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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, 19 December 22
ENERGY CRISIS FUELS COAL COMEBACK IN GERMANY - REUTERS
Coal has made a comeback in Germany this year, as Europe’s largest economy turns to the dirty fuel to power it through an energy crisis.
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Thursday, 15 December 22
MARKET INSIGHT - INTERMODAL
While observing the ship repair market very close to the end of the year, we are confident that shipyards worldwide are entering a new era. The nex ...
Tuesday, 13 December 22
STRONG COAL PRICES SUPPORT ROBUST EARNINGS AT INDONESIAN COAL MINERS - FITCH RATINGS
Fitch Ratings expects cash flow generation at Indonesian coal miners to remain strong in 2023, based on its forecast for coal prices to remain high ...
Tuesday, 13 December 22
BIMCO CII CLAUSE FINALLY RELEASED: DOES IT MAKE ANY SENSE OF CCI? - WFW
WHAT IS CII?
The new International Maritime Organisation’s (“IMO’s”) Carbon Intensity Indicator (“CII”) cer ...
Tuesday, 13 December 22
COAL BASE RAMPS UP ENERGY SUPPLY FOR WINTER NEEDS - XINHUA
Inner Mongolia Autonomous Region, China’s leading coal production base, has kicked its production into high gear to meet heating needs as col ...
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- Borneo Indobara - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Semirara Mining and Power Corporation, Philippines
- Ind-Barath Power Infra Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Medco Energi Mining Internasional
- Ceylon Electricity Board - Sri Lanka
- Aboitiz Power Corporation - Philippines
- Binh Thuan Hamico - Vietnam
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Edison Trading Spa - Italy
- Bukit Baiduri Energy - Indonesia
- GAC Shipping (India) Pvt Ltd
- Cigading International Bulk Terminal - Indonesia
- New Zealand Coal & Carbon
- Meralco Power Generation, Philippines
- IHS Mccloskey Coal Group - USA
- Therma Luzon, Inc, Philippines
- Parliament of New Zealand
- Marubeni Corporation - India
- Antam Resourcindo - Indonesia
- Aditya Birla Group - India
- Cement Manufacturers Association - India
- Malabar Cements Ltd - India
- Coal and Oil Company - UAE
- Globalindo Alam Lestari - Indonesia
- Standard Chartered Bank - UAE
- Offshore Bulk Terminal Pte Ltd, Singapore
- Holcim Trading Pte Ltd - Singapore
- Meenaskhi Energy Private Limited - India
- Siam City Cement - Thailand
- Bukit Makmur.PT - Indonesia
- GMR Energy Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- MS Steel International - UAE
- Karbindo Abesyapradhi - Indoneisa
- Salva Resources Pvt Ltd - India
- Thiess Contractors Indonesia
- Bayan Resources Tbk. - Indonesia
- South Luzon Thermal Energy Corporation
- Toyota Tsusho Corporation, Japan
- Sakthi Sugars Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Wilmar Investment Holdings
- Dalmia Cement Bharat India
- Sical Logistics Limited - India
- Indika Energy - Indonesia
- Makarim & Taira - Indonesia
- Petron Corporation, Philippines
- Baramulti Group, Indonesia
- Formosa Plastics Group - Taiwan
- Sree Jayajothi Cements Limited - India
- Renaissance Capital - South Africa
- Jaiprakash Power Ventures ltd
- Iligan Light & Power Inc, Philippines
- Banpu Public Company Limited - Thailand
- Kapuas Tunggal Persada - Indonesia
- Energy Development Corp, Philippines
- Bhatia International Limited - India
- Agrawal Coal Company - India
- Intertek Mineral Services - Indonesia
- International Coal Ventures Pvt Ltd - India
- Ministry of Finance - Indonesia
- IEA Clean Coal Centre - UK
- Goldman Sachs - Singapore
- Kalimantan Lumbung Energi - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Indo Tambangraya Megah - Indonesia
- Trasteel International SA, Italy
- Indian Energy Exchange, India
- Kumho Petrochemical, South Korea
- Siam City Cement PLC, Thailand
- Rio Tinto Coal - Australia
- Anglo American - United Kingdom
- Straits Asia Resources Limited - Singapore
- Essar Steel Hazira Ltd - India
- Bhoruka Overseas - Indonesia
- CNBM International Corporation - China
- ASAPP Information Group - India
- GVK Power & Infra Limited - India
- Lanco Infratech Ltd - India
- Pendopo Energi Batubara - Indonesia
- European Bulk Services B.V. - Netherlands
- Metalloyd Limited - United Kingdom
- Orica Mining Services - Indonesia
- Karaikal Port Pvt Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Planning Commission, India
- Eastern Energy - Thailand
- Deloitte Consulting - India
- Grasim Industreis Ltd - India
- Independent Power Producers Association of India
- Bahari Cakrawala Sebuku - Indonesia
- McConnell Dowell - Australia
- Romanian Commodities Exchange
- Gujarat Electricity Regulatory Commission - India
- Manunggal Multi Energi - Indonesia
- Vedanta Resources Plc - India
- Vizag Seaport Private Limited - India
- Port Waratah Coal Services - Australia
- Thai Mozambique Logistica
- Kepco SPC Power Corporation, Philippines
- Central Electricity Authority - India
- Savvy Resources Ltd - HongKong
- Power Finance Corporation Ltd., India
- PNOC Exploration Corporation - Philippines
- Tamil Nadu electricity Board
- Commonwealth Bank - Australia
- Chettinad Cement Corporation Ltd - India
- Orica Australia Pty. Ltd.
- Vijayanagar Sugar Pvt Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- ICICI Bank Limited - India
- Sindya Power Generating Company Private Ltd
- Global Green Power PLC Corporation, Philippines
- Minerals Council of Australia
- SN Aboitiz Power Inc, Philippines
- Ambuja Cements Ltd - India
- Mjunction Services Limited - India
- Merrill Lynch Commodities Europe
- SMG Consultants - Indonesia
- Parry Sugars Refinery, India
- LBH Netherlands Bv - Netherlands
- Heidelberg Cement - Germany
- San Jose City I Power Corp, Philippines
- Oldendorff Carriers - Singapore
- Riau Bara Harum - Indonesia
- Ministry of Transport, Egypt
- Asmin Koalindo Tuhup - Indonesia
- Jindal Steel & Power Ltd - India
- Wood Mackenzie - Singapore
- PowerSource Philippines DevCo
- Australian Commodity Traders Exchange
- The Treasury - Australian Government
- Coalindo Energy - Indonesia
- Kaltim Prima Coal - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Mintek Dendrill Indonesia
- Kartika Selabumi Mining - Indonesia
- Bangladesh Power Developement Board
- Simpson Spence & Young - Indonesia
- Semirara Mining Corp, Philippines
- Videocon Industries ltd - India
- Singapore Mercantile Exchange
- Tata Chemicals Ltd - India
- The State Trading Corporation of India Ltd
- Kohat Cement Company Ltd. - Pakistan
- Gujarat Sidhee Cement - India
- Mercuria Energy - Indonesia
- Interocean Group of Companies - India
- Krishnapatnam Port Company Ltd. - India
- Rashtriya Ispat Nigam Limited - India
- Ministry of Mines - Canada
- TeaM Sual Corporation - Philippines
- Kobexindo Tractors - Indoneisa
- SMC Global Power, Philippines
- Madhucon Powers Ltd - India
- Larsen & Toubro Limited - India
- Altura Mining Limited, Indonesia
- Kideco Jaya Agung - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Star Paper Mills Limited - India
- Xindia Steels Limited - India
- Latin American Coal - Colombia
- Indogreen Group - Indonesia
- Samtan Co., Ltd - South Korea
- White Energy Company Limited
- TNB Fuel Sdn Bhd - Malaysia
- Georgia Ports Authority, United States
- Indian Oil Corporation Limited
- Directorate General of MIneral and Coal - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Coastal Gujarat Power Limited - India
- AsiaOL BioFuels Corp., Philippines
- Global Coal Blending Company Limited - Australia
- PTC India Limited - India
- Australian Coal Association
- Bulk Trading Sa - Switzerland
- Miang Besar Coal Terminal - Indonesia
- Price Waterhouse Coopers - Russia
- Bukit Asam (Persero) Tbk - Indonesia
- Indonesian Coal Mining Association
- India Bulls Power Limited - India
- Electricity Generating Authority of Thailand
- Timah Investasi Mineral - Indoneisa
- Posco Energy - South Korea
- OPG Power Generation Pvt Ltd - India
- Uttam Galva Steels Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bank of Tokyo Mitsubishi UFJ Ltd
- VISA Power Limited - India
- CIMB Investment Bank - Malaysia
- Sarangani Energy Corporation, Philippines
- Electricity Authority, New Zealand
- Attock Cement Pakistan Limited
- The University of Queensland
- Directorate Of Revenue Intelligence - India
- Bhushan Steel Limited - India
- Chamber of Mines of South Africa
- Africa Commodities Group - South Africa
- Pipit Mutiara Jaya. PT, Indonesia
- Carbofer General Trading SA - India
- Energy Link Ltd, New Zealand
- Global Business Power Corporation, Philippines
- Economic Council, Georgia
- Central Java Power - Indonesia
- Mercator Lines Limited - India
- London Commodity Brokers - England
- GN Power Mariveles Coal Plant, Philippines
- Sojitz Corporation - Japan
- Jorong Barutama Greston.PT - Indonesia
- Barasentosa Lestari - Indonesia
- Eastern Coal Council - USA
- Maheswari Brothers Coal Limited - India
- Bharathi Cement Corporation - India
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