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