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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
WHO PAYS FOR IMO 2020? - FREIGHT WAVES
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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- Chettinad Cement Corporation Ltd - India
- Heidelberg Cement - Germany
- GMR Energy Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Siam City Cement - Thailand
- Meenaskhi Energy Private Limited - India
- Essar Steel Hazira Ltd - India
- PNOC Exploration Corporation - Philippines
- Commonwealth Bank - Australia
- India Bulls Power Limited - India
- Kartika Selabumi Mining - Indonesia
- The Treasury - Australian Government
- South Luzon Thermal Energy Corporation
- LBH Netherlands Bv - Netherlands
- Romanian Commodities Exchange
- MS Steel International - UAE
- Georgia Ports Authority, United States
- GAC Shipping (India) Pvt Ltd
- Chamber of Mines of South Africa
- Sojitz Corporation - Japan
- Carbofer General Trading SA - India
- Sakthi Sugars Limited - India
- International Coal Ventures Pvt Ltd - India
- Samtan Co., Ltd - South Korea
- Kepco SPC Power Corporation, Philippines
- Riau Bara Harum - Indonesia
- Jaiprakash Power Ventures ltd
- Maharashtra Electricity Regulatory Commission - India
- IHS Mccloskey Coal Group - USA
- Metalloyd Limited - United Kingdom
- Merrill Lynch Commodities Europe
- AsiaOL BioFuels Corp., Philippines
- Salva Resources Pvt Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Dalmia Cement Bharat India
- Bukit Asam (Persero) Tbk - Indonesia
- Ministry of Finance - Indonesia
- ICICI Bank Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Mjunction Services Limited - India
- Larsen & Toubro Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Bhatia International Limited - India
- Sarangani Energy Corporation, Philippines
- Parry Sugars Refinery, India
- Siam City Cement PLC, Thailand
- Xindia Steels Limited - India
- Orica Australia Pty. Ltd.
- SN Aboitiz Power Inc, Philippines
- Kapuas Tunggal Persada - Indonesia
- Parliament of New Zealand
- Central Electricity Authority - India
- Binh Thuan Hamico - Vietnam
- Energy Link Ltd, New Zealand
- Malabar Cements Ltd - India
- Manunggal Multi Energi - Indonesia
- Star Paper Mills Limited - India
- Vedanta Resources Plc - India
- Videocon Industries ltd - India
- Krishnapatnam Port Company Ltd. - India
- Electricity Authority, New Zealand
- Simpson Spence & Young - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Gujarat Electricity Regulatory Commission - India
- Bayan Resources Tbk. - Indonesia
- Barasentosa Lestari - Indonesia
- San Jose City I Power Corp, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- IEA Clean Coal Centre - UK
- Latin American Coal - Colombia
- Indonesian Coal Mining Association
- Globalindo Alam Lestari - Indonesia
- Savvy Resources Ltd - HongKong
- Oldendorff Carriers - Singapore
- Electricity Generating Authority of Thailand
- Cigading International Bulk Terminal - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kideco Jaya Agung - Indonesia
- Bukit Makmur.PT - Indonesia
- European Bulk Services B.V. - Netherlands
- Indika Energy - Indonesia
- Africa Commodities Group - South Africa
- Kobexindo Tractors - Indoneisa
- Goldman Sachs - Singapore
- Central Java Power - Indonesia
- Ministry of Mines - Canada
- Maheswari Brothers Coal Limited - India
- Ceylon Electricity Board - Sri Lanka
- Mercuria Energy - Indonesia
- Iligan Light & Power Inc, Philippines
- Banpu Public Company Limited - Thailand
- CNBM International Corporation - China
- Agrawal Coal Company - India
- Billiton Holdings Pty Ltd - Australia
- Marubeni Corporation - India
- Global Green Power PLC Corporation, Philippines
- Thai Mozambique Logistica
- TeaM Sual Corporation - Philippines
- Eastern Coal Council - USA
- Toyota Tsusho Corporation, Japan
- Pipit Mutiara Jaya. PT, Indonesia
- Alfred C Toepfer International GmbH - Germany
- Sical Logistics Limited - India
- Power Finance Corporation Ltd., India
- Australian Coal Association
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Semirara Mining and Power Corporation, Philippines
- Miang Besar Coal Terminal - Indonesia
- Global Business Power Corporation, Philippines
- Singapore Mercantile Exchange
- Australian Commodity Traders Exchange
- Standard Chartered Bank - UAE
- The University of Queensland
- TNB Fuel Sdn Bhd - Malaysia
- Tata Chemicals Ltd - India
- Sree Jayajothi Cements Limited - India
- Altura Mining Limited, Indonesia
- Trasteel International SA, Italy
- Sindya Power Generating Company Private Ltd
- Minerals Council of Australia
- VISA Power Limited - India
- Coal and Oil Company - UAE
- Price Waterhouse Coopers - Russia
- Deloitte Consulting - India
- Medco Energi Mining Internasional
- Bahari Cakrawala Sebuku - Indonesia
- Formosa Plastics Group - Taiwan
- Lanco Infratech Ltd - India
- SMC Global Power, Philippines
- McConnell Dowell - Australia
- Ministry of Transport, Egypt
- Mercator Lines Limited - India
- Economic Council, Georgia
- The State Trading Corporation of India Ltd
- Rio Tinto Coal - Australia
- Independent Power Producers Association of India
- Semirara Mining Corp, Philippines
- Intertek Mineral Services - Indonesia
- Bukit Baiduri Energy - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Indo Tambangraya Megah - Indonesia
- Bhoruka Overseas - Indonesia
- PTC India Limited - India
- Grasim Industreis Ltd - India
- Petron Corporation, Philippines
- London Commodity Brokers - England
- Borneo Indobara - Indonesia
- Makarim & Taira - Indonesia
- Uttam Galva Steels Limited - India
- Global Coal Blending Company Limited - Australia
- Therma Luzon, Inc, Philippines
- CIMB Investment Bank - Malaysia
- Planning Commission, India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Wilmar Investment Holdings
- Port Waratah Coal Services - Australia
- Wood Mackenzie - Singapore
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Rashtriya Ispat Nigam Limited - India
- Kumho Petrochemical, South Korea
- Edison Trading Spa - Italy
- Kohat Cement Company Ltd. - Pakistan
- Bharathi Cement Corporation - India
- Bhushan Steel Limited - India
- Posco Energy - South Korea
- Leighton Contractors Pty Ltd - Australia
- Kaltim Prima Coal - Indonesia
- GVK Power & Infra Limited - India
- Thiess Contractors Indonesia
- Bangladesh Power Developement Board
- Karaikal Port Pvt Ltd - India
- Straits Asia Resources Limited - Singapore
- Indogreen Group - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Baramulti Group, Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Meralco Power Generation, Philippines
- Bulk Trading Sa - Switzerland
- Aditya Birla Group - India
- Jorong Barutama Greston.PT - Indonesia
- Mintek Dendrill Indonesia
- New Zealand Coal & Carbon
- Gujarat Sidhee Cement - India
- GN Power Mariveles Coal Plant, Philippines
- Eastern Energy - Thailand
- Indian Oil Corporation Limited
- Interocean Group of Companies - India
- OPG Power Generation Pvt Ltd - India
- ASAPP Information Group - India
- Jindal Steel & Power Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Cement Manufacturers Association - India
- Ind-Barath Power Infra Limited - India
- Coalindo Energy - Indonesia
- Orica Mining Services - Indonesia
- Antam Resourcindo - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Indian Energy Exchange, India
- Aboitiz Power Corporation - Philippines
- Anglo American - United Kingdom
- Neyveli Lignite Corporation Ltd, - India
- White Energy Company Limited
- Vizag Seaport Private Limited - India
- Directorate Of Revenue Intelligence - India
- Coastal Gujarat Power Limited - India
- Madhucon Powers Ltd - India
- Ambuja Cements Ltd - India
- Timah Investasi Mineral - Indoneisa
- Renaissance Capital - South Africa
- Tamil Nadu electricity Board
- Energy Development Corp, Philippines
- PowerSource Philippines DevCo
- Attock Cement Pakistan Limited
- SMG Consultants - Indonesia
- Pendopo Energi Batubara - Indonesia
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