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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, 02 April 18
THIESS SECURES $240M SATUI EXTENSION
The successful implementation of an innovative mining plan by Thiess at the Satui coal mine in South Kalimantan, has resulted in a $240 million con ...
Friday, 30 March 18
SHIPPING INDUSTRY CONFIDENCE HITS FOUR-YEAR HIGH - MOORE STEPHENS
Shipping Confidence Survey
In February 2018, the average confidence level expressed by respondents was up from 6.2 in November 2017 t ...
Friday, 30 March 18
EXPLAINING POLAND'S COAL PARADOX - FORBES
In the U.S. coal is succumbing to market forces despite the Trump Administration’s push to support the industry. Abundant, cheap and cleaner ...
Friday, 30 March 18
THIESS SECURES $140M MT OWEN INCREASE
Thiess has secured a A$140 million increase to its contract with Glencore for coal mining services at Mt Owen in the Hunter Valley, Australia. Mt O ...
Wednesday, 28 March 18
THIESS WINS $280M WAHANA EXTENSION
Thiess has been awarded a three-year $280 million contract extension at the Wahana coal mine in South Kalimantan, Indonesia.
According to Thie ...
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- Indogreen Group - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Eastern Energy - Thailand
- Central Electricity Authority - India
- Sarangani Energy Corporation, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Bukit Makmur.PT - Indonesia
- Ambuja Cements Ltd - India
- Thai Mozambique Logistica
- Gujarat Mineral Development Corp Ltd - India
- VISA Power Limited - India
- TeaM Sual Corporation - Philippines
- Goldman Sachs - Singapore
- Vizag Seaport Private Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Siam City Cement PLC, Thailand
- San Jose City I Power Corp, Philippines
- Salva Resources Pvt Ltd - India
- Iligan Light & Power Inc, Philippines
- PowerSource Philippines DevCo
- Kaltim Prima Coal - Indonesia
- Baramulti Group, Indonesia
- Mjunction Services Limited - India
- Straits Asia Resources Limited - Singapore
- Ministry of Transport, Egypt
- Coalindo Energy - Indonesia
- ICICI Bank Limited - India
- Globalindo Alam Lestari - Indonesia
- Binh Thuan Hamico - Vietnam
- Interocean Group of Companies - India
- Commonwealth Bank - Australia
- OPG Power Generation Pvt Ltd - India
- Ceylon Electricity Board - Sri Lanka
- The University of Queensland
- Madhucon Powers Ltd - India
- Indo Tambangraya Megah - Indonesia
- Bhushan Steel Limited - India
- Attock Cement Pakistan Limited
- IHS Mccloskey Coal Group - USA
- Agrawal Coal Company - India
- Therma Luzon, Inc, Philippines
- Sojitz Corporation - Japan
- Meralco Power Generation, Philippines
- Eastern Coal Council - USA
- Intertek Mineral Services - Indonesia
- McConnell Dowell - Australia
- Borneo Indobara - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Sree Jayajothi Cements Limited - India
- Aditya Birla Group - India
- Grasim Industreis Ltd - India
- Pendopo Energi Batubara - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Uttam Galva Steels Limited - India
- GAC Shipping (India) Pvt Ltd
- South Luzon Thermal Energy Corporation
- Planning Commission, India
- Bangladesh Power Developement Board
- Kartika Selabumi Mining - Indonesia
- Merrill Lynch Commodities Europe
- TNB Fuel Sdn Bhd - Malaysia
- Manunggal Multi Energi - Indonesia
- Latin American Coal - Colombia
- GVK Power & Infra Limited - India
- Bukit Baiduri Energy - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Bulk Trading Sa - Switzerland
- Energy Development Corp, Philippines
- Coastal Gujarat Power Limited - India
- Kapuas Tunggal Persada - Indonesia
- Electricity Authority, New Zealand
- Mercuria Energy - Indonesia
- Jaiprakash Power Ventures ltd
- Coal and Oil Company - UAE
- Central Java Power - Indonesia
- Kumho Petrochemical, South Korea
- Economic Council, Georgia
- Krishnapatnam Port Company Ltd. - India
- Karaikal Port Pvt Ltd - India
- Semirara Mining Corp, Philippines
- Sakthi Sugars Limited - India
- Bharathi Cement Corporation - India
- Wilmar Investment Holdings
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Savvy Resources Ltd - HongKong
- Bayan Resources Tbk. - Indonesia
- Singapore Mercantile Exchange
- Cement Manufacturers Association - India
- Videocon Industries ltd - India
- Directorate Of Revenue Intelligence - India
- Maheswari Brothers Coal Limited - India
- Edison Trading Spa - Italy
- Xindia Steels Limited - India
- Gujarat Electricity Regulatory Commission - India
- PTC India Limited - India
- Orica Australia Pty. Ltd.
- Kohat Cement Company Ltd. - Pakistan
- MS Steel International - UAE
- Neyveli Lignite Corporation Ltd, - India
- Vijayanagar Sugar Pvt Ltd - India
- SMG Consultants - Indonesia
- Global Green Power PLC Corporation, Philippines
- Kepco SPC Power Corporation, Philippines
- Power Finance Corporation Ltd., India
- Holcim Trading Pte Ltd - Singapore
- Indika Energy - Indonesia
- Jindal Steel & Power Ltd - India
- CNBM International Corporation - China
- Gujarat Sidhee Cement - India
- Miang Besar Coal Terminal - Indonesia
- Port Waratah Coal Services - Australia
- Medco Energi Mining Internasional
- Alfred C Toepfer International GmbH - Germany
- The Treasury - Australian Government
- Larsen & Toubro Limited - India
- Ministry of Finance - Indonesia
- London Commodity Brokers - England
- European Bulk Services B.V. - Netherlands
- Altura Mining Limited, Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Heidelberg Cement - Germany
- Antam Resourcindo - Indonesia
- Bhatia International Limited - India
- Parliament of New Zealand
- Formosa Plastics Group - Taiwan
- Sinarmas Energy and Mining - Indonesia
- Renaissance Capital - South Africa
- Chettinad Cement Corporation Ltd - India
- The State Trading Corporation of India Ltd
- Indian Energy Exchange, India
- India Bulls Power Limited - India
- Malabar Cements Ltd - India
- Wood Mackenzie - Singapore
- Global Business Power Corporation, Philippines
- Vedanta Resources Plc - India
- Samtan Co., Ltd - South Korea
- Deloitte Consulting - India
- Tamil Nadu electricity Board
- Directorate General of MIneral and Coal - Indonesia
- Carbofer General Trading SA - India
- Kideco Jaya Agung - Indonesia
- Indonesian Coal Mining Association
- Independent Power Producers Association of India
- International Coal Ventures Pvt Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Sical Logistics Limited - India
- Rashtriya Ispat Nigam Limited - India
- Trasteel International SA, Italy
- Dalmia Cement Bharat India
- Minerals Council of Australia
- AsiaOL BioFuels Corp., Philippines
- GMR Energy Limited - India
- Lanco Infratech Ltd - India
- CIMB Investment Bank - Malaysia
- Romanian Commodities Exchange
- Simpson Spence & Young - Indonesia
- Indian Oil Corporation Limited
- Standard Chartered Bank - UAE
- Toyota Tsusho Corporation, Japan
- IEA Clean Coal Centre - UK
- Asmin Koalindo Tuhup - Indonesia
- Orica Mining Services - Indonesia
- Riau Bara Harum - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Rio Tinto Coal - Australia
- LBH Netherlands Bv - Netherlands
- Ministry of Mines - Canada
- Posco Energy - South Korea
- Oldendorff Carriers - Singapore
- Bukit Asam (Persero) Tbk - Indonesia
- SMC Global Power, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Sindya Power Generating Company Private Ltd
- Petron Corporation, Philippines
- Bhoruka Overseas - Indonesia
- Banpu Public Company Limited - Thailand
- Marubeni Corporation - India
- Mercator Lines Limited - India
- Price Waterhouse Coopers - Russia
- Timah Investasi Mineral - Indoneisa
- Global Coal Blending Company Limited - Australia
- Billiton Holdings Pty Ltd - Australia
- Star Paper Mills Limited - India
- Metalloyd Limited - United Kingdom
- ASAPP Information Group - India
- Ind-Barath Power Infra Limited - India
- Australian Coal Association
- Energy Link Ltd, New Zealand
- Australian Commodity Traders Exchange
- Semirara Mining and Power Corporation, Philippines
- Parry Sugars Refinery, India
- Georgia Ports Authority, United States
- Meenaskhi Energy Private Limited - India
- Kobexindo Tractors - Indoneisa
- Siam City Cement - Thailand
- Mintek Dendrill Indonesia
- Karbindo Abesyapradhi - Indoneisa
- White Energy Company Limited
- Pipit Mutiara Jaya. PT, Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Essar Steel Hazira Ltd - India
- Thiess Contractors Indonesia
- Anglo American - United Kingdom
- Chamber of Mines of South Africa
- Leighton Contractors Pty Ltd - Australia
- PNOC Exploration Corporation - Philippines
- Electricity Generating Authority of Thailand
- Barasentosa Lestari - Indonesia
- Aboitiz Power Corporation - Philippines
- SN Aboitiz Power Inc, Philippines
- Tata Chemicals Ltd - India
- Makarim & Taira - Indonesia
- New Zealand Coal & Carbon
- Africa Commodities Group - South Africa
- Offshore Bulk Terminal Pte Ltd, Singapore
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