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