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