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