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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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Friday, 02 August 24
COAL MARKET DEVELOPMENTS: FALLING PRICES AMID RECORD-HIGH OUTPUT - WORLD BANK
Coal prices inched up in May (m/m) following an 8 percent decline in 2024Q1. The Australian and South African benchmarks have plummeted more ...
Friday, 26 July 24
FUELEU MARITME IS COMING. IS YOUR CHARTERPARTY READY? - GARD
With less than six months to implementation of FuelEU Maritime in EU and EEA trades, there has been little published advice regarding how to alloca ...
Thursday, 04 July 24
INDIA'S COAL PRODUCTION RISES 14% IN JUNE - PTI
The country’s coal production rose by 14.49% to 84.63 million tonne (MT) in June. The country’s coal output was 73.92 MT in June last f ...
Tuesday, 02 July 24
NTPC CAPTIVE COAL OUTPUT GROWS 15% IN Q1; DESPATCH RISES 17%
State-owned NTPC on Monday reported a 15 per cent year-on-year increase in the production of coal from captives mines to 9.862 metric million tonne ...
Friday, 28 June 24
KOSPO INVITED BIDS FOR 400,000 MT OF MINIMUM 4000 NCV COAL FOR FIVE YEARS
Korea Southern Power Co., Ltd. (KOSPO), is inviting bids for total 400,000 MT of Low Calorific Value Coal for 5 years starting from July 2024 until ...
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- Essar Steel Hazira Ltd - India
- Global Green Power PLC Corporation, Philippines
- Bukit Makmur.PT - Indonesia
- Karaikal Port Pvt Ltd - India
- Power Finance Corporation Ltd., India
- Minerals Council of Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- IEA Clean Coal Centre - UK
- International Coal Ventures Pvt Ltd - India
- Attock Cement Pakistan Limited
- Intertek Mineral Services - Indonesia
- Mercuria Energy - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- PowerSource Philippines DevCo
- Renaissance Capital - South Africa
- Gujarat Electricity Regulatory Commission - India
- The Treasury - Australian Government
- Independent Power Producers Association of India
- AsiaOL BioFuels Corp., Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Eastern Coal Council - USA
- Cigading International Bulk Terminal - Indonesia
- Kumho Petrochemical, South Korea
- Indogreen Group - Indonesia
- South Luzon Thermal Energy Corporation
- Kideco Jaya Agung - Indonesia
- Australian Coal Association
- Cement Manufacturers Association - India
- Romanian Commodities Exchange
- Antam Resourcindo - Indonesia
- Orica Mining Services - Indonesia
- Thai Mozambique Logistica
- European Bulk Services B.V. - Netherlands
- Heidelberg Cement - Germany
- Leighton Contractors Pty Ltd - Australia
- India Bulls Power Limited - India
- Anglo American - United Kingdom
- CIMB Investment Bank - Malaysia
- Indo Tambangraya Megah - Indonesia
- SN Aboitiz Power Inc, Philippines
- McConnell Dowell - Australia
- San Jose City I Power Corp, Philippines
- TeaM Sual Corporation - Philippines
- Electricity Authority, New Zealand
- Siam City Cement PLC, Thailand
- MS Steel International - UAE
- Singapore Mercantile Exchange
- Economic Council, Georgia
- The State Trading Corporation of India Ltd
- GMR Energy Limited - India
- Globalindo Alam Lestari - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Sojitz Corporation - Japan
- Holcim Trading Pte Ltd - Singapore
- Rio Tinto Coal - Australia
- Larsen & Toubro Limited - India
- Grasim Industreis Ltd - India
- New Zealand Coal & Carbon
- Coastal Gujarat Power Limited - India
- Africa Commodities Group - South Africa
- Semirara Mining Corp, Philippines
- Bhatia International Limited - India
- Petron Corporation, Philippines
- Aboitiz Power Corporation - Philippines
- Central Electricity Authority - India
- Ministry of Finance - Indonesia
- Mintek Dendrill Indonesia
- Lanco Infratech Ltd - India
- Wood Mackenzie - Singapore
- Standard Chartered Bank - UAE
- Meralco Power Generation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- PetroVietnam Power Coal Import and Supply Company
- SMG Consultants - Indonesia
- Merrill Lynch Commodities Europe
- Bhushan Steel Limited - India
- Toyota Tsusho Corporation, Japan
- ICICI Bank Limited - India
- Altura Mining Limited, Indonesia
- Timah Investasi Mineral - Indoneisa
- Xindia Steels Limited - India
- Price Waterhouse Coopers - Russia
- Indika Energy - Indonesia
- Tamil Nadu electricity Board
- Uttam Galva Steels Limited - India
- Kohat Cement Company Ltd. - Pakistan
- LBH Netherlands Bv - Netherlands
- Jorong Barutama Greston.PT - Indonesia
- Coal and Oil Company - UAE
- Vijayanagar Sugar Pvt Ltd - India
- VISA Power Limited - India
- PNOC Exploration Corporation - Philippines
- OPG Power Generation Pvt Ltd - India
- Medco Energi Mining Internasional
- Miang Besar Coal Terminal - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- White Energy Company Limited
- Bhoruka Overseas - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Energy Link Ltd, New Zealand
- Simpson Spence & Young - Indonesia
- Kartika Selabumi Mining - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Carbofer General Trading SA - India
- Orica Australia Pty. Ltd.
- Coalindo Energy - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Global Coal Blending Company Limited - Australia
- Iligan Light & Power Inc, Philippines
- Energy Development Corp, Philippines
- Sarangani Energy Corporation, Philippines
- Rashtriya Ispat Nigam Limited - India
- London Commodity Brokers - England
- Wilmar Investment Holdings
- Latin American Coal - Colombia
- Parry Sugars Refinery, India
- Karbindo Abesyapradhi - Indoneisa
- SMC Global Power, Philippines
- Oldendorff Carriers - Singapore
- Formosa Plastics Group - Taiwan
- Deloitte Consulting - India
- Goldman Sachs - Singapore
- Kapuas Tunggal Persada - Indonesia
- Electricity Generating Authority of Thailand
- Chamber of Mines of South Africa
- Borneo Indobara - Indonesia
- GVK Power & Infra Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bahari Cakrawala Sebuku - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Directorate Of Revenue Intelligence - India
- Makarim & Taira - Indonesia
- The University of Queensland
- Pendopo Energi Batubara - Indonesia
- Central Java Power - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Thiess Contractors Indonesia
- Eastern Energy - Thailand
- Parliament of New Zealand
- Therma Luzon, Inc, Philippines
- Semirara Mining and Power Corporation, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Bangladesh Power Developement Board
- Dalmia Cement Bharat India
- Ind-Barath Power Infra Limited - India
- Bharathi Cement Corporation - India
- PTC India Limited - India
- Mercator Lines Limited - India
- Planning Commission, India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Riau Bara Harum - Indonesia
- Interocean Group of Companies - India
- IHS Mccloskey Coal Group - USA
- GAC Shipping (India) Pvt Ltd
- Krishnapatnam Port Company Ltd. - India
- Ambuja Cements Ltd - India
- Port Waratah Coal Services - Australia
- Jindal Steel & Power Ltd - India
- Tata Chemicals Ltd - India
- Salva Resources Pvt Ltd - India
- Posco Energy - South Korea
- Ceylon Electricity Board - Sri Lanka
- Vizag Seaport Private Limited - India
- CNBM International Corporation - China
- Videocon Industries ltd - India
- Maheswari Brothers Coal Limited - India
- Kobexindo Tractors - Indoneisa
- Gujarat Mineral Development Corp Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Billiton Holdings Pty Ltd - Australia
- Vedanta Resources Plc - India
- Chettinad Cement Corporation Ltd - India
- Malabar Cements Ltd - India
- Indian Oil Corporation Limited
- Star Paper Mills Limited - India
- Siam City Cement - Thailand
- Maharashtra Electricity Regulatory Commission - India
- Aditya Birla Group - India
- Edison Trading Spa - Italy
- Sakthi Sugars Limited - India
- Bulk Trading Sa - Switzerland
- Commonwealth Bank - Australia
- Ministry of Transport, Egypt
- Indonesian Coal Mining Association
- TNB Fuel Sdn Bhd - Malaysia
- Sree Jayajothi Cements Limited - India
- Georgia Ports Authority, United States
- Kaltim Prima Coal - Indonesia
- Savvy Resources Ltd - HongKong
- Madhucon Powers Ltd - India
- ASAPP Information Group - India
- Ministry of Mines - Canada
- Bayan Resources Tbk. - Indonesia
- Marubeni Corporation - India
- Global Business Power Corporation, Philippines
- Manunggal Multi Energi - Indonesia
- Indian Energy Exchange, India
- Jaiprakash Power Ventures ltd
- Agrawal Coal Company - India
- Banpu Public Company Limited - Thailand
- Bukit Baiduri Energy - Indonesia
- Kepco SPC Power Corporation, Philippines
- Samtan Co., Ltd - South Korea
- Barasentosa Lestari - Indonesia
- Metalloyd Limited - United Kingdom
- Neyveli Lignite Corporation Ltd, - India
- Australian Commodity Traders Exchange
- Trasteel International SA, Italy
- Alfred C Toepfer International GmbH - Germany
- Gujarat Sidhee Cement - India
- Mjunction Services Limited - India
- Straits Asia Resources Limited - Singapore
- Binh Thuan Hamico - Vietnam
- Sical Logistics Limited - India
- Meenaskhi Energy Private Limited - India
- Sindya Power Generating Company Private Ltd
- Baramulti Group, Indonesia
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