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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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Monday, 18 May 20
TAKING ADVANTAGE OF VIRUS DISTRACTION - BALTIC EXCHANGE
As the industry grapples to deal with exceptional Covid-19-related challenges, a deeper threat is coming to the fore. At this time of crisis, more ...
Monday, 18 May 20
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Monday, 18 May 20
CHINA'S COAL OUTPUT UP 1.3 PCT IN JANUARY-APRIL: XINHUA
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Sunday, 17 May 20
A 55,000 OPEN ILIGAN FIXING AT $6,500 VIA INDONESIA REDELIVERY INDIA - BALTIC BRIEFING
Capesize
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Friday, 15 May 20
CHINA'S COAL CONSUMPTION TO FALL Y/Y IN SECOND QUARTER, IMPROVEMENT EXPECTED IN SECOND HALF - INDUSTRY BODY: REUTERS
China’s coal consumption is expected to decline in the second quarter from a year earlier, but will see an improvement in the second half of ...
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- Metalloyd Limited - United Kingdom
- Straits Asia Resources Limited - Singapore
- Maharashtra Electricity Regulatory Commission - India
- Lanco Infratech Ltd - India
- Independent Power Producers Association of India
- LBH Netherlands Bv - Netherlands
- Krishnapatnam Port Company Ltd. - India
- Indian Energy Exchange, India
- PetroVietnam Power Coal Import and Supply Company
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- International Coal Ventures Pvt Ltd - India
- Romanian Commodities Exchange
- Dalmia Cement Bharat India
- Indo Tambangraya Megah - Indonesia
- Samtan Co., Ltd - South Korea
- Merrill Lynch Commodities Europe
- Energy Development Corp, Philippines
- IEA Clean Coal Centre - UK
- Petron Corporation, Philippines
- Indogreen Group - Indonesia
- PNOC Exploration Corporation - Philippines
- Ceylon Electricity Board - Sri Lanka
- The State Trading Corporation of India Ltd
- Jorong Barutama Greston.PT - Indonesia
- Global Green Power PLC Corporation, Philippines
- Essar Steel Hazira Ltd - India
- PTC India Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Central Java Power - Indonesia
- Toyota Tsusho Corporation, Japan
- Baramulti Group, Indonesia
- Vizag Seaport Private Limited - India
- Mercator Lines Limited - India
- Global Business Power Corporation, Philippines
- Savvy Resources Ltd - HongKong
- Malabar Cements Ltd - India
- Attock Cement Pakistan Limited
- GN Power Mariveles Coal Plant, Philippines
- Vedanta Resources Plc - India
- Power Finance Corporation Ltd., India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kepco SPC Power Corporation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Thiess Contractors Indonesia
- Sindya Power Generating Company Private Ltd
- IHS Mccloskey Coal Group - USA
- Bukit Asam (Persero) Tbk - Indonesia
- Indian Oil Corporation Limited
- Parliament of New Zealand
- Uttam Galva Steels Limited - India
- Parry Sugars Refinery, India
- Xindia Steels Limited - India
- SMG Consultants - Indonesia
- Videocon Industries ltd - India
- Standard Chartered Bank - UAE
- Sakthi Sugars Limited - India
- Intertek Mineral Services - Indonesia
- Binh Thuan Hamico - Vietnam
- Trasteel International SA, Italy
- Petrochimia International Co. Ltd.- Taiwan
- Planning Commission, India
- Grasim Industreis Ltd - India
- Mercuria Energy - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Meralco Power Generation, Philippines
- Globalindo Alam Lestari - Indonesia
- Kumho Petrochemical, South Korea
- Tamil Nadu electricity Board
- Banpu Public Company Limited - Thailand
- South Luzon Thermal Energy Corporation
- Deloitte Consulting - India
- Electricity Generating Authority of Thailand
- Kaltim Prima Coal - Indonesia
- Directorate Of Revenue Intelligence - India
- Karbindo Abesyapradhi - Indoneisa
- Bukit Makmur.PT - Indonesia
- Bhatia International Limited - India
- Bharathi Cement Corporation - India
- Chamber of Mines of South Africa
- Sree Jayajothi Cements Limited - India
- Indika Energy - Indonesia
- Bangladesh Power Developement Board
- OPG Power Generation Pvt Ltd - India
- CIMB Investment Bank - Malaysia
- Aboitiz Power Corporation - Philippines
- Singapore Mercantile Exchange
- Coastal Gujarat Power Limited - India
- Bulk Trading Sa - Switzerland
- GVK Power & Infra Limited - India
- New Zealand Coal & Carbon
- Cement Manufacturers Association - India
- Coalindo Energy - Indonesia
- Bhushan Steel Limited - India
- Therma Luzon, Inc, Philippines
- GMR Energy Limited - India
- Orica Mining Services - Indonesia
- Borneo Indobara - Indonesia
- PowerSource Philippines DevCo
- Larsen & Toubro Limited - India
- Africa Commodities Group - South Africa
- London Commodity Brokers - England
- Siam City Cement - Thailand
- Holcim Trading Pte Ltd - Singapore
- Marubeni Corporation - India
- Orica Australia Pty. Ltd.
- Semirara Mining Corp, Philippines
- Wood Mackenzie - Singapore
- Bukit Baiduri Energy - Indonesia
- CNBM International Corporation - China
- Central Electricity Authority - India
- Bayan Resources Tbk. - Indonesia
- Commonwealth Bank - Australia
- TeaM Sual Corporation - Philippines
- Sinarmas Energy and Mining - Indonesia
- Mjunction Services Limited - India
- Miang Besar Coal Terminal - Indonesia
- Makarim & Taira - Indonesia
- San Jose City I Power Corp, Philippines
- Tata Chemicals Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Ministry of Finance - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Georgia Ports Authority, United States
- Minerals Council of Australia
- Ministry of Mines - Canada
- Semirara Mining and Power Corporation, Philippines
- Thai Mozambique Logistica
- Jindal Steel & Power Ltd - India
- GAC Shipping (India) Pvt Ltd
- European Bulk Services B.V. - Netherlands
- Indonesian Coal Mining Association
- Kideco Jaya Agung - Indonesia
- ICICI Bank Limited - India
- Pendopo Energi Batubara - Indonesia
- The Treasury - Australian Government
- Sical Logistics Limited - India
- Australian Coal Association
- Kartika Selabumi Mining - Indonesia
- Star Paper Mills Limited - India
- Carbofer General Trading SA - India
- Salva Resources Pvt Ltd - India
- Ministry of Transport, Egypt
- AsiaOL BioFuels Corp., Philippines
- Simpson Spence & Young - Indonesia
- McConnell Dowell - Australia
- Sojitz Corporation - Japan
- Manunggal Multi Energi - Indonesia
- Heidelberg Cement - Germany
- Australian Commodity Traders Exchange
- Bahari Cakrawala Sebuku - Indonesia
- Ambuja Cements Ltd - India
- Latin American Coal - Colombia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- TNB Fuel Sdn Bhd - Malaysia
- Antam Resourcindo - Indonesia
- Coal and Oil Company - UAE
- Altura Mining Limited, Indonesia
- Bhoruka Overseas - Indonesia
- Barasentosa Lestari - Indonesia
- Edison Trading Spa - Italy
- Alfred C Toepfer International GmbH - Germany
- Madhucon Powers Ltd - India
- SN Aboitiz Power Inc, Philippines
- Wilmar Investment Holdings
- Anglo American - United Kingdom
- Ind-Barath Power Infra Limited - India
- Karaikal Port Pvt Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Maheswari Brothers Coal Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Siam City Cement PLC, Thailand
- Sarangani Energy Corporation, Philippines
- Cigading International Bulk Terminal - Indonesia
- Aditya Birla Group - India
- Eastern Coal Council - USA
- Billiton Holdings Pty Ltd - Australia
- SMC Global Power, Philippines
- Interocean Group of Companies - India
- Agrawal Coal Company - India
- Oldendorff Carriers - Singapore
- Asmin Koalindo Tuhup - Indonesia
- Gujarat Sidhee Cement - India
- Economic Council, Georgia
- Meenaskhi Energy Private Limited - India
- Eastern Energy - Thailand
- India Bulls Power Limited - India
- VISA Power Limited - India
- White Energy Company Limited
- Chettinad Cement Corporation Ltd - India
- ASAPP Information Group - India
- Medco Energi Mining Internasional
- Kobexindo Tractors - Indoneisa
- Posco Energy - South Korea
- Port Waratah Coal Services - Australia
- Goldman Sachs - Singapore
- Energy Link Ltd, New Zealand
- Timah Investasi Mineral - Indoneisa
- Vijayanagar Sugar Pvt Ltd - India
- Iligan Light & Power Inc, Philippines
- Leighton Contractors Pty Ltd - Australia
- Renaissance Capital - South Africa
- Global Coal Blending Company Limited - Australia
- Jaiprakash Power Ventures ltd
- Rashtriya Ispat Nigam Limited - India
- Mintek Dendrill Indonesia
- Price Waterhouse Coopers - Russia
- Riau Bara Harum - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Electricity Authority, New Zealand
- Gujarat Mineral Development Corp Ltd - India
- MS Steel International - UAE
- Formosa Plastics Group - Taiwan
- The University of Queensland
- Kalimantan Lumbung Energi - Indonesia
- Rio Tinto Coal - Australia
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