exchange, India
- Savvy Resources Ltd - HongKong
- OPG Power Generation Pvt Ltd - India
- Coastal Gujarat Power Limited - India
- Meralco Power Generation, Philippines
- Georgia Ports Authority, United States
- Energy Link Ltd, New Zealand
- The University of Queensland
- India Bulls Power Limited - India
- Straits Asia Resources Limited - Singapore
- Wilmar Investment Holdings
- Parry Sugars Refinery, India
- Binh Thuan Hamico - Vietnam
- Riau Bara Harum - Indonesia
- Chettinad Cement Corporation Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Carbofer General Trading SA - India
- Malabar Cements Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- London Commodity Brokers - England
- Karaikal Port Pvt Ltd - India
- Larsen & Toubro Limited - India
- Attock Cement Pakistan Limited
- Medco Energi Mining Internasional
- Heidelberg Cement - Germany
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Madhucon Powers Ltd - India
- Sindya Power Generating Company Private Ltd
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ministry of Finance - Indonesia
- Miang Besar Coal Terminal - Indonesia
- CNBM International Corporation - China
- Minerals Council of Australia
- Posco Energy - South Korea
- Singapore Mercantile Exchange
- Kideco Jaya Agung - Indonesia
- IEA Clean Coal Centre - UK
- Merrill Lynch Commodities Europe
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Metalloyd Limited - United Kingdom
- Petrochimia International Co. Ltd.- Taiwan
- Thiess Contractors Indonesia
- Ind-Barath Power Infra Limited - India
- Ambuja Cements Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Australian Coal Association
- Bayan Resources Tbk. - Indonesia
- Trasteel International SA, Italy
- Gujarat Sidhee Cement - India
- Pipit Mutiara Jaya. PT, Indonesia
- Kepco SPC Power Corporation, Philippines
- SN Aboitiz Power Inc, Philippines
- Planning Commission, India
- Global Business Power Corporation, Philippines
- Maheswari Brothers Coal Limited - India
- Leighton Contractors Pty Ltd - Australia
- The State Trading Corporation of India Ltd
- Banpu Public Company Limited - Thailand
- White Energy Company Limited
- Central Java Power - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Intertek Mineral Services - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Borneo Indobara - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Baramulti Group, Indonesia
- Bhushan Steel Limited - India
- Petron Corporation, Philippines
- Parliament of New Zealand
- Directorate General of MIneral and Coal - Indonesia
- Lanco Infratech Ltd - India
- International Coal Ventures Pvt Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Edison Trading Spa - Italy
- Offshore Bulk Terminal Pte Ltd, Singapore
- Ceylon Electricity Board - Sri Lanka
- Sarangani Energy Corporation, Philippines
- PTC India Limited - India
- Chamber of Mines of South Africa
- European Bulk Services B.V. - Netherlands
- Rio Tinto Coal - Australia
- Jorong Barutama Greston.PT - Indonesia
- Krishnapatnam Port Company Ltd. - India
- PowerSource Philippines DevCo
- Indonesian Coal Mining Association
- Tamil Nadu electricity Board
- IHS Mccloskey Coal Group - USA
- Toyota Tsusho Corporation, Japan
- Eastern Coal Council - USA
- Ministry of Transport, Egypt
- Jindal Steel & Power Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Vedanta Resources Plc - India
- Price Waterhouse Coopers - Russia
- Wood Mackenzie - Singapore
- TeaM Sual Corporation - Philippines
- Directorate Of Revenue Intelligence - India
- Power Finance Corporation Ltd., India
- ICICI Bank Limited - India
- Samtan Co., Ltd - South Korea
- Makarim & Taira - Indonesia
- Manunggal Multi Energi - Indonesia
- Jaiprakash Power Ventures ltd
- Holcim Trading Pte Ltd - Singapore
- Cement Manufacturers Association - India
- Therma Luzon, Inc, Philippines
- Agrawal Coal Company - India
- San Jose City I Power Corp, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Mercator Lines Limited - India
- Sinarmas Energy and Mining - Indonesia
- Videocon Industries ltd - India
- Romanian Commodities Exchange
- TNB Fuel Sdn Bhd - Malaysia
- Timah Investasi Mineral - Indoneisa
- Africa Commodities Group - South Africa
- SMC Global Power, Philippines
- Simpson Spence & Young - Indonesia
- Bulk Trading Sa - Switzerland
- Neyveli Lignite Corporation Ltd, - India
- SMG Consultants - Indonesia
- Economic Council, Georgia
- VISA Power Limited - India
- Semirara Mining and Power Corporation, Philippines
- Electricity Generating Authority of Thailand
- Sojitz Corporation - Japan
- Mintek Dendrill Indonesia
- Pendopo Energi Batubara - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Siam City Cement PLC, Thailand
- Bhoruka Overseas - Indonesia
- Global Green Power PLC Corporation, Philippines
- Ministry of Mines - Canada
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