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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, 06 March 20
COLOMBIAN COAL OUTPUT FELL 2% IN 2019 - REUTERS
Coal production in Colombia, the fifth-largest coal exporter in the world, fell 2% to 82.2 million tonnes in 2019 after output at one of the princi ...
Friday, 06 March 20
SOLID BACKING FOR LNG AS A MARINE FUEL - BALTIC EXCHANGE
When it comes to choosing the best fuel on the near horizon to help the international shipping industry shrink its carbon intensity by 2050, DNV GL ...
Friday, 06 March 20
INDONESIA COAL PRICE REFERENCE UP AGAIN THIS MONTH
COALspot.com: The Ministry of Energy and Mineral Resources of the Republic of Indonesia has revised up the benchmark price of Indonesian thermal co ...
Thursday, 05 March 20
PANAMAX: SHIP-OWNERS HAVE MOSTLY BEEN GETTING HIGHER RATES THAN THE LAST DONE - FEARNLEYS
Cape
There is still limited amount of positive news around, with the effects of Corona virus hurting world economy. However, overall average in ...
Thursday, 05 March 20
COAL IMPORTS DOWN IN MAJOR ASIAN MARKETS, AND CORONAVIRUS NOT THE DRIVING FORCE - CLYDE RUSSELL
Asia’s seaborne coal markets stumbled in February and it appears the coronavirus outbreak in China may dodge most of the blame, with the weak ...
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- Salva Resources Pvt Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Gujarat Sidhee Cement - India
- ICICI Bank Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Agrawal Coal Company - India
- Manunggal Multi Energi - Indonesia
- Bharathi Cement Corporation - India
- Central Java Power - Indonesia
- Ministry of Transport, Egypt
- Offshore Bulk Terminal Pte Ltd, Singapore
- Indian Oil Corporation Limited
- Ambuja Cements Ltd - India
- Holcim Trading Pte Ltd - Singapore
- GN Power Mariveles Coal Plant, Philippines
- Krishnapatnam Port Company Ltd. - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Kapuas Tunggal Persada - Indonesia
- Port Waratah Coal Services - Australia
- Australian Commodity Traders Exchange
- Bhushan Steel Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Sojitz Corporation - Japan
- Essar Steel Hazira Ltd - India
- Tata Chemicals Ltd - India
- GMR Energy Limited - India
- Edison Trading Spa - Italy
- GAC Shipping (India) Pvt Ltd
- Latin American Coal - Colombia
- Australian Coal Association
- Interocean Group of Companies - India
- Parliament of New Zealand
- Pipit Mutiara Jaya. PT, Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Tamil Nadu electricity Board
- Mercator Lines Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Central Electricity Authority - India
- Energy Link Ltd, New Zealand
- McConnell Dowell - Australia
- San Jose City I Power Corp, Philippines
- Heidelberg Cement - Germany
- Karbindo Abesyapradhi - Indoneisa
- Uttam Galva Steels Limited - India
- Gujarat Electricity Regulatory Commission - India
- Riau Bara Harum - Indonesia
- India Bulls Power Limited - India
- Kobexindo Tractors - Indoneisa
- Mintek Dendrill Indonesia
- Simpson Spence & Young - Indonesia
- Wood Mackenzie - Singapore
- CNBM International Corporation - China
- Electricity Authority, New Zealand
- Ministry of Mines - Canada
- Coastal Gujarat Power Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Wilmar Investment Holdings
- Jaiprakash Power Ventures ltd
- Rio Tinto Coal - Australia
- CIMB Investment Bank - Malaysia
- Attock Cement Pakistan Limited
- South Luzon Thermal Energy Corporation
- Orica Mining Services - Indonesia
- Timah Investasi Mineral - Indoneisa
- Sree Jayajothi Cements Limited - India
- Bulk Trading Sa - Switzerland
- PTC India Limited - India
- Dalmia Cement Bharat India
- Global Green Power PLC Corporation, Philippines
- Sarangani Energy Corporation, Philippines
- VISA Power Limited - India
- Bhoruka Overseas - Indonesia
- Merrill Lynch Commodities Europe
- Miang Besar Coal Terminal - Indonesia
- Cement Manufacturers Association - India
- Binh Thuan Hamico - Vietnam
- Medco Energi Mining Internasional
- Kepco SPC Power Corporation, Philippines
- Semirara Mining Corp, Philippines
- Indian Energy Exchange, India
- Formosa Plastics Group - Taiwan
- Alfred C Toepfer International GmbH - Germany
- Indonesian Coal Mining Association
- Kartika Selabumi Mining - Indonesia
- Ministry of Finance - Indonesia
- Malabar Cements Ltd - India
- Banpu Public Company Limited - Thailand
- The University of Queensland
- Grasim Industreis Ltd - India
- Orica Australia Pty. Ltd.
- Thai Mozambique Logistica
- Jindal Steel & Power Ltd - India
- The State Trading Corporation of India Ltd
- Deloitte Consulting - India
- Kideco Jaya Agung - Indonesia
- Globalindo Alam Lestari - Indonesia
- Intertek Mineral Services - Indonesia
- Mjunction Services Limited - India
- Meenaskhi Energy Private Limited - India
- Minerals Council of Australia
- Bhatia International Limited - India
- Maheswari Brothers Coal Limited - India
- Carbofer General Trading SA - India
- TeaM Sual Corporation - Philippines
- Chettinad Cement Corporation Ltd - India
- Kaltim Prima Coal - Indonesia
- LBH Netherlands Bv - Netherlands
- London Commodity Brokers - England
- Antam Resourcindo - Indonesia
- Meralco Power Generation, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Borneo Indobara - Indonesia
- Videocon Industries ltd - India
- OPG Power Generation Pvt Ltd - India
- Therma Luzon, Inc, Philippines
- Baramulti Group, Indonesia
- The Treasury - Australian Government
- Larsen & Toubro Limited - India
- Ceylon Electricity Board - Sri Lanka
- Renaissance Capital - South Africa
- Toyota Tsusho Corporation, Japan
- Sinarmas Energy and Mining - Indonesia
- Romanian Commodities Exchange
- Aboitiz Power Corporation - Philippines
- Standard Chartered Bank - UAE
- SMC Global Power, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Indogreen Group - Indonesia
- Madhucon Powers Ltd - India
- Ind-Barath Power Infra Limited - India
- White Energy Company Limited
- Neyveli Lignite Corporation Ltd, - India
- MS Steel International - UAE
- Planning Commission, India
- Power Finance Corporation Ltd., India
- Africa Commodities Group - South Africa
- Sakthi Sugars Limited - India
- Trasteel International SA, Italy
- Sindya Power Generating Company Private Ltd
- GVK Power & Infra Limited - India
- IHS Mccloskey Coal Group - USA
- Bayan Resources Tbk. - Indonesia
- Price Waterhouse Coopers - Russia
- Thiess Contractors Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Straits Asia Resources Limited - Singapore
- Sical Logistics Limited - India
- International Coal Ventures Pvt Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Bangladesh Power Developement Board
- Petrochimia International Co. Ltd.- Taiwan
- Electricity Generating Authority of Thailand
- Anglo American - United Kingdom
- Mercuria Energy - Indonesia
- Savvy Resources Ltd - HongKong
- Makarim & Taira - Indonesia
- Parry Sugars Refinery, India
- Marubeni Corporation - India
- Barasentosa Lestari - Indonesia
- IEA Clean Coal Centre - UK
- Eastern Coal Council - USA
- Kumho Petrochemical, South Korea
- Directorate General of MIneral and Coal - Indonesia
- Siam City Cement - Thailand
- Altura Mining Limited, Indonesia
- Global Coal Blending Company Limited - Australia
- Vizag Seaport Private Limited - India
- Aditya Birla Group - India
- Goldman Sachs - Singapore
- Singapore Mercantile Exchange
- Leighton Contractors Pty Ltd - Australia
- Coalindo Energy - Indonesia
- Independent Power Producers Association of India
- Indika Energy - Indonesia
- Oldendorff Carriers - Singapore
- Vedanta Resources Plc - India
- Iligan Light & Power Inc, Philippines
- Metalloyd Limited - United Kingdom
- PowerSource Philippines DevCo
- Lanco Infratech Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- European Bulk Services B.V. - Netherlands
- Indo Tambangraya Megah - Indonesia
- Karaikal Port Pvt Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Bukit Makmur.PT - Indonesia
- Eastern Energy - Thailand
- Xindia Steels Limited - India
- Commonwealth Bank - Australia
- Directorate Of Revenue Intelligence - India
- Siam City Cement PLC, Thailand
- PetroVietnam Power Coal Import and Supply Company
- PNOC Exploration Corporation - Philippines
- Georgia Ports Authority, United States
- Star Paper Mills Limited - India
- Posco Energy - South Korea
- Pendopo Energi Batubara - Indonesia
- Chamber of Mines of South Africa
- Asia Pacific Energy Resources Ventures Inc, Philippines
- SN Aboitiz Power Inc, Philippines
- Cigading International Bulk Terminal - Indonesia
- SMG Consultants - Indonesia
- Energy Development Corp, Philippines
- Samtan Co., Ltd - South Korea
- ASAPP Information Group - India
- Coal and Oil Company - UAE
- Bukit Baiduri Energy - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Economic Council, Georgia
- Semirara Mining and Power Corporation, Philippines
- Petron Corporation, Philippines
- New Zealand Coal & Carbon
- Global Business Power Corporation, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Dong Bac Coal Mineral Investment Coporation - Vietnam
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