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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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Thursday, 22 December 22
RUSSIAN OIL EXPORTS CRATER BY 54% IN THE FIRST FULL WEEK OF THE EU'S EMBARGO AMID A SHORTAGE OF TANKERS WILLING TO CARRY CARGOES - BUSINESS INSIDER
Since the European Union imposed its seaborne crude sanctions, Russian oil exports have tumbled by more than half, according to data compiled by Bl ...
Thursday, 22 December 22
CHINA TIGHTENS VERIFICATION OF SHIPS’ ENERGY CONSUMPTION DATA - GARD
From 22 December 2022, ships trading to Chinese ports must record their energy consumption data in accordance with the requirements of their Ship E ...
Thursday, 22 December 22
AN OVERVIEW OF THE LNG MARKET - VESSELSVALUE
LNG values have continued to strengthen, spurred by skyrocketing earnings that have surpassed last year’s record breaking peaks. In November, ...
Thursday, 22 December 22
COKING COAL SLUMPS AS TALKS ON AUSTRALIA-CHINA TRADE RIFT LOOM - REUTERS
Chinese coking coal futures dropped more than 3 per cent on Tuesday (Dec 20), extending losses, as supply of the steelmaking input might increase i ...
Thursday, 22 December 22
COAL AND GAS PRICE CAPS MAY COMPOUND POLITICAL RISK FOR AUSTRALIAN CORPORATES - FITCH RATINGS
Australia’s introduction of temporary price caps on domestic sales of gas and coal used for electricity generation will probably have limited ...
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- Cigading International Bulk Terminal - Indonesia
- Manunggal Multi Energi - Indonesia
- London Commodity Brokers - England
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Salva Resources Pvt Ltd - India
- Mintek Dendrill Indonesia
- Central Java Power - Indonesia
- Tamil Nadu electricity Board
- Siam City Cement PLC, Thailand
- Bukit Asam (Persero) Tbk - Indonesia
- Toyota Tsusho Corporation, Japan
- Price Waterhouse Coopers - Russia
- Tata Chemicals Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Banpu Public Company Limited - Thailand
- Aditya Birla Group - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Rashtriya Ispat Nigam Limited - India
- Miang Besar Coal Terminal - Indonesia
- Rio Tinto Coal - Australia
- Bangladesh Power Developement Board
- CIMB Investment Bank - Malaysia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- SN Aboitiz Power Inc, Philippines
- Makarim & Taira - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Oldendorff Carriers - Singapore
- European Bulk Services B.V. - Netherlands
- Directorate Of Revenue Intelligence - India
- Carbofer General Trading SA - India
- OPG Power Generation Pvt Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Antam Resourcindo - Indonesia
- Sical Logistics Limited - India
- GVK Power & Infra Limited - India
- Edison Trading Spa - Italy
- Heidelberg Cement - Germany
- Malabar Cements Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Thai Mozambique Logistica
- Jaiprakash Power Ventures ltd
- Georgia Ports Authority, United States
- Alfred C Toepfer International GmbH - Germany
- Sojitz Corporation - Japan
- The University of Queensland
- Coalindo Energy - Indonesia
- New Zealand Coal & Carbon
- Billiton Holdings Pty Ltd - Australia
- Port Waratah Coal Services - Australia
- Australian Commodity Traders Exchange
- Energy Link Ltd, New Zealand
- Kumho Petrochemical, South Korea
- Singapore Mercantile Exchange
- Grasim Industreis Ltd - India
- Coastal Gujarat Power Limited - India
- LBH Netherlands Bv - Netherlands
- Kapuas Tunggal Persada - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Global Green Power PLC Corporation, Philippines
- Power Finance Corporation Ltd., India
- Kaltim Prima Coal - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Trasteel International SA, Italy
- Vedanta Resources Plc - India
- GAC Shipping (India) Pvt Ltd
- Wilmar Investment Holdings
- Cement Manufacturers Association - India
- TNB Fuel Sdn Bhd - Malaysia
- Bhoruka Overseas - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Ministry of Mines - Canada
- PowerSource Philippines DevCo
- PetroVietnam Power Coal Import and Supply Company
- Mercuria Energy - Indonesia
- Orica Australia Pty. Ltd.
- GN Power Mariveles Coal Plant, Philippines
- Therma Luzon, Inc, Philippines
- Leighton Contractors Pty Ltd - Australia
- PNOC Exploration Corporation - Philippines
- White Energy Company Limited
- Eastern Coal Council - USA
- Anglo American - United Kingdom
- Timah Investasi Mineral - Indoneisa
- San Jose City I Power Corp, Philippines
- Goldman Sachs - Singapore
- Electricity Authority, New Zealand
- Gujarat Electricity Regulatory Commission - India
- Economic Council, Georgia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Jindal Steel & Power Ltd - India
- Altura Mining Limited, Indonesia
- Romanian Commodities Exchange
- Samtan Co., Ltd - South Korea
- South Luzon Thermal Energy Corporation
- TeaM Sual Corporation - Philippines
- Indonesian Coal Mining Association
- Parry Sugars Refinery, India
- Star Paper Mills Limited - India
- Ministry of Finance - Indonesia
- Karaikal Port Pvt Ltd - India
- PTC India Limited - India
- Vizag Seaport Private Limited - India
- Bhushan Steel Limited - India
- Indian Energy Exchange, India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- MS Steel International - UAE
- The Treasury - Australian Government
- International Coal Ventures Pvt Ltd - India
- Minerals Council of Australia
- ICICI Bank Limited - India
- Intertek Mineral Services - Indonesia
- Attock Cement Pakistan Limited
- Baramulti Group, Indonesia
- Kartika Selabumi Mining - Indonesia
- Sakthi Sugars Limited - India
- Kideco Jaya Agung - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bahari Cakrawala Sebuku - Indonesia
- Essar Steel Hazira Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Latin American Coal - Colombia
- IHS Mccloskey Coal Group - USA
- McConnell Dowell - Australia
- Petron Corporation, Philippines
- Uttam Galva Steels Limited - India
- Barasentosa Lestari - Indonesia
- CNBM International Corporation - China
- Karbindo Abesyapradhi - Indoneisa
- Kepco SPC Power Corporation, Philippines
- Holcim Trading Pte Ltd - Singapore
- Xindia Steels Limited - India
- Merrill Lynch Commodities Europe
- Metalloyd Limited - United Kingdom
- Indika Energy - Indonesia
- Madhucon Powers Ltd - India
- Siam City Cement - Thailand
- Agrawal Coal Company - India
- Central Electricity Authority - India
- Orica Mining Services - Indonesia
- Larsen & Toubro Limited - India
- Chettinad Cement Corporation Ltd - India
- The State Trading Corporation of India Ltd
- Lanco Infratech Ltd - India
- Formosa Plastics Group - Taiwan
- Sarangani Energy Corporation, Philippines
- Sindya Power Generating Company Private Ltd
- Planning Commission, India
- Bulk Trading Sa - Switzerland
- SMC Global Power, Philippines
- Semirara Mining Corp, Philippines
- Meralco Power Generation, Philippines
- Marubeni Corporation - India
- Mercator Lines Limited - India
- GMR Energy Limited - India
- Ind-Barath Power Infra Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Kalimantan Lumbung Energi - Indonesia
- Bhatia International Limited - India
- Medco Energi Mining Internasional
- Binh Thuan Hamico - Vietnam
- Global Coal Blending Company Limited - Australia
- Bharathi Cement Corporation - India
- Bayan Resources Tbk. - Indonesia
- SMG Consultants - Indonesia
- Bukit Baiduri Energy - Indonesia
- Bukit Makmur.PT - Indonesia
- Africa Commodities Group - South Africa
- Mjunction Services Limited - India
- Borneo Indobara - Indonesia
- Wood Mackenzie - Singapore
- Deloitte Consulting - India
- Videocon Industries ltd - India
- Electricity Generating Authority of Thailand
- Global Business Power Corporation, Philippines
- ASAPP Information Group - India
- Krishnapatnam Port Company Ltd. - India
- Maheswari Brothers Coal Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Gujarat Sidhee Cement - India
- Interocean Group of Companies - India
- Standard Chartered Bank - UAE
- Independent Power Producers Association of India
- India Bulls Power Limited - India
- Simpson Spence & Young - Indonesia
- Indo Tambangraya Megah - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Eastern Energy - Thailand
- Australian Coal Association
- Pendopo Energi Batubara - Indonesia
- Globalindo Alam Lestari - Indonesia
- Straits Asia Resources Limited - Singapore
- Thiess Contractors Indonesia
- Coal and Oil Company - UAE
- IEA Clean Coal Centre - UK
- Posco Energy - South Korea
- Meenaskhi Energy Private Limited - India
- Iligan Light & Power Inc, Philippines
- Sree Jayajothi Cements Limited - India
- Indogreen Group - Indonesia
- Dalmia Cement Bharat India
- Kobexindo Tractors - Indoneisa
- Pipit Mutiara Jaya. PT, Indonesia
- Ambuja Cements Ltd - India
- Parliament of New Zealand
- Energy Development Corp, Philippines
- Chamber of Mines of South Africa
- AsiaOL BioFuels Corp., Philippines
- Ministry of Transport, Egypt
- Aboitiz Power Corporation - Philippines
- VISA Power Limited - India
- Commonwealth Bank - Australia
- Jorong Barutama Greston.PT - Indonesia
- Renaissance Capital - South Africa
- Kohat Cement Company Ltd. - Pakistan
- Indian Oil Corporation Limited
- Savvy Resources Ltd - HongKong
- Riau Bara Harum - Indonesia
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