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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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Saturday, 09 May 20
ANGLO AMERICAN CONSIDERS SPINNING OFF SOUTH AFRICAN COAL OPERATIONS - REUTERS
Diversified miner Anglo American said on Thursday it prefers unbundling and listing its thermal coal operations in South Africa on the Johannesburg ...
Friday, 08 May 20
THE COLLAPSE OF THE OIL AND BUNKER FUEL MARKETS IN EARLY 2020 - PETER SAND
The sulphur regulation from the International Maritime Organization (IMO) that came into force on 1 January 2020 took the centre stage in the shipp ...
Friday, 08 May 20
LNG DEMAND FACED SEVERAL HEADWINDS IN THE FIRST QUARTER OF 2020 - GASLOG
LNG demand faced several headwinds in the first quarter of 2020 including a warmer than average winter in the northern hemisphere, high inventory l ...
Thursday, 07 May 20
IEEFA UPDATE: THE OUTLOOK FOR THERMAL COAL IN SOUTHEAST ASIA AND SOUTH ASIA
Seven headwinds are building to sustained growth in coal in Asia
The medium term outlook for thermal coal in Southeast Asia is posit ...
Thursday, 07 May 20
IMO 2020: BUNKER CLAIMS HANDLING GUIDE FOR A NEW DECADE - THE STANDARD CLUB
KNOWLEDGE TO ELEVATE
IMO 2020 is the term generally used to describe the following regulations under Annex VI of the International Convention ...
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- Tamil Nadu electricity Board
- Karaikal Port Pvt Ltd - India
- Barasentosa Lestari - Indonesia
- Central Java Power - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Planning Commission, India
- Kartika Selabumi Mining - Indonesia
- Petron Corporation, Philippines
- Anglo American - United Kingdom
- Mercuria Energy - Indonesia
- Thiess Contractors Indonesia
- Miang Besar Coal Terminal - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Antam Resourcindo - Indonesia
- McConnell Dowell - Australia
- Mjunction Services Limited - India
- Kepco SPC Power Corporation, Philippines
- Bulk Trading Sa - Switzerland
- Dalmia Cement Bharat India
- New Zealand Coal & Carbon
- Rashtriya Ispat Nigam Limited - India
- Gujarat Mineral Development Corp Ltd - India
- The State Trading Corporation of India Ltd
- Tata Chemicals Ltd - India
- The University of Queensland
- Ministry of Mines - Canada
- Riau Bara Harum - Indonesia
- Malabar Cements Ltd - India
- Indian Oil Corporation Limited
- Krishnapatnam Port Company Ltd. - India
- Price Waterhouse Coopers - Russia
- Orica Mining Services - Indonesia
- White Energy Company Limited
- South Luzon Thermal Energy Corporation
- Gujarat Electricity Regulatory Commission - India
- TeaM Sual Corporation - Philippines
- CNBM International Corporation - China
- Energy Development Corp, Philippines
- Siam City Cement - Thailand
- Sojitz Corporation - Japan
- Attock Cement Pakistan Limited
- SMC Global Power, Philippines
- Maheswari Brothers Coal Limited - India
- CIMB Investment Bank - Malaysia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Straits Asia Resources Limited - Singapore
- Karbindo Abesyapradhi - Indoneisa
- Wilmar Investment Holdings
- Kideco Jaya Agung - Indonesia
- PNOC Exploration Corporation - Philippines
- LBH Netherlands Bv - Netherlands
- Vijayanagar Sugar Pvt Ltd - India
- Bukit Makmur.PT - Indonesia
- ICICI Bank Limited - India
- Edison Trading Spa - Italy
- Meralco Power Generation, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Samtan Co., Ltd - South Korea
- Toyota Tsusho Corporation, Japan
- Videocon Industries ltd - India
- Agrawal Coal Company - India
- Bukit Baiduri Energy - Indonesia
- Energy Link Ltd, New Zealand
- Latin American Coal - Colombia
- Goldman Sachs - Singapore
- Posco Energy - South Korea
- Australian Coal Association
- Intertek Mineral Services - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Oldendorff Carriers - Singapore
- Wood Mackenzie - Singapore
- Meenaskhi Energy Private Limited - India
- IEA Clean Coal Centre - UK
- Therma Luzon, Inc, Philippines
- Larsen & Toubro Limited - India
- Alfred C Toepfer International GmbH - Germany
- Global Coal Blending Company Limited - Australia
- International Coal Ventures Pvt Ltd - India
- GVK Power & Infra Limited - India
- Electricity Generating Authority of Thailand
- GMR Energy Limited - India
- Ceylon Electricity Board - Sri Lanka
- European Bulk Services B.V. - Netherlands
- Sarangani Energy Corporation, Philippines
- Bhushan Steel Limited - India
- Chamber of Mines of South Africa
- Vizag Seaport Private Limited - India
- Power Finance Corporation Ltd., India
- Georgia Ports Authority, United States
- Commonwealth Bank - Australia
- India Bulls Power Limited - India
- Standard Chartered Bank - UAE
- PTC India Limited - India
- Uttam Galva Steels Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Mercator Lines Limited - India
- Binh Thuan Hamico - Vietnam
- Eastern Coal Council - USA
- Coalindo Energy - Indonesia
- Formosa Plastics Group - Taiwan
- OPG Power Generation Pvt Ltd - India
- Essar Steel Hazira Ltd - India
- Semirara Mining Corp, Philippines
- Africa Commodities Group - South Africa
- Jaiprakash Power Ventures ltd
- Vedanta Resources Plc - India
- Baramulti Group, Indonesia
- Bangladesh Power Developement Board
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Orica Australia Pty. Ltd.
- IHS Mccloskey Coal Group - USA
- Ministry of Transport, Egypt
- Aboitiz Power Corporation - Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Parliament of New Zealand
- Carbofer General Trading SA - India
- Heidelberg Cement - Germany
- Cement Manufacturers Association - India
- Thai Mozambique Logistica
- Billiton Holdings Pty Ltd - Australia
- Trasteel International SA, Italy
- Kobexindo Tractors - Indoneisa
- Savvy Resources Ltd - HongKong
- Grasim Industreis Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Neyveli Lignite Corporation Ltd, - India
- Directorate Of Revenue Intelligence - India
- San Jose City I Power Corp, Philippines
- ASAPP Information Group - India
- Global Business Power Corporation, Philippines
- Pendopo Energi Batubara - Indonesia
- Borneo Indobara - Indonesia
- London Commodity Brokers - England
- Altura Mining Limited, Indonesia
- Independent Power Producers Association of India
- Indo Tambangraya Megah - Indonesia
- Sindya Power Generating Company Private Ltd
- AsiaOL BioFuels Corp., Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- MS Steel International - UAE
- Salva Resources Pvt Ltd - India
- Simpson Spence & Young - Indonesia
- Marubeni Corporation - India
- Asmin Koalindo Tuhup - Indonesia
- Kumho Petrochemical, South Korea
- Mintek Dendrill Indonesia
- Bharathi Cement Corporation - India
- Star Paper Mills Limited - India
- Minerals Council of Australia
- Ministry of Finance - Indonesia
- Global Green Power PLC Corporation, Philippines
- Gujarat Sidhee Cement - India
- Banpu Public Company Limited - Thailand
- Coastal Gujarat Power Limited - India
- The Treasury - Australian Government
- Eastern Energy - Thailand
- Xindia Steels Limited - India
- Chettinad Cement Corporation Ltd - India
- Sree Jayajothi Cements Limited - India
- Port Waratah Coal Services - Australia
- Interocean Group of Companies - India
- Medco Energi Mining Internasional
- Aditya Birla Group - India
- Romanian Commodities Exchange
- Indogreen Group - Indonesia
- Jindal Steel & Power Ltd - India
- Metalloyd Limited - United Kingdom
- GN Power Mariveles Coal Plant, Philippines
- Central Electricity Authority - India
- Economic Council, Georgia
- Sakthi Sugars Limited - India
- Madhucon Powers Ltd - India
- Bhatia International Limited - India
- Ind-Barath Power Infra Limited - India
- Indika Energy - Indonesia
- Merrill Lynch Commodities Europe
- Kohat Cement Company Ltd. - Pakistan
- Sinarmas Energy and Mining - Indonesia
- SMG Consultants - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Sical Logistics Limited - India
- Bayan Resources Tbk. - Indonesia
- SN Aboitiz Power Inc, Philippines
- VISA Power Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Lanco Infratech Ltd - India
- Siam City Cement PLC, Thailand
- Rio Tinto Coal - Australia
- Coal and Oil Company - UAE
- Bahari Cakrawala Sebuku - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Kaltim Prima Coal - Indonesia
- Australian Commodity Traders Exchange
- Singapore Mercantile Exchange
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Ambuja Cements Ltd - India
- GAC Shipping (India) Pvt Ltd
- Deloitte Consulting - India
- Parry Sugars Refinery, India
- Indian Energy Exchange, India
- Globalindo Alam Lestari - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Iligan Light & Power Inc, Philippines
- Kapuas Tunggal Persada - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Renaissance Capital - South Africa
- Timah Investasi Mineral - Indoneisa
- Makarim & Taira - Indonesia
- PowerSource Philippines DevCo
- Manunggal Multi Energi - Indonesia
- Bhoruka Overseas - Indonesia
- Electricity Authority, New Zealand
- Maharashtra Electricity Regulatory Commission - India
- Indonesian Coal Mining Association
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