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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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Monday, 23 September 19
CHINA RECORDS SLOWER GROWTH IN COAL PRODUCTION - XINHUA
The growth of China’s raw coal production slowed down in August, data from the National Bureau of Statistics (NBS) showed.
Aro ...
Friday, 20 September 19
INDIA TO INVITE BIDS FOR COMMERCIAL COAL MINING IN DECEMBER - MINISTER FOR COAL
India aims to begin the process of holding the first round of commercial coal mining auctions December end, Minister for Coal, Mines and Parliament ...
Friday, 20 September 19
INDIA: ECONOMIC SLOWDOWN IMPACTS COAL IMPORT CARGO IN H1 FY20 - PTI
Economic slowdown has impacted coal import cargo in the first half of this fiscal, as overall cargo growth at major ports registered a marginal gro ...
Wednesday, 18 September 19
SHIPPING MARKET INSIGHT - INTERMODAL
During the first week of September, I had the privilege of attending the Donsö Shipping Meet 2019, in Donsö, a small island of around 1,& ...
Tuesday, 17 September 19
PANAMA SHIP REGISTRY MODERNIZES SHIP REGISTRATION
The Panama Ship Registry has announced it will integrate in a single platform “Electronic Ship Registration System (ESRS)” the present ...
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- European Bulk Services B.V. - Netherlands
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- SMC Global Power, Philippines
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- Bank of Tokyo Mitsubishi UFJ Ltd
- Posco Energy - South Korea
- Coastal Gujarat Power Limited - India
- TeaM Sual Corporation - Philippines
- Star Paper Mills Limited - India
- Bukit Makmur.PT - Indonesia
- Aditya Birla Group - India
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- Pendopo Energi Batubara - Indonesia
- LBH Netherlands Bv - Netherlands
- Billiton Holdings Pty Ltd - Australia
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- Electricity Authority, New Zealand
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- Eastern Coal Council - USA
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- Parliament of New Zealand
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- Samtan Co., Ltd - South Korea
- Sarangani Energy Corporation, Philippines
- Intertek Mineral Services - Indonesia
- Australian Coal Association
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- Iligan Light & Power Inc, Philippines
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- Anglo American - United Kingdom
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- Filglen & Citicon Mining (HK) Ltd - Hong Kong
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- Holcim Trading Pte Ltd - Singapore
- Pipit Mutiara Jaya. PT, Indonesia
- Price Waterhouse Coopers - Russia
- PTC India Limited - India
- Global Business Power Corporation, Philippines
- Savvy Resources Ltd - HongKong
- Semirara Mining and Power Corporation, Philippines
- Wilmar Investment Holdings
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Commonwealth Bank - Australia
- Interocean Group of Companies - India
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- Renaissance Capital - South Africa
- Gujarat Electricity Regulatory Commission - India
- Indian Energy Exchange, India
- Merrill Lynch Commodities Europe
- Standard Chartered Bank - UAE
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- PNOC Exploration Corporation - Philippines
- Jindal Steel & Power Ltd - India
- Tata Chemicals Ltd - India
- Meenaskhi Energy Private Limited - India
- Trasteel International SA, Italy
- Indogreen Group - Indonesia
- Minerals Council of Australia
- Africa Commodities Group - South Africa
- Aboitiz Power Corporation - Philippines
- Toyota Tsusho Corporation, Japan
- Bhushan Steel Limited - India
- Indonesian Coal Mining Association
- Vijayanagar Sugar Pvt Ltd - India
- Malabar Cements Ltd - India
- Baramulti Group, Indonesia
- Rio Tinto Coal - Australia
- Asmin Koalindo Tuhup - Indonesia
- Port Waratah Coal Services - Australia
- Riau Bara Harum - Indonesia
- Kobexindo Tractors - Indoneisa
- Madhucon Powers Ltd - India
- Indo Tambangraya Megah - Indonesia
- Thai Mozambique Logistica
- Cigading International Bulk Terminal - Indonesia
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- Straits Asia Resources Limited - Singapore
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- Maharashtra Electricity Regulatory Commission - India
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- Heidelberg Cement - Germany
- India Bulls Power Limited - India
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- Altura Mining Limited, Indonesia
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- Chettinad Cement Corporation Ltd - India
- GVK Power & Infra Limited - India
- San Jose City I Power Corp, Philippines
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- Krishnapatnam Port Company Ltd. - India
- Orica Mining Services - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Coal and Oil Company - UAE
- Agrawal Coal Company - India
- Gujarat Sidhee Cement - India
- Barasentosa Lestari - Indonesia
- IHS Mccloskey Coal Group - USA
- Meralco Power Generation, Philippines
- Siam City Cement - Thailand
- Therma Luzon, Inc, Philippines
- Mercator Lines Limited - India
- Orica Australia Pty. Ltd.
- CNBM International Corporation - China
- Energy Link Ltd, New Zealand
- Gujarat Mineral Development Corp Ltd - India
- Rashtriya Ispat Nigam Limited - India
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- Indika Energy - Indonesia
- VISA Power Limited - India
- Banpu Public Company Limited - Thailand
- Ministry of Finance - Indonesia
- Thiess Contractors Indonesia
- New Zealand Coal & Carbon
- Mintek Dendrill Indonesia
- ICICI Bank Limited - India
- ASAPP Information Group - India
- Jorong Barutama Greston.PT - Indonesia
- Planning Commission, India
- Siam City Cement PLC, Thailand
- Cement Manufacturers Association - India
- Global Coal Blending Company Limited - Australia
- Kohat Cement Company Ltd. - Pakistan
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- Binh Thuan Hamico - Vietnam
- Dr Ramakrishna Prasad Power Pvt Ltd - India
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- Kumho Petrochemical, South Korea
- Medco Energi Mining Internasional
- Ministry of Mines - Canada
- Georgia Ports Authority, United States
- Neyveli Lignite Corporation Ltd, - India
- South Luzon Thermal Energy Corporation
- The University of Queensland
- Mjunction Services Limited - India
- Deloitte Consulting - India
- Chamber of Mines of South Africa
- Sinarmas Energy and Mining - Indonesia
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