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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, 02 June 20
CHINA TAIYUAN COAL TRANSACTION PRICE INDEX DOWN 0.86 PCT - XINHUA
China Taiyuan coal transaction price index stood at 123.95 points Monday, down 0.86 percent week on week.
The index, released by Chi ...
Tuesday, 02 June 20
THE HISTORIC DECLINE OF US COAL - WOOD MACKENZIE
The first commercial power plant in the US was Thomas Edison’s coal-fired Pearl Street station in lower Manhattan, which started operating in ...
Tuesday, 02 June 20
COAL INDIA'S MAY SALES DRIVEN SHARPLY LOWER BY SLUMP IN POWER DEMAND - REUTER
Coal India’s sales fell 23.3% in May as utilities refrained from purchases amid record stockpiles and tepid demand because of a nationwide lo ...
Tuesday, 02 June 20
TUAH TURANGGA AGUNG RECORDED 4.54 MILLION TONS OF COAL SALES IN THE FIRST FOUR MONTHS OF 2020
PT United Tractors Tbk through its subsidiary, PT Tuah Turangga Agung recorded 4.54 million tons of coal sales in the first four months of 2020, up ...
Tuesday, 02 June 20
SOURING SINO-AUSTRALIA TRADE RELATIONS - BALTIC EXCHANGE
Cooling relations between the commodity powerhouses of China and Australia may point to trade troubles ahead when the world emerges from the Covid- ...
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- Ministry of Mines - Canada
- Goldman Sachs - Singapore
- Energy Link Ltd, New Zealand
- Alfred C Toepfer International GmbH - Germany
- Savvy Resources Ltd - HongKong
- London Commodity Brokers - England
- Aboitiz Power Corporation - Philippines
- Bukit Makmur.PT - Indonesia
- Indian Energy Exchange, India
- TNB Fuel Sdn Bhd - Malaysia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Jaiprakash Power Ventures ltd
- Power Finance Corporation Ltd., India
- Coastal Gujarat Power Limited - India
- Latin American Coal - Colombia
- Bahari Cakrawala Sebuku - Indonesia
- Sojitz Corporation - Japan
- OPG Power Generation Pvt Ltd - India
- San Jose City I Power Corp, Philippines
- Global Green Power PLC Corporation, Philippines
- Bulk Trading Sa - Switzerland
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Simpson Spence & Young - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Uttam Galva Steels Limited - India
- Timah Investasi Mineral - Indoneisa
- Interocean Group of Companies - India
- Jorong Barutama Greston.PT - Indonesia
- Manunggal Multi Energi - Indonesia
- IHS Mccloskey Coal Group - USA
- New Zealand Coal & Carbon
- Kaltim Prima Coal - Indonesia
- Parry Sugars Refinery, India
- SN Aboitiz Power Inc, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Barasentosa Lestari - Indonesia
- Semirara Mining and Power Corporation, Philippines
- The State Trading Corporation of India Ltd
- Indo Tambangraya Megah - Indonesia
- Global Business Power Corporation, Philippines
- Independent Power Producers Association of India
- GVK Power & Infra Limited - India
- Mjunction Services Limited - India
- International Coal Ventures Pvt Ltd - India
- Renaissance Capital - South Africa
- Oldendorff Carriers - Singapore
- Wood Mackenzie - Singapore
- PNOC Exploration Corporation - Philippines
- SMC Global Power, Philippines
- Price Waterhouse Coopers - Russia
- European Bulk Services B.V. - Netherlands
- South Luzon Thermal Energy Corporation
- Medco Energi Mining Internasional
- Asmin Koalindo Tuhup - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Sree Jayajothi Cements Limited - India
- Australian Commodity Traders Exchange
- Central Java Power - Indonesia
- Energy Development Corp, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Larsen & Toubro Limited - India
- SMG Consultants - Indonesia
- Deloitte Consulting - India
- McConnell Dowell - Australia
- Sarangani Energy Corporation, Philippines
- Holcim Trading Pte Ltd - Singapore
- Planning Commission, India
- Bhushan Steel Limited - India
- Maheswari Brothers Coal Limited - India
- Borneo Indobara - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Kideco Jaya Agung - Indonesia
- Essar Steel Hazira Ltd - India
- Chamber of Mines of South Africa
- Central Electricity Authority - India
- PTC India Limited - India
- Intertek Mineral Services - Indonesia
- Indogreen Group - Indonesia
- Agrawal Coal Company - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Meralco Power Generation, Philippines
- Economic Council, Georgia
- White Energy Company Limited
- Gujarat Electricity Regulatory Commission - India
- Ministry of Transport, Egypt
- Tata Chemicals Ltd - India
- Bharathi Cement Corporation - India
- Samtan Co., Ltd - South Korea
- Offshore Bulk Terminal Pte Ltd, Singapore
- Attock Cement Pakistan Limited
- Kapuas Tunggal Persada - Indonesia
- Grasim Industreis Ltd - India
- Singapore Mercantile Exchange
- Bangladesh Power Developement Board
- Pipit Mutiara Jaya. PT, Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Semirara Mining Corp, Philippines
- TeaM Sual Corporation - Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Thai Mozambique Logistica
- The Treasury - Australian Government
- Xindia Steels Limited - India
- Miang Besar Coal Terminal - Indonesia
- Commonwealth Bank - Australia
- Mercator Lines Limited - India
- Malabar Cements Ltd - India
- Mintek Dendrill Indonesia
- Metalloyd Limited - United Kingdom
- Petrochimia International Co. Ltd.- Taiwan
- Kartika Selabumi Mining - Indonesia
- CIMB Investment Bank - Malaysia
- Bukit Baiduri Energy - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Sakthi Sugars Limited - India
- Thiess Contractors Indonesia
- CNBM International Corporation - China
- Videocon Industries ltd - India
- Indika Energy - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Kumho Petrochemical, South Korea
- Cement Manufacturers Association - India
- Parliament of New Zealand
- Petron Corporation, Philippines
- Toyota Tsusho Corporation, Japan
- Port Waratah Coal Services - Australia
- Romanian Commodities Exchange
- The University of Queensland
- Aditya Birla Group - India
- Karaikal Port Pvt Ltd - India
- Lanco Infratech Ltd - India
- GMR Energy Limited - India
- Binh Thuan Hamico - Vietnam
- Eastern Energy - Thailand
- Vedanta Resources Plc - India
- GAC Shipping (India) Pvt Ltd
- Trasteel International SA, Italy
- Posco Energy - South Korea
- Directorate Of Revenue Intelligence - India
- Standard Chartered Bank - UAE
- Bhatia International Limited - India
- Africa Commodities Group - South Africa
- Wilmar Investment Holdings
- Kobexindo Tractors - Indoneisa
- Ind-Barath Power Infra Limited - India
- Baramulti Group, Indonesia
- Indonesian Coal Mining Association
- Gujarat Sidhee Cement - India
- Therma Luzon, Inc, Philippines
- Leighton Contractors Pty Ltd - Australia
- Meenaskhi Energy Private Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Straits Asia Resources Limited - Singapore
- Indian Oil Corporation Limited
- Karbindo Abesyapradhi - Indoneisa
- Bank of Tokyo Mitsubishi UFJ Ltd
- Coalindo Energy - Indonesia
- Georgia Ports Authority, United States
- India Bulls Power Limited - India
- Formosa Plastics Group - Taiwan
- Mercuria Energy - Indonesia
- Makarim & Taira - Indonesia
- Chettinad Cement Corporation Ltd - India
- Altura Mining Limited, Indonesia
- Star Paper Mills Limited - India
- Banpu Public Company Limited - Thailand
- Maharashtra Electricity Regulatory Commission - India
- Rio Tinto Coal - Australia
- LBH Netherlands Bv - Netherlands
- Eastern Coal Council - USA
- Bayan Resources Tbk. - Indonesia
- Electricity Generating Authority of Thailand
- MS Steel International - UAE
- Pendopo Energi Batubara - Indonesia
- Sical Logistics Limited - India
- Globalindo Alam Lestari - Indonesia
- PowerSource Philippines DevCo
- Madhucon Powers Ltd - India
- Kepco SPC Power Corporation, Philippines
- Ministry of Finance - Indonesia
- Edison Trading Spa - Italy
- Rashtriya Ispat Nigam Limited - India
- Marubeni Corporation - India
- IEA Clean Coal Centre - UK
- Australian Coal Association
- Siam City Cement PLC, Thailand
- Ceylon Electricity Board - Sri Lanka
- Directorate General of MIneral and Coal - Indonesia
- Coal and Oil Company - UAE
- AsiaOL BioFuels Corp., Philippines
- Bhoruka Overseas - Indonesia
- Orica Mining Services - Indonesia
- Sindya Power Generating Company Private Ltd
- Riau Bara Harum - Indonesia
- Ambuja Cements Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Antam Resourcindo - Indonesia
- Orica Australia Pty. Ltd.
- ICICI Bank Limited - India
- Siam City Cement - Thailand
- Merrill Lynch Commodities Europe
- Sinarmas Energy and Mining - Indonesia
- Global Coal Blending Company Limited - Australia
- ASAPP Information Group - India
- Salva Resources Pvt Ltd - India
- VISA Power Limited - India
- Tamil Nadu electricity Board
- Iligan Light & Power Inc, Philippines
- Electricity Authority, New Zealand
- Carbofer General Trading SA - India
- Heidelberg Cement - Germany
- Gujarat Mineral Development Corp Ltd - India
- Dalmia Cement Bharat India
- Minerals Council of Australia
- Vizag Seaport Private Limited - India
- Jindal Steel & Power Ltd - India
- Anglo American - United Kingdom
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