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