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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, 18 February 23
PAKISTAN PLANS TO QUADRUPLE DOMESTIC COAL-FIRED POWER, MOVE AWAY FROM GAS - REUTERS
Pakistan plans to quadruple its domestic coal-fired capacity to reduce power generation costs and will not build new gas-fired plants in the coming ...
Saturday, 18 February 23
2023 MARINE FUEL MARKET PREDICTIONS - JOHN BERGMAN, AURAMARINE
The drive for decarbonisation we witnessed in 2022 has continued into 2023, demonstrating the shipping’s industry positive strides in the fas ...
Saturday, 28 January 23
COAL GROWTH BLIP NOT TO BE REPEATED - BALTIC EXCHANGE
As 2022 drew to a close, global coal demand looked set to end the year just 1.2% up on the previous year. But that small increase was enough to pus ...
Thursday, 26 January 23
CHINA'S COAL OUTPUT INCREASES IN DECEMBER 2022 - XINHUA
China’s raw coal output posted stable expansion in December 2022, official data showed.
The country produced 400 million tonne ...
Thursday, 26 January 23
COKING COAL NARROWS THE GAP ON THERMAL AS CHINA REOPENS - REUTERS
The premium of high-grade thermal coal over coking coal in Asia is shrinking as China’s re-opening and ending of a ban on imports from Austra ...
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- Marubeni Corporation - India
- Sree Jayajothi Cements Limited - India
- Alfred C Toepfer International GmbH - Germany
- Commonwealth Bank - Australia
- Mercator Lines Limited - India
- Eastern Energy - Thailand
- Chamber of Mines of South Africa
- European Bulk Services B.V. - Netherlands
- Ceylon Electricity Board - Sri Lanka
- Indian Energy Exchange, India
- Krishnapatnam Port Company Ltd. - India
- Holcim Trading Pte Ltd - Singapore
- Sindya Power Generating Company Private Ltd
- Formosa Plastics Group - Taiwan
- Central Java Power - Indonesia
- Simpson Spence & Young - Indonesia
- Wood Mackenzie - Singapore
- Toyota Tsusho Corporation, Japan
- Australian Coal Association
- London Commodity Brokers - England
- Planning Commission, India
- TeaM Sual Corporation - Philippines
- Therma Luzon, Inc, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Coal and Oil Company - UAE
- Gujarat Electricity Regulatory Commission - India
- SMG Consultants - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Indo Tambangraya Megah - Indonesia
- Bhoruka Overseas - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Posco Energy - South Korea
- AsiaOL BioFuels Corp., Philippines
- Directorate General of MIneral and Coal - Indonesia
- ICICI Bank Limited - India
- Georgia Ports Authority, United States
- Manunggal Multi Energi - Indonesia
- Aboitiz Power Corporation - Philippines
- Electricity Authority, New Zealand
- Malabar Cements Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Global Coal Blending Company Limited - Australia
- Carbofer General Trading SA - India
- Bukit Makmur.PT - Indonesia
- Star Paper Mills Limited - India
- Energy Link Ltd, New Zealand
- IHS Mccloskey Coal Group - USA
- Electricity Generating Authority of Thailand
- Borneo Indobara - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Jaiprakash Power Ventures ltd
- Billiton Holdings Pty Ltd - Australia
- Riau Bara Harum - Indonesia
- Standard Chartered Bank - UAE
- Port Waratah Coal Services - Australia
- Medco Energi Mining Internasional
- Kalimantan Lumbung Energi - Indonesia
- Globalindo Alam Lestari - Indonesia
- PTC India Limited - India
- Siam City Cement - Thailand
- Miang Besar Coal Terminal - Indonesia
- Timah Investasi Mineral - Indoneisa
- Bukit Baiduri Energy - Indonesia
- Indian Oil Corporation Limited
- TNB Fuel Sdn Bhd - Malaysia
- Cigading International Bulk Terminal - Indonesia
- Straits Asia Resources Limited - Singapore
- OPG Power Generation Pvt Ltd - India
- CNBM International Corporation - China
- Sarangani Energy Corporation, Philippines
- Sojitz Corporation - Japan
- GAC Shipping (India) Pvt Ltd
- Petron Corporation, Philippines
- Sinarmas Energy and Mining - Indonesia
- Larsen & Toubro Limited - India
- SMC Global Power, Philippines
- GVK Power & Infra Limited - India
- Bhatia International Limited - India
- McConnell Dowell - Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Grasim Industreis Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Sakthi Sugars Limited - India
- Vedanta Resources Plc - India
- Videocon Industries ltd - India
- IEA Clean Coal Centre - UK
- Savvy Resources Ltd - HongKong
- Intertek Mineral Services - Indonesia
- Makarim & Taira - Indonesia
- Mercuria Energy - Indonesia
- The State Trading Corporation of India Ltd
- Eastern Coal Council - USA
- Minerals Council of Australia
- Indogreen Group - Indonesia
- Ind-Barath Power Infra Limited - India
- Wilmar Investment Holdings
- Trasteel International SA, Italy
- Samtan Co., Ltd - South Korea
- Indonesian Coal Mining Association
- Parry Sugars Refinery, India
- MS Steel International - UAE
- Indika Energy - Indonesia
- Meenaskhi Energy Private Limited - India
- Madhucon Powers Ltd - India
- Heidelberg Cement - Germany
- Uttam Galva Steels Limited - India
- Binh Thuan Hamico - Vietnam
- Anglo American - United Kingdom
- Jindal Steel & Power Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Agrawal Coal Company - India
- India Bulls Power Limited - India
- Bharathi Cement Corporation - India
- Tamil Nadu electricity Board
- Chettinad Cement Corporation Ltd - India
- Global Business Power Corporation, Philippines
- Maheswari Brothers Coal Limited - India
- Bhushan Steel Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Tata Chemicals Ltd - India
- Bulk Trading Sa - Switzerland
- Meralco Power Generation, Philippines
- Baramulti Group, Indonesia
- Cement Manufacturers Association - India
- Africa Commodities Group - South Africa
- International Coal Ventures Pvt Ltd - India
- Thai Mozambique Logistica
- Bangladesh Power Developement Board
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bank of Tokyo Mitsubishi UFJ Ltd
- Power Finance Corporation Ltd., India
- Metalloyd Limited - United Kingdom
- Independent Power Producers Association of India
- Goldman Sachs - Singapore
- Orica Mining Services - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Attock Cement Pakistan Limited
- Parliament of New Zealand
- Vijayanagar Sugar Pvt Ltd - India
- Barasentosa Lestari - Indonesia
- New Zealand Coal & Carbon
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Karaikal Port Pvt Ltd - India
- Antam Resourcindo - Indonesia
- Thiess Contractors Indonesia
- Kaltim Prima Coal - Indonesia
- The University of Queensland
- Interocean Group of Companies - India
- Ambuja Cements Ltd - India
- Romanian Commodities Exchange
- The Treasury - Australian Government
- Energy Development Corp, Philippines
- GMR Energy Limited - India
- Latin American Coal - Colombia
- ASAPP Information Group - India
- Mintek Dendrill Indonesia
- Kepco SPC Power Corporation, Philippines
- Kapuas Tunggal Persada - Indonesia
- Vizag Seaport Private Limited - India
- Siam City Cement PLC, Thailand
- Semirara Mining Corp, Philippines
- White Energy Company Limited
- Rio Tinto Coal - Australia
- Central Electricity Authority - India
- VISA Power Limited - India
- Ministry of Finance - Indonesia
- Sical Logistics Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- PNOC Exploration Corporation - Philippines
- Price Waterhouse Coopers - Russia
- Renaissance Capital - South Africa
- Kobexindo Tractors - Indoneisa
- Gujarat Mineral Development Corp Ltd - India
- Dalmia Cement Bharat India
- Ministry of Transport, Egypt
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- CIMB Investment Bank - Malaysia
- Pendopo Energi Batubara - Indonesia
- SN Aboitiz Power Inc, Philippines
- Global Green Power PLC Corporation, Philippines
- San Jose City I Power Corp, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Xindia Steels Limited - India
- LBH Netherlands Bv - Netherlands
- Kumho Petrochemical, South Korea
- PetroVietnam Power Coal Import and Supply Company
- South Luzon Thermal Energy Corporation
- Coastal Gujarat Power Limited - India
- Banpu Public Company Limited - Thailand
- Essar Steel Hazira Ltd - India
- Mjunction Services Limited - India
- Kartika Selabumi Mining - Indonesia
- Orica Australia Pty. Ltd.
- Oldendorff Carriers - Singapore
- Ministry of Mines - Canada
- Aditya Birla Group - India
- Coalindo Energy - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Merrill Lynch Commodities Europe
- Altura Mining Limited, Indonesia
- PowerSource Philippines DevCo
- Bayan Resources Tbk. - Indonesia
- Australian Commodity Traders Exchange
- GN Power Mariveles Coal Plant, Philippines
- Gujarat Sidhee Cement - India
- Directorate Of Revenue Intelligence - India
- Kideco Jaya Agung - Indonesia
- Salva Resources Pvt Ltd - India
- Singapore Mercantile Exchange
- Neyveli Lignite Corporation Ltd, - India
- Economic Council, Georgia
- Lanco Infratech Ltd - India
- Edison Trading Spa - Italy
- Deloitte Consulting - India
- Iligan Light & Power Inc, Philippines
- Rashtriya Ispat Nigam Limited - India
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