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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, 12 May 20
A GLOBAL ECONOMIC RESTART HAS SLOWLY BEGUN AS COUNTRIES AROUND THE WORLD GRADUALLY - ALLIED
A global economic restart has slowly begun as countries around the world gradually set their return back to “normality”. Yet by all mea ...
Tuesday, 12 May 20
CAN INDONESIA'S COAL INDUSTRY SURVIVE COVID-19? : IEEFA
Pandemic Lockdown and Slumping Prices Put Extreme Pressure on Coal Miners
Executive Summary
While attention has been focused on th ...
Tuesday, 12 May 20
INDIA'S COAL PRODUCTION TO CLOCK RECORD 700 MILLION TONNES IN FY21: COAL SECRETARY - PTI
Coal Secretary Anil Jain said FY20 coal production was lower than the target of 660 million tonnes because of flooding of a key coal mine.
&nbs ...
Monday, 11 May 20
CHINA'S BENCHMARK POWER COAL PRICE DROPS SLIGHTLY - XINHUA
China’s benchmark power coal price dropped slightly during the past week.
The Bohai-Rim Steam-Coal Price Index (BSPI), a gauge ...
Monday, 11 May 20
CORONAVIRUS PUTS MORE THAN A THIRD OF SEABORNE COAL SUPPLY AT RISK - WOOD MACKENZIE
The full impact of the coronavirus outbreak on the global economy is yet unclear. However, the demand destruction is already becoming evident, with ...
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- Global Green Power PLC Corporation, Philippines
- Indonesian Coal Mining Association
- Ministry of Finance - Indonesia
- Kaltim Prima Coal - Indonesia
- Coal and Oil Company - UAE
- South Luzon Thermal Energy Corporation
- Global Business Power Corporation, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Petrochimia International Co. Ltd.- Taiwan
- European Bulk Services B.V. - Netherlands
- Standard Chartered Bank - UAE
- Anglo American - United Kingdom
- Straits Asia Resources Limited - Singapore
- Power Finance Corporation Ltd., India
- Merrill Lynch Commodities Europe
- San Jose City I Power Corp, Philippines
- CNBM International Corporation - China
- GVK Power & Infra Limited - India
- Makarim & Taira - Indonesia
- Coalindo Energy - Indonesia
- Siam City Cement - Thailand
- Toyota Tsusho Corporation, Japan
- Aditya Birla Group - India
- VISA Power Limited - India
- Ministry of Mines - Canada
- Interocean Group of Companies - India
- Miang Besar Coal Terminal - Indonesia
- MS Steel International - UAE
- International Coal Ventures Pvt Ltd - India
- Riau Bara Harum - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- New Zealand Coal & Carbon
- Altura Mining Limited, Indonesia
- Alfred C Toepfer International GmbH - Germany
- Binh Thuan Hamico - Vietnam
- Mjunction Services Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Samtan Co., Ltd - South Korea
- Formosa Plastics Group - Taiwan
- Global Coal Blending Company Limited - Australia
- Madhucon Powers Ltd - India
- Star Paper Mills Limited - India
- Bayan Resources Tbk. - Indonesia
- Eastern Coal Council - USA
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kartika Selabumi Mining - Indonesia
- GMR Energy Limited - India
- Bhoruka Overseas - Indonesia
- Vedanta Resources Plc - India
- OPG Power Generation Pvt Ltd - India
- McConnell Dowell - Australia
- The University of Queensland
- Bharathi Cement Corporation - India
- Savvy Resources Ltd - HongKong
- Meenaskhi Energy Private Limited - India
- Baramulti Group, Indonesia
- LBH Netherlands Bv - Netherlands
- Semirara Mining and Power Corporation, Philippines
- Electricity Generating Authority of Thailand
- Sojitz Corporation - Japan
- SMC Global Power, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- IEA Clean Coal Centre - UK
- ASAPP Information Group - India
- Australian Commodity Traders Exchange
- Directorate Of Revenue Intelligence - India
- Chamber of Mines of South Africa
- Cement Manufacturers Association - India
- Therma Luzon, Inc, Philippines
- Cigading International Bulk Terminal - Indonesia
- Thai Mozambique Logistica
- Central Java Power - Indonesia
- Minerals Council of Australia
- Malabar Cements Ltd - India
- Mercuria Energy - Indonesia
- Orica Australia Pty. Ltd.
- Tamil Nadu electricity Board
- Orica Mining Services - Indonesia
- Tata Chemicals Ltd - India
- Wood Mackenzie - Singapore
- Mintek Dendrill Indonesia
- Bukit Baiduri Energy - Indonesia
- ICICI Bank Limited - India
- Kumho Petrochemical, South Korea
- Marubeni Corporation - India
- Semirara Mining Corp, Philippines
- PowerSource Philippines DevCo
- Jorong Barutama Greston.PT - Indonesia
- Sical Logistics Limited - India
- TeaM Sual Corporation - Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Kideco Jaya Agung - Indonesia
- Uttam Galva Steels Limited - India
- Pendopo Energi Batubara - Indonesia
- Lanco Infratech Ltd - India
- Parry Sugars Refinery, India
- Price Waterhouse Coopers - Russia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bukit Asam (Persero) Tbk - Indonesia
- Bukit Makmur.PT - Indonesia
- Thiess Contractors Indonesia
- White Energy Company Limited
- The Treasury - Australian Government
- Electricity Authority, New Zealand
- Gujarat Sidhee Cement - India
- Sree Jayajothi Cements Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Jindal Steel & Power Ltd - India
- Intertek Mineral Services - Indonesia
- Sakthi Sugars Limited - India
- Energy Development Corp, Philippines
- SMG Consultants - Indonesia
- Timah Investasi Mineral - Indoneisa
- Aboitiz Power Corporation - Philippines
- Larsen & Toubro Limited - India
- Kapuas Tunggal Persada - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- SN Aboitiz Power Inc, Philippines
- Commonwealth Bank - Australia
- Romanian Commodities Exchange
- Attock Cement Pakistan Limited
- Australian Coal Association
- Borneo Indobara - Indonesia
- Kepco SPC Power Corporation, Philippines
- Chettinad Cement Corporation Ltd - India
- Georgia Ports Authority, United States
- Petron Corporation, Philippines
- Kobexindo Tractors - Indoneisa
- Bulk Trading Sa - Switzerland
- Jaiprakash Power Ventures ltd
- Gujarat Electricity Regulatory Commission - India
- Africa Commodities Group - South Africa
- Iligan Light & Power Inc, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Edison Trading Spa - Italy
- GAC Shipping (India) Pvt Ltd
- Indogreen Group - Indonesia
- Renaissance Capital - South Africa
- Bangladesh Power Developement Board
- Barasentosa Lestari - Indonesia
- Indian Energy Exchange, India
- AsiaOL BioFuels Corp., Philippines
- Planning Commission, India
- Eastern Energy - Thailand
- Wilmar Investment Holdings
- Maheswari Brothers Coal Limited - India
- Banpu Public Company Limited - Thailand
- Krishnapatnam Port Company Ltd. - India
- Karaikal Port Pvt Ltd - India
- Economic Council, Georgia
- Vizag Seaport Private Limited - India
- India Bulls Power Limited - India
- Sinarmas Energy and Mining - Indonesia
- Latin American Coal - Colombia
- Agrawal Coal Company - India
- Meralco Power Generation, Philippines
- Posco Energy - South Korea
- PTC India Limited - India
- Ceylon Electricity Board - Sri Lanka
- Simpson Spence & Young - Indonesia
- IHS Mccloskey Coal Group - USA
- Indo Tambangraya Megah - Indonesia
- Medco Energi Mining Internasional
- Maharashtra Electricity Regulatory Commission - India
- Ambuja Cements Ltd - India
- Globalindo Alam Lestari - Indonesia
- Trasteel International SA, Italy
- Neyveli Lignite Corporation Ltd, - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Manunggal Multi Energi - Indonesia
- Bhatia International Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Siam City Cement PLC, Thailand
- Central Electricity Authority - India
- Bhushan Steel Limited - India
- Parliament of New Zealand
- Port Waratah Coal Services - Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Energy Link Ltd, New Zealand
- Sindya Power Generating Company Private Ltd
- Carbofer General Trading SA - India
- Rio Tinto Coal - Australia
- London Commodity Brokers - England
- Coastal Gujarat Power Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Indika Energy - Indonesia
- Heidelberg Cement - Germany
- PetroVietnam Power Coal Import and Supply Company
- Antam Resourcindo - Indonesia
- Grasim Industreis Ltd - India
- Sarangani Energy Corporation, Philippines
- Rashtriya Ispat Nigam Limited - India
- Essar Steel Hazira Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Indian Oil Corporation Limited
- Billiton Holdings Pty Ltd - Australia
- PNOC Exploration Corporation - Philippines
- Metalloyd Limited - United Kingdom
- Bahari Cakrawala Sebuku - Indonesia
- Mercator Lines Limited - India
- Goldman Sachs - Singapore
- The State Trading Corporation of India Ltd
- Dalmia Cement Bharat India
- Independent Power Producers Association of India
- Leighton Contractors Pty Ltd - Australia
- Singapore Mercantile Exchange
- CIMB Investment Bank - Malaysia
- Salva Resources Pvt Ltd - India
- Xindia Steels Limited - India
- Videocon Industries ltd - India
- Deloitte Consulting - India
- Oldendorff Carriers - Singapore
- Ministry of Transport, Egypt
- Ind-Barath Power Infra Limited - India
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