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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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Sunday, 16 April 23
CHINA JUGGLES FOUR MAJOR ECONOMIC CHANGES IN 2023 - WOOD MACKENZIE
Change is afoot in China. Economic growth is slowing, while rising political tensions between China and the US, coupled with global supply chain re ...
Sunday, 16 April 23
CHINA'S MARCH COAL IMPORTS JUMP TO 3-YEAR HIGH - REUTERS
China’s coal imports surged in March to their highest in any month over the past three years as utilities increased purchases on expectations ...
Sunday, 16 April 23
OPEC KEEPS WORLD OIL DEMAND GROWTH OUTLOOK UNCHANGED
The OPEC Reference Basket (ORB) declined in March by $3.43, or 4.2%, m-o-m to average $78.45/b. The ICE Brent first-month contract fell by $4.33, o ...
Sunday, 16 April 23
CHEAPER SPOT LNG PRICES TEMPT SOME ASIAN BUYERS AMID SUPPLY GAINS - REUTERS
Cheaper spot prices for liquefied natural gas (LNG) are luring price-sensitive buyers back in Asia, with China and India recording rising imports i ...
Tuesday, 11 April 23
COAL USE CLIMBS WORLDWIDE DESPITE PROMISES TO SLASH IT - AAP
The burning of coal for electricity, cement, steel and other uses went up in 2022 despite global promises to phase down the fuel that is the bigges ...
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- Wood Mackenzie - Singapore
- Banpu Public Company Limited - Thailand
- Kobexindo Tractors - Indoneisa
- Star Paper Mills Limited - India
- Timah Investasi Mineral - Indoneisa
- Singapore Mercantile Exchange
- Australian Coal Association
- Kalimantan Lumbung Energi - Indonesia
- Electricity Authority, New Zealand
- Merrill Lynch Commodities Europe
- Riau Bara Harum - Indonesia
- Videocon Industries ltd - India
- SMC Global Power, Philippines
- Lanco Infratech Ltd - India
- Parliament of New Zealand
- Sical Logistics Limited - India
- Maheswari Brothers Coal Limited - India
- Tata Chemicals Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Larsen & Toubro Limited - India
- Orica Mining Services - Indonesia
- Indo Tambangraya Megah - Indonesia
- Vizag Seaport Private Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Salva Resources Pvt Ltd - India
- Sree Jayajothi Cements Limited - India
- Chettinad Cement Corporation Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Miang Besar Coal Terminal - Indonesia
- Bukit Makmur.PT - Indonesia
- Thai Mozambique Logistica
- Toyota Tsusho Corporation, Japan
- Pipit Mutiara Jaya. PT, Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Manunggal Multi Energi - Indonesia
- Essar Steel Hazira Ltd - India
- Energy Link Ltd, New Zealand
- AsiaOL BioFuels Corp., Philippines
- OPG Power Generation Pvt Ltd - India
- Planning Commission, India
- LBH Netherlands Bv - Netherlands
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Georgia Ports Authority, United States
- Bharathi Cement Corporation - India
- Uttam Galva Steels Limited - India
- GMR Energy Limited - India
- Coal and Oil Company - UAE
- Chamber of Mines of South Africa
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Gujarat Sidhee Cement - India
- Oldendorff Carriers - Singapore
- Orica Australia Pty. Ltd.
- Standard Chartered Bank - UAE
- Borneo Indobara - Indonesia
- Eastern Coal Council - USA
- India Bulls Power Limited - India
- The State Trading Corporation of India Ltd
- Ministry of Transport, Egypt
- Global Coal Blending Company Limited - Australia
- Siam City Cement - Thailand
- Therma Luzon, Inc, Philippines
- Economic Council, Georgia
- Price Waterhouse Coopers - Russia
- CIMB Investment Bank - Malaysia
- Ind-Barath Power Infra Limited - India
- Kohat Cement Company Ltd. - Pakistan
- VISA Power Limited - India
- Madhucon Powers Ltd - India
- Aditya Birla Group - India
- Altura Mining Limited, Indonesia
- PowerSource Philippines DevCo
- Australian Commodity Traders Exchange
- Jaiprakash Power Ventures ltd
- Kartika Selabumi Mining - Indonesia
- Bhoruka Overseas - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- European Bulk Services B.V. - Netherlands
- Vedanta Resources Plc - India
- IEA Clean Coal Centre - UK
- Eastern Energy - Thailand
- Semirara Mining and Power Corporation, Philippines
- PNOC Exploration Corporation - Philippines
- IHS Mccloskey Coal Group - USA
- Indian Oil Corporation Limited
- Deloitte Consulting - India
- Coalindo Energy - Indonesia
- Mjunction Services Limited - India
- Thiess Contractors Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Bhushan Steel Limited - India
- Africa Commodities Group - South Africa
- Malabar Cements Ltd - India
- Bhatia International Limited - India
- Meralco Power Generation, Philippines
- Meenaskhi Energy Private Limited - India
- International Coal Ventures Pvt Ltd - India
- Sindya Power Generating Company Private Ltd
- White Energy Company Limited
- Marubeni Corporation - India
- Directorate Of Revenue Intelligence - India
- Energy Development Corp, Philippines
- London Commodity Brokers - England
- Kumho Petrochemical, South Korea
- Holcim Trading Pte Ltd - Singapore
- Semirara Mining Corp, Philippines
- Romanian Commodities Exchange
- Grasim Industreis Ltd - India
- Mercator Lines Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Parry Sugars Refinery, India
- Indogreen Group - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- McConnell Dowell - Australia
- Siam City Cement PLC, Thailand
- Binh Thuan Hamico - Vietnam
- The University of Queensland
- Latin American Coal - Colombia
- New Zealand Coal & Carbon
- Ministry of Finance - Indonesia
- GVK Power & Infra Limited - India
- Antam Resourcindo - Indonesia
- Anglo American - United Kingdom
- Central Java Power - Indonesia
- Renaissance Capital - South Africa
- Bukit Baiduri Energy - Indonesia
- Coastal Gujarat Power Limited - India
- CNBM International Corporation - China
- Makarim & Taira - Indonesia
- Formosa Plastics Group - Taiwan
- Kapuas Tunggal Persada - Indonesia
- Straits Asia Resources Limited - Singapore
- Kaltim Prima Coal - Indonesia
- Medco Energi Mining Internasional
- Commonwealth Bank - Australia
- Dalmia Cement Bharat India
- Carbofer General Trading SA - India
- Petrochimia International Co. Ltd.- Taiwan
- Globalindo Alam Lestari - Indonesia
- Tamil Nadu electricity Board
- The Treasury - Australian Government
- PetroVietnam Power Coal Import and Supply Company
- Gujarat Electricity Regulatory Commission - India
- Bukit Asam (Persero) Tbk - Indonesia
- Simpson Spence & Young - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Power Finance Corporation Ltd., India
- Sarangani Energy Corporation, Philippines
- Alfred C Toepfer International GmbH - Germany
- Kideco Jaya Agung - Indonesia
- Rashtriya Ispat Nigam Limited - India
- San Jose City I Power Corp, Philippines
- South Luzon Thermal Energy Corporation
- Goldman Sachs - Singapore
- PTC India Limited - India
- Sojitz Corporation - Japan
- Rio Tinto Coal - Australia
- SMG Consultants - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- ASAPP Information Group - India
- Mercuria Energy - Indonesia
- Indika Energy - Indonesia
- MS Steel International - UAE
- Trasteel International SA, Italy
- Kepco SPC Power Corporation, Philippines
- Electricity Generating Authority of Thailand
- Indian Energy Exchange, India
- Minerals Council of Australia
- Global Business Power Corporation, Philippines
- Metalloyd Limited - United Kingdom
- Sinarmas Energy and Mining - Indonesia
- Xindia Steels Limited - India
- ICICI Bank Limited - India
- Bayan Resources Tbk. - Indonesia
- Barasentosa Lestari - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Petron Corporation, Philippines
- Wilmar Investment Holdings
- Cement Manufacturers Association - India
- Bulk Trading Sa - Switzerland
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Pendopo Energi Batubara - Indonesia
- Port Waratah Coal Services - Australia
- Posco Energy - South Korea
- Indonesian Coal Mining Association
- Attock Cement Pakistan Limited
- Mintek Dendrill Indonesia
- Savvy Resources Ltd - HongKong
- Jindal Steel & Power Ltd - India
- SN Aboitiz Power Inc, Philippines
- Heidelberg Cement - Germany
- Billiton Holdings Pty Ltd - Australia
- Central Electricity Authority - India
- Bangladesh Power Developement Board
- Intertek Mineral Services - Indonesia
- Sakthi Sugars Limited - India
- GAC Shipping (India) Pvt Ltd
- Baramulti Group, Indonesia
- Cigading International Bulk Terminal - Indonesia
- TeaM Sual Corporation - Philippines
- Directorate General of MIneral and Coal - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Ambuja Cements Ltd - India
- Interocean Group of Companies - India
- Edison Trading Spa - Italy
- Independent Power Producers Association of India
- Krishnapatnam Port Company Ltd. - India
- Neyveli Lignite Corporation Ltd, - India
- GN Power Mariveles Coal Plant, Philippines
- Iligan Light & Power Inc, Philippines
- Samtan Co., Ltd - South Korea
- Aboitiz Power Corporation - Philippines
- Global Green Power PLC Corporation, Philippines
- Ministry of Mines - Canada
- Agrawal Coal Company - India
- Karaikal Port Pvt Ltd - India
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