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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, 17 August 22
CHINA'S COAL-RICH SHANXI MAKES STRIDES IN HIGH-QUALITY DEVELOPMENT - XINHUA
Shanxi, a major coal-producing province in north China, has made continuous advances in high-quality development over the past decade, according to ...
Wednesday, 17 August 22
PAXOCEAN, HONG LAM MARINE AND BUREAU VERITAS SIGN MOU TO DEVELOP AMMONIA BUNKER VESSEL DESIGN - BUREAU VERITAS
PaxOcean Engineering Pte. Ltd. has signed a Memorandum of Understanding (MOU) with Singapore-based bunker vessel operator Hong Lam Marine and class ...
Wednesday, 17 August 22
GOODFUELSS ASIA-PACIFIC BRANCH KICKSTARTS SUSTAINABLE BIOFUEL DELIVERIES WITH NYK AS FIRST CLIENT - GOOD FUELS
GoodFuels, the leading biofuels pioneer for the global transport industry, has today announced that it has successfully supplied sustainable marine ...
Tuesday, 16 August 22
EU BAN ON RUSSIAN COAL IMPORTS COMES INTO FORCE - DEUTSCHE WELLE
The European Union banned Russian coal imports in response to the invasion of Ukraine as part of sanctions in April. Since then, it’s been sc ...
Thursday, 11 August 22
MARKET INSIGHT - INTERMODAL
On July 22nd, Ukraine signed a deal with Russia to release 22mn tons of grain from Ukraine’s 3 major ports (Yuzhny, Chornomorsk, Odesa). Such ...
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- Krishnapatnam Port Company Ltd. - India
- Tata Chemicals Ltd - India
- Indian Oil Corporation Limited
- OPG Power Generation Pvt Ltd - India
- Billiton Holdings Pty Ltd - Australia
- PetroVietnam Power Coal Import and Supply Company
- Oldendorff Carriers - Singapore
- Karaikal Port Pvt Ltd - India
- Videocon Industries ltd - India
- SMC Global Power, Philippines
- Borneo Indobara - Indonesia
- Essar Steel Hazira Ltd - India
- GAC Shipping (India) Pvt Ltd
- Carbofer General Trading SA - India
- Agrawal Coal Company - India
- Larsen & Toubro Limited - India
- Eastern Coal Council - USA
- Grasim Industreis Ltd - India
- Madhucon Powers Ltd - India
- Mintek Dendrill Indonesia
- Mercator Lines Limited - India
- India Bulls Power Limited - India
- Aboitiz Power Corporation - Philippines
- Ceylon Electricity Board - Sri Lanka
- Georgia Ports Authority, United States
- GN Power Mariveles Coal Plant, Philippines
- Bangladesh Power Developement Board
- Jorong Barutama Greston.PT - Indonesia
- Energy Development Corp, Philippines
- GVK Power & Infra Limited - India
- Mercuria Energy - Indonesia
- Cement Manufacturers Association - India
- The State Trading Corporation of India Ltd
- Neyveli Lignite Corporation Ltd, - India
- Rashtriya Ispat Nigam Limited - India
- South Luzon Thermal Energy Corporation
- AsiaOL BioFuels Corp., Philippines
- Chettinad Cement Corporation Ltd - India
- Ambuja Cements Ltd - India
- Tamil Nadu electricity Board
- Australian Coal Association
- Goldman Sachs - Singapore
- Thai Mozambique Logistica
- Electricity Generating Authority of Thailand
- Riau Bara Harum - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Bhushan Steel Limited - India
- Bulk Trading Sa - Switzerland
- Directorate General of MIneral and Coal - Indonesia
- Indonesian Coal Mining Association
- IHS Mccloskey Coal Group - USA
- McConnell Dowell - Australia
- Global Coal Blending Company Limited - Australia
- Global Business Power Corporation, Philippines
- Vedanta Resources Plc - India
- Pipit Mutiara Jaya. PT, Indonesia
- Altura Mining Limited, Indonesia
- European Bulk Services B.V. - Netherlands
- Makarim & Taira - Indonesia
- International Coal Ventures Pvt Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Maheswari Brothers Coal Limited - India
- ASAPP Information Group - India
- Barasentosa Lestari - Indonesia
- Timah Investasi Mineral - Indoneisa
- Semirara Mining Corp, Philippines
- Miang Besar Coal Terminal - Indonesia
- Sojitz Corporation - Japan
- Banpu Public Company Limited - Thailand
- Merrill Lynch Commodities Europe
- Asmin Koalindo Tuhup - Indonesia
- VISA Power Limited - India
- Thiess Contractors Indonesia
- Ministry of Mines - Canada
- Bharathi Cement Corporation - India
- Indian Energy Exchange, India
- Binh Thuan Hamico - Vietnam
- Siam City Cement PLC, Thailand
- Sakthi Sugars Limited - India
- Bukit Baiduri Energy - Indonesia
- Africa Commodities Group - South Africa
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Planning Commission, India
- Samtan Co., Ltd - South Korea
- Asia Pacific Energy Resources Ventures Inc, Philippines
- San Jose City I Power Corp, Philippines
- Semirara Mining and Power Corporation, Philippines
- Coal and Oil Company - UAE
- Offshore Bulk Terminal Pte Ltd, Singapore
- Simpson Spence & Young - Indonesia
- Price Waterhouse Coopers - Russia
- Port Waratah Coal Services - Australia
- Iligan Light & Power Inc, Philippines
- Dalmia Cement Bharat India
- Kartika Selabumi Mining - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Savvy Resources Ltd - HongKong
- Directorate Of Revenue Intelligence - India
- Central Electricity Authority - India
- Medco Energi Mining Internasional
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Trasteel International SA, Italy
- Bahari Cakrawala Sebuku - Indonesia
- Gujarat Sidhee Cement - India
- CNBM International Corporation - China
- Bhoruka Overseas - Indonesia
- Uttam Galva Steels Limited - India
- IEA Clean Coal Centre - UK
- Meenaskhi Energy Private Limited - India
- Jindal Steel & Power Ltd - India
- Baramulti Group, Indonesia
- CIMB Investment Bank - Malaysia
- Indika Energy - Indonesia
- Marubeni Corporation - India
- Karbindo Abesyapradhi - Indoneisa
- Edison Trading Spa - Italy
- Salva Resources Pvt Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Global Green Power PLC Corporation, Philippines
- Standard Chartered Bank - UAE
- Kumho Petrochemical, South Korea
- Wilmar Investment Holdings
- Jaiprakash Power Ventures ltd
- Commonwealth Bank - Australia
- TNB Fuel Sdn Bhd - Malaysia
- Sarangani Energy Corporation, Philippines
- Ind-Barath Power Infra Limited - India
- White Energy Company Limited
- Indo Tambangraya Megah - Indonesia
- LBH Netherlands Bv - Netherlands
- Coastal Gujarat Power Limited - India
- GMR Energy Limited - India
- Posco Energy - South Korea
- Bayan Resources Tbk. - Indonesia
- Xindia Steels Limited - India
- Vizag Seaport Private Limited - India
- Kobexindo Tractors - Indoneisa
- Aditya Birla Group - India
- Romanian Commodities Exchange
- Malabar Cements Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Power Finance Corporation Ltd., India
- Australian Commodity Traders Exchange
- Sree Jayajothi Cements Limited - India
- Wood Mackenzie - Singapore
- Vijayanagar Sugar Pvt Ltd - India
- Globalindo Alam Lestari - Indonesia
- Star Paper Mills Limited - India
- Chamber of Mines of South Africa
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Petron Corporation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kaltim Prima Coal - Indonesia
- Electricity Authority, New Zealand
- Bukit Makmur.PT - Indonesia
- Antam Resourcindo - Indonesia
- SMG Consultants - Indonesia
- Bhatia International Limited - India
- Intertek Mineral Services - Indonesia
- MS Steel International - UAE
- Kepco SPC Power Corporation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Singapore Mercantile Exchange
- Coalindo Energy - Indonesia
- Renaissance Capital - South Africa
- Eastern Energy - Thailand
- Petrochimia International Co. Ltd.- Taiwan
- Kohat Cement Company Ltd. - Pakistan
- Sinarmas Energy and Mining - Indonesia
- Ministry of Finance - Indonesia
- Sical Logistics Limited - India
- Energy Link Ltd, New Zealand
- The Treasury - Australian Government
- SN Aboitiz Power Inc, Philippines
- TeaM Sual Corporation - Philippines
- The University of Queensland
- Straits Asia Resources Limited - Singapore
- Interocean Group of Companies - India
- New Zealand Coal & Carbon
- PowerSource Philippines DevCo
- Cigading International Bulk Terminal - Indonesia
- PTC India Limited - India
- Siam City Cement - Thailand
- Sindya Power Generating Company Private Ltd
- Meralco Power Generation, Philippines
- Heidelberg Cement - Germany
- Orica Mining Services - Indonesia
- Ministry of Transport, Egypt
- Minerals Council of Australia
- Pendopo Energi Batubara - Indonesia
- ICICI Bank Limited - India
- Rio Tinto Coal - Australia
- Indogreen Group - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- PNOC Exploration Corporation - Philippines
- Economic Council, Georgia
- Central Java Power - Indonesia
- Kideco Jaya Agung - Indonesia
- Lanco Infratech Ltd - India
- London Commodity Brokers - England
- Mjunction Services Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Attock Cement Pakistan Limited
- Parliament of New Zealand
- Latin American Coal - Colombia
- Toyota Tsusho Corporation, Japan
- Independent Power Producers Association of India
- Alfred C Toepfer International GmbH - Germany
- Therma Luzon, Inc, Philippines
- Parry Sugars Refinery, India
- Metalloyd Limited - United Kingdom
- Anglo American - United Kingdom
- Orica Australia Pty. Ltd.
- Formosa Plastics Group - Taiwan
- Manunggal Multi Energi - Indonesia
- Deloitte Consulting - India
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