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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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Saturday, 01 February 20
THERMAL COAL MARKETS: 5 TRENDS TO WATCH OUT FOR IN 2020 - MINING REVIEW
The seaborne thermal coal market entered the year challenged by low priced LNG in the Atlantic and rapidly increasing supply in the Pacific.
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Saturday, 01 February 20
COAL IS NOT GOING ANYWHERE - MINING REVIEW
The coal sector is living under the constant threat of being blamed by environmentalists as being responsible for a world disaster called global wa ...
Saturday, 01 February 20
CIL PRODUCTION TO NOT EXCEED 640 MILLION TON IN FY20: OFFICIAL - PTI
Hit by disruptions due to a prolonged monsoon, mining major Coal India Ltd’s production in the current fiscal will not exceed 640 million ton ...
Saturday, 01 February 20
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The United Nations’ International Maritime Organization (IMO) implemented its low-sulfur fuel mandate on January 1, 2020. Full enforcement be ...
Friday, 31 January 20
EIA EXPECTS U.S. ELECTRICITY GENERATION FROM RENEWABLES TO SOON SURPASS NUCLEAR AND COAL
In the latest long-term projections, the U.S Energy Information Administration (EIA) projects electricity generation from renewable sources such as ...
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- Trasteel International SA, Italy
- Asmin Koalindo Tuhup - Indonesia
- Agrawal Coal Company - India
- TeaM Sual Corporation - Philippines
- Leighton Contractors Pty Ltd - Australia
- New Zealand Coal & Carbon
- GAC Shipping (India) Pvt Ltd
- CIMB Investment Bank - Malaysia
- Madhucon Powers Ltd - India
- Carbofer General Trading SA - India
- Minerals Council of Australia
- Ambuja Cements Ltd - India
- The University of Queensland
- Posco Energy - South Korea
- Jaiprakash Power Ventures ltd
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Anglo American - United Kingdom
- Altura Mining Limited, Indonesia
- Economic Council, Georgia
- SMC Global Power, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- PetroVietnam Power Coal Import and Supply Company
- IEA Clean Coal Centre - UK
- Holcim Trading Pte Ltd - Singapore
- VISA Power Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bayan Resources Tbk. - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Wilmar Investment Holdings
- Ministry of Finance - Indonesia
- SMG Consultants - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Borneo Indobara - Indonesia
- Sarangani Energy Corporation, Philippines
- Meralco Power Generation, Philippines
- GVK Power & Infra Limited - India
- Jindal Steel & Power Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Mintek Dendrill Indonesia
- Bhoruka Overseas - Indonesia
- Ind-Barath Power Infra Limited - India
- Heidelberg Cement - Germany
- Formosa Plastics Group - Taiwan
- Interocean Group of Companies - India
- Orica Australia Pty. Ltd.
- Mercator Lines Limited - India
- LBH Netherlands Bv - Netherlands
- Mercuria Energy - Indonesia
- Ceylon Electricity Board - Sri Lanka
- CNBM International Corporation - China
- Bukit Asam (Persero) Tbk - Indonesia
- OPG Power Generation Pvt Ltd - India
- Essar Steel Hazira Ltd - India
- McConnell Dowell - Australia
- Kapuas Tunggal Persada - Indonesia
- Indo Tambangraya Megah - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Goldman Sachs - Singapore
- Aditya Birla Group - India
- Riau Bara Harum - Indonesia
- Wood Mackenzie - Singapore
- Antam Resourcindo - Indonesia
- Parliament of New Zealand
- Deloitte Consulting - India
- International Coal Ventures Pvt Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Bhatia International Limited - India
- Electricity Generating Authority of Thailand
- Georgia Ports Authority, United States
- Thai Mozambique Logistica
- Australian Coal Association
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Videocon Industries ltd - India
- PowerSource Philippines DevCo
- TNB Fuel Sdn Bhd - Malaysia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Lanco Infratech Ltd - India
- Savvy Resources Ltd - HongKong
- The State Trading Corporation of India Ltd
- Africa Commodities Group - South Africa
- Gujarat Mineral Development Corp Ltd - India
- Indian Energy Exchange, India
- Maharashtra Electricity Regulatory Commission - India
- Iligan Light & Power Inc, Philippines
- Baramulti Group, Indonesia
- Marubeni Corporation - India
- Indian Oil Corporation Limited
- Indonesian Coal Mining Association
- Bukit Makmur.PT - Indonesia
- Commonwealth Bank - Australia
- PTC India Limited - India
- Energy Development Corp, Philippines
- The Treasury - Australian Government
- Latin American Coal - Colombia
- Price Waterhouse Coopers - Russia
- Grasim Industreis Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Gujarat Electricity Regulatory Commission - India
- Australian Commodity Traders Exchange
- Bahari Cakrawala Sebuku - Indonesia
- IHS Mccloskey Coal Group - USA
- Alfred C Toepfer International GmbH - Germany
- Global Business Power Corporation, Philippines
- Ministry of Mines - Canada
- Sakthi Sugars Limited - India
- Merrill Lynch Commodities Europe
- PNOC Exploration Corporation - Philippines
- Therma Luzon, Inc, Philippines
- Parry Sugars Refinery, India
- Karbindo Abesyapradhi - Indoneisa
- Metalloyd Limited - United Kingdom
- Cement Manufacturers Association - India
- Semirara Mining Corp, Philippines
- Vedanta Resources Plc - India
- Renaissance Capital - South Africa
- Kideco Jaya Agung - Indonesia
- Chettinad Cement Corporation Ltd - India
- Central Java Power - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Gujarat Sidhee Cement - India
- India Bulls Power Limited - India
- Petron Corporation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Eastern Energy - Thailand
- Semirara Mining and Power Corporation, Philippines
- Electricity Authority, New Zealand
- Port Waratah Coal Services - Australia
- Independent Power Producers Association of India
- Thiess Contractors Indonesia
- Toyota Tsusho Corporation, Japan
- Orica Mining Services - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Romanian Commodities Exchange
- Bulk Trading Sa - Switzerland
- Simpson Spence & Young - Indonesia
- Kepco SPC Power Corporation, Philippines
- London Commodity Brokers - England
- Oldendorff Carriers - Singapore
- Xindia Steels Limited - India
- Intertek Mineral Services - Indonesia
- Vizag Seaport Private Limited - India
- Kobexindo Tractors - Indoneisa
- Larsen & Toubro Limited - India
- Binh Thuan Hamico - Vietnam
- Bukit Baiduri Energy - Indonesia
- Eastern Coal Council - USA
- Chamber of Mines of South Africa
- Vijayanagar Sugar Pvt Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- MS Steel International - UAE
- Indogreen Group - Indonesia
- Uttam Galva Steels Limited - India
- Kumho Petrochemical, South Korea
- Siam City Cement - Thailand
- Billiton Holdings Pty Ltd - Australia
- Directorate Of Revenue Intelligence - India
- Rio Tinto Coal - Australia
- Samtan Co., Ltd - South Korea
- Edison Trading Spa - Italy
- Kaltim Prima Coal - Indonesia
- Meenaskhi Energy Private Limited - India
- Salva Resources Pvt Ltd - India
- Bharathi Cement Corporation - India
- Kohat Cement Company Ltd. - Pakistan
- Mjunction Services Limited - India
- Pendopo Energi Batubara - Indonesia
- Central Electricity Authority - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- South Luzon Thermal Energy Corporation
- Siam City Cement PLC, Thailand
- European Bulk Services B.V. - Netherlands
- Sree Jayajothi Cements Limited - India
- Kartika Selabumi Mining - Indonesia
- Timah Investasi Mineral - Indoneisa
- Karaikal Port Pvt Ltd - India
- Coalindo Energy - Indonesia
- Dalmia Cement Bharat India
- Coastal Gujarat Power Limited - India
- Banpu Public Company Limited - Thailand
- Kalimantan Lumbung Energi - Indonesia
- Straits Asia Resources Limited - Singapore
- Sojitz Corporation - Japan
- White Energy Company Limited
- ASAPP Information Group - India
- Indika Energy - Indonesia
- Power Finance Corporation Ltd., India
- Malabar Cements Ltd - India
- Attock Cement Pakistan Limited
- GMR Energy Limited - India
- Standard Chartered Bank - UAE
- Manunggal Multi Energi - Indonesia
- Medco Energi Mining Internasional
- Energy Link Ltd, New Zealand
- Star Paper Mills Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Singapore Mercantile Exchange
- Ministry of Transport, Egypt
- Sindya Power Generating Company Private Ltd
- Bangladesh Power Developement Board
- Barasentosa Lestari - Indonesia
- Bhushan Steel Limited - India
- Planning Commission, India
- Aboitiz Power Corporation - Philippines
- ICICI Bank Limited - India
- Sical Logistics Limited - India
- Tamil Nadu electricity Board
- Makarim & Taira - Indonesia
- Tata Chemicals Ltd - India
- San Jose City I Power Corp, Philippines
- Globalindo Alam Lestari - Indonesia
- Global Coal Blending Company Limited - Australia
- Maheswari Brothers Coal Limited - India
- Global Green Power PLC Corporation, Philippines
- SN Aboitiz Power Inc, Philippines
- Coal and Oil Company - UAE
- Rashtriya Ispat Nigam Limited - India
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