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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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Friday, 23 September 22
CHINA DIGS DEEP TO RAISE COAL OUTPUT TO RECORD HIGH - REUTERS
China’s coal production has surged this year as the government seeks to improve energy security by reducing dependence on imports and amassin ...
Friday, 23 September 22
EUROPEAN STEEL BUYERS SEEK DIRECTION IN VOLATILE MARKET - MEPS INTERNATIONAL
Demand for steel is slow to recover, after the summer break. Mill production costs continue to increase. Steel purchasers are uncertain about the f ...
Friday, 23 September 22
BUOYANT COAL INDUSTRY SEEKS WAYS TO STAY IN THE LONG-TERM ENERGY MIX - REUTERS
There’s no doubt that the global coal industry has been a major beneficiary of Russia’s invasion of Ukraine and the subsequent energy c ...
Friday, 23 September 22
MARKET INSIGHT - INTERMODAL
In view of the forthcoming winter, Europe is trying to escape from its energy (oil & gas) dependency from Russia to ensure energy abundance eve ...
Tuesday, 20 September 22
CHINA'S DAILY COAL OUTPUT HITS 3-MONTH LOW IN AUGUST ON RAINS, COVID CURBS - REUTERS
China’s daily coal output in August slipped to a three-month low as some mines in its biggest coal mining regions reduced operations or even ...
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- Jindal Steel & Power Ltd - India
- Xindia Steels Limited - India
- Energy Development Corp, Philippines
- Parliament of New Zealand
- Malabar Cements Ltd - India
- Savvy Resources Ltd - HongKong
- CNBM International Corporation - China
- Oldendorff Carriers - Singapore
- European Bulk Services B.V. - Netherlands
- Orica Australia Pty. Ltd.
- VISA Power Limited - India
- Madhucon Powers Ltd - India
- Singapore Mercantile Exchange
- San Jose City I Power Corp, Philippines
- Indika Energy - Indonesia
- PowerSource Philippines DevCo
- The Treasury - Australian Government
- Gujarat Mineral Development Corp Ltd - India
- Marubeni Corporation - India
- Timah Investasi Mineral - Indoneisa
- Bhatia International Limited - India
- Formosa Plastics Group - Taiwan
- Kepco SPC Power Corporation, Philippines
- Intertek Mineral Services - Indonesia
- Independent Power Producers Association of India
- Eastern Coal Council - USA
- Bukit Asam (Persero) Tbk - Indonesia
- Indogreen Group - Indonesia
- Central Electricity Authority - India
- Larsen & Toubro Limited - India
- CIMB Investment Bank - Malaysia
- Africa Commodities Group - South Africa
- Global Green Power PLC Corporation, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Orica Mining Services - Indonesia
- Romanian Commodities Exchange
- Vijayanagar Sugar Pvt Ltd - India
- GVK Power & Infra Limited - India
- Sojitz Corporation - Japan
- Agrawal Coal Company - India
- Holcim Trading Pte Ltd - Singapore
- Rio Tinto Coal - Australia
- Ministry of Mines - Canada
- Pipit Mutiara Jaya. PT, Indonesia
- Kaltim Prima Coal - Indonesia
- TeaM Sual Corporation - Philippines
- Aditya Birla Group - India
- Meralco Power Generation, Philippines
- Chamber of Mines of South Africa
- Merrill Lynch Commodities Europe
- Metalloyd Limited - United Kingdom
- OPG Power Generation Pvt Ltd - India
- Bangladesh Power Developement Board
- Makarim & Taira - Indonesia
- Energy Link Ltd, New Zealand
- Meenaskhi Energy Private Limited - India
- Mjunction Services Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Riau Bara Harum - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Interocean Group of Companies - India
- Power Finance Corporation Ltd., India
- Bhushan Steel Limited - India
- Wood Mackenzie - Singapore
- Vizag Seaport Private Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Global Coal Blending Company Limited - Australia
- Straits Asia Resources Limited - Singapore
- Alfred C Toepfer International GmbH - Germany
- Karbindo Abesyapradhi - Indoneisa
- White Energy Company Limited
- Australian Commodity Traders Exchange
- Chettinad Cement Corporation Ltd - India
- Krishnapatnam Port Company Ltd. - India
- AsiaOL BioFuels Corp., Philippines
- Banpu Public Company Limited - Thailand
- Siam City Cement - Thailand
- Therma Luzon, Inc, Philippines
- Toyota Tsusho Corporation, Japan
- Thai Mozambique Logistica
- Edison Trading Spa - Italy
- Pendopo Energi Batubara - Indonesia
- Aboitiz Power Corporation - Philippines
- Ministry of Finance - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Standard Chartered Bank - UAE
- Kumho Petrochemical, South Korea
- PetroVietnam Power Coal Import and Supply Company
- Goldman Sachs - Singapore
- Ambuja Cements Ltd - India
- Dalmia Cement Bharat India
- Carbofer General Trading SA - India
- Electricity Authority, New Zealand
- Anglo American - United Kingdom
- Bukit Baiduri Energy - Indonesia
- PTC India Limited - India
- IHS Mccloskey Coal Group - USA
- Gujarat Sidhee Cement - India
- Cigading International Bulk Terminal - Indonesia
- Mercuria Energy - Indonesia
- ASAPP Information Group - India
- Kalimantan Lumbung Energi - Indonesia
- Semirara Mining Corp, Philippines
- Attock Cement Pakistan Limited
- Commonwealth Bank - Australia
- Maharashtra Electricity Regulatory Commission - India
- Electricity Generating Authority of Thailand
- Antam Resourcindo - Indonesia
- Kobexindo Tractors - Indoneisa
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Directorate Of Revenue Intelligence - India
- SMG Consultants - Indonesia
- Sindya Power Generating Company Private Ltd
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Star Paper Mills Limited - India
- Medco Energi Mining Internasional
- India Bulls Power Limited - India
- Samtan Co., Ltd - South Korea
- Thiess Contractors Indonesia
- Gujarat Electricity Regulatory Commission - India
- IEA Clean Coal Centre - UK
- Mintek Dendrill Indonesia
- Sakthi Sugars Limited - India
- Ceylon Electricity Board - Sri Lanka
- Salva Resources Pvt Ltd - India
- Indian Oil Corporation Limited
- Minerals Council of Australia
- Cement Manufacturers Association - India
- PNOC Exploration Corporation - Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- Ind-Barath Power Infra Limited - India
- South Luzon Thermal Energy Corporation
- Baramulti Group, Indonesia
- SMC Global Power, Philippines
- Siam City Cement PLC, Thailand
- Bharathi Cement Corporation - India
- Latin American Coal - Colombia
- Indian Energy Exchange, India
- Bayan Resources Tbk. - Indonesia
- ICICI Bank Limited - India
- Uttam Galva Steels Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Billiton Holdings Pty Ltd - Australia
- Leighton Contractors Pty Ltd - Australia
- Coal and Oil Company - UAE
- Binh Thuan Hamico - Vietnam
- Asmin Koalindo Tuhup - Indonesia
- GAC Shipping (India) Pvt Ltd
- Tamil Nadu electricity Board
- Grasim Industreis Ltd - India
- Georgia Ports Authority, United States
- Renaissance Capital - South Africa
- Altura Mining Limited, Indonesia
- Kapuas Tunggal Persada - Indonesia
- Indo Tambangraya Megah - Indonesia
- MS Steel International - UAE
- Bhoruka Overseas - Indonesia
- Port Waratah Coal Services - Australia
- Ministry of Transport, Egypt
- Posco Energy - South Korea
- Maheswari Brothers Coal Limited - India
- Kideco Jaya Agung - Indonesia
- Bulk Trading Sa - Switzerland
- Bukit Makmur.PT - Indonesia
- London Commodity Brokers - England
- GMR Energy Limited - India
- Semirara Mining and Power Corporation, Philippines
- Eastern Energy - Thailand
- Kohat Cement Company Ltd. - Pakistan
- Simpson Spence & Young - Indonesia
- Heidelberg Cement - Germany
- Miang Besar Coal Terminal - Indonesia
- Sical Logistics Limited - India
- Coalindo Energy - Indonesia
- Planning Commission, India
- Deloitte Consulting - India
- Central Java Power - Indonesia
- New Zealand Coal & Carbon
- Wilmar Investment Holdings
- Coastal Gujarat Power Limited - India
- Sarangani Energy Corporation, Philippines
- International Coal Ventures Pvt Ltd - India
- Jaiprakash Power Ventures ltd
- LBH Netherlands Bv - Netherlands
- The State Trading Corporation of India Ltd
- Iligan Light & Power Inc, Philippines
- Economic Council, Georgia
- Rashtriya Ispat Nigam Limited - India
- The University of Queensland
- Tata Chemicals Ltd - India
- Globalindo Alam Lestari - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Kartika Selabumi Mining - Indonesia
- Karaikal Port Pvt Ltd - India
- McConnell Dowell - Australia
- Australian Coal Association
- Parry Sugars Refinery, India
- Sinarmas Energy and Mining - Indonesia
- Global Business Power Corporation, Philippines
- Price Waterhouse Coopers - Russia
- Trasteel International SA, Italy
- Barasentosa Lestari - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Petron Corporation, Philippines
- Manunggal Multi Energi - Indonesia
- Sree Jayajothi Cements Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Borneo Indobara - Indonesia
- Indonesian Coal Mining Association
- SN Aboitiz Power Inc, Philippines
- Vedanta Resources Plc - India
- Essar Steel Hazira Ltd - India
- Mercator Lines Limited - India
- Lanco Infratech Ltd - India
- Videocon Industries ltd - India
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