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