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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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Wednesday, 28 March 18
RIO TINTO TO SELL KESTREL MINE FOR $2.25 BILLION - REUTERS
Rio Tinto sold its remaining coal asset Kestrel in Australia to private equity manager EMR Capital and Indonesia’s Adaro Energy Tbk for $2.25 ...
Tuesday, 27 March 18
SHIPPING MARKET ANALYSIS - GERRY LATHROP
With the almost complete phase out of Tier II new-building slots on our door step, along with the plethora of emissions related articles seemingly ...
Friday, 23 March 18
RIO TINTO AGREES SALE OF HAIL CREEK AND VALERIA TO GLENCORE FOR $1.7 BILLION
Press Release: Rio Tinto has entered into a binding agreement with Glencore for the sale of its entire interests in the Hail Creek coal mine and th ...
Wednesday, 21 March 18
CHINA'S RAW COAL OUTPUT UP IN 2017, FIRST GROWTH SINCE 2014 - XINHUA
China’s raw coal output rose in 2017 due to rebounding demand and high-quality capacity, according to the National Bureau of Statistics (NBS) ...
Wednesday, 21 March 18
MARKET INSIGHT - CHRISTOPHER T. WHITTY
President’s Trump administration proposed tariffs on steel and aluminum imports in an attempt to target China and Europe among others. Earlie ...
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- Bhatia International Limited - India
- Electricity Generating Authority of Thailand
- Central Java Power - Indonesia
- LBH Netherlands Bv - Netherlands
- Bhoruka Overseas - Indonesia
- Bangladesh Power Developement Board
- Manunggal Multi Energi - Indonesia
- VISA Power Limited - India
- Kapuas Tunggal Persada - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sical Logistics Limited - India
- Africa Commodities Group - South Africa
- Bhushan Steel Limited - India
- Bulk Trading Sa - Switzerland
- International Coal Ventures Pvt Ltd - India
- Latin American Coal - Colombia
- Karbindo Abesyapradhi - Indoneisa
- Simpson Spence & Young - Indonesia
- Ministry of Transport, Egypt
- Kaltim Prima Coal - Indonesia
- Indian Oil Corporation Limited
- European Bulk Services B.V. - Netherlands
- Ambuja Cements Ltd - India
- Edison Trading Spa - Italy
- AsiaOL BioFuels Corp., Philippines
- Indika Energy - Indonesia
- Tamil Nadu electricity Board
- Kohat Cement Company Ltd. - Pakistan
- South Luzon Thermal Energy Corporation
- Oldendorff Carriers - Singapore
- New Zealand Coal & Carbon
- Aditya Birla Group - India
- Gujarat Electricity Regulatory Commission - India
- Directorate General of MIneral and Coal - Indonesia
- Wood Mackenzie - Singapore
- Alfred C Toepfer International GmbH - Germany
- Ministry of Mines - Canada
- Merrill Lynch Commodities Europe
- Jorong Barutama Greston.PT - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Mercuria Energy - Indonesia
- Energy Link Ltd, New Zealand
- Lanco Infratech Ltd - India
- Price Waterhouse Coopers - Russia
- London Commodity Brokers - England
- Independent Power Producers Association of India
- Binh Thuan Hamico - Vietnam
- Xindia Steels Limited - India
- Leighton Contractors Pty Ltd - Australia
- Altura Mining Limited, Indonesia
- Cement Manufacturers Association - India
- MS Steel International - UAE
- Sarangani Energy Corporation, Philippines
- ICICI Bank Limited - India
- Tata Chemicals Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Deloitte Consulting - India
- SN Aboitiz Power Inc, Philippines
- Central Electricity Authority - India
- Sakthi Sugars Limited - India
- Grasim Industreis Ltd - India
- Therma Luzon, Inc, Philippines
- Power Finance Corporation Ltd., India
- Ministry of Finance - Indonesia
- Minerals Council of Australia
- Cigading International Bulk Terminal - Indonesia
- Samtan Co., Ltd - South Korea
- PTC India Limited - India
- Banpu Public Company Limited - Thailand
- Petrochimia International Co. Ltd.- Taiwan
- Ceylon Electricity Board - Sri Lanka
- Salva Resources Pvt Ltd - India
- Semirara Mining and Power Corporation, Philippines
- TeaM Sual Corporation - Philippines
- SMG Consultants - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Planning Commission, India
- Mjunction Services Limited - India
- Jindal Steel & Power Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Maheswari Brothers Coal Limited - India
- Gujarat Sidhee Cement - India
- The University of Queensland
- Siam City Cement - Thailand
- Miang Besar Coal Terminal - Indonesia
- OPG Power Generation Pvt Ltd - India
- Kideco Jaya Agung - Indonesia
- Standard Chartered Bank - UAE
- Baramulti Group, Indonesia
- Romanian Commodities Exchange
- Rio Tinto Coal - Australia
- Indonesian Coal Mining Association
- Antam Resourcindo - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Malabar Cements Ltd - India
- Formosa Plastics Group - Taiwan
- Petron Corporation, Philippines
- Attock Cement Pakistan Limited
- GAC Shipping (India) Pvt Ltd
- Aboitiz Power Corporation - Philippines
- Coastal Gujarat Power Limited - India
- Vedanta Resources Plc - India
- Orica Mining Services - Indonesia
- Metalloyd Limited - United Kingdom
- Coalindo Energy - Indonesia
- Eastern Energy - Thailand
- Sojitz Corporation - Japan
- CNBM International Corporation - China
- Vizag Seaport Private Limited - India
- Bayan Resources Tbk. - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Vijayanagar Sugar Pvt Ltd - India
- McConnell Dowell - Australia
- Ind-Barath Power Infra Limited - India
- Commonwealth Bank - Australia
- Savvy Resources Ltd - HongKong
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Australian Coal Association
- GMR Energy Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Star Paper Mills Limited - India
- The State Trading Corporation of India Ltd
- Sree Jayajothi Cements Limited - India
- Goldman Sachs - Singapore
- Straits Asia Resources Limited - Singapore
- Orica Australia Pty. Ltd.
- Thai Mozambique Logistica
- Georgia Ports Authority, United States
- Borneo Indobara - Indonesia
- Port Waratah Coal Services - Australia
- Jaiprakash Power Ventures ltd
- Wilmar Investment Holdings
- Mercator Lines Limited - India
- India Bulls Power Limited - India
- Kobexindo Tractors - Indoneisa
- Medco Energi Mining Internasional
- Bukit Makmur.PT - Indonesia
- Riau Bara Harum - Indonesia
- Chamber of Mines of South Africa
- Bharathi Cement Corporation - India
- Kumho Petrochemical, South Korea
- Pipit Mutiara Jaya. PT, Indonesia
- Meenaskhi Energy Private Limited - India
- Directorate Of Revenue Intelligence - India
- Barasentosa Lestari - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Pendopo Energi Batubara - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Toyota Tsusho Corporation, Japan
- Thiess Contractors Indonesia
- Economic Council, Georgia
- Makarim & Taira - Indonesia
- San Jose City I Power Corp, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Iligan Light & Power Inc, Philippines
- Siam City Cement PLC, Thailand
- Essar Steel Hazira Ltd - India
- Eastern Coal Council - USA
- SMC Global Power, Philippines
- Holcim Trading Pte Ltd - Singapore
- Parliament of New Zealand
- Kepco SPC Power Corporation, Philippines
- Interocean Group of Companies - India
- Parry Sugars Refinery, India
- GVK Power & Infra Limited - India
- Madhucon Powers Ltd - India
- Indogreen Group - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Indian Energy Exchange, India
- Global Green Power PLC Corporation, Philippines
- Indo Tambangraya Megah - Indonesia
- Marubeni Corporation - India
- GN Power Mariveles Coal Plant, Philippines
- Uttam Galva Steels Limited - India
- Bukit Baiduri Energy - Indonesia
- Dalmia Cement Bharat India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Karaikal Port Pvt Ltd - India
- The Treasury - Australian Government
- Sindya Power Generating Company Private Ltd
- White Energy Company Limited
- Kalimantan Lumbung Energi - Indonesia
- Coal and Oil Company - UAE
- Gujarat Mineral Development Corp Ltd - India
- Agrawal Coal Company - India
- Australian Commodity Traders Exchange
- Electricity Authority, New Zealand
- Videocon Industries ltd - India
- Trasteel International SA, Italy
- Chettinad Cement Corporation Ltd - India
- Mintek Dendrill Indonesia
- Carbofer General Trading SA - India
- Heidelberg Cement - Germany
- Krishnapatnam Port Company Ltd. - India
- Renaissance Capital - South Africa
- Timah Investasi Mineral - Indoneisa
- Larsen & Toubro Limited - India
- PNOC Exploration Corporation - Philippines
- Sinarmas Energy and Mining - Indonesia
- Intertek Mineral Services - Indonesia
- Global Business Power Corporation, Philippines
- ASAPP Information Group - India
- Global Coal Blending Company Limited - Australia
- Semirara Mining Corp, Philippines
- Energy Development Corp, Philippines
- Posco Energy - South Korea
- IEA Clean Coal Centre - UK
- Singapore Mercantile Exchange
- Globalindo Alam Lestari - Indonesia
- CIMB Investment Bank - Malaysia
- Anglo American - United Kingdom
- Kartika Selabumi Mining - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- PowerSource Philippines DevCo
- Meralco Power Generation, Philippines
- IHS Mccloskey Coal Group - USA
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