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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, 29 July 22
GLENCORE TO SUPPLY COAL TO NIPPON STEEL AT $375 PER TON - BLOOMBERG
Glencore Plc, agreed to supply coal to Nippon Steel at one of the highest prices ever paid by the Japan Bloomberg reported on July 27.
...
Friday, 29 July 22
GLOBAL COAL DEMAND IS SET TO RETURN TO ITS ALL-TIME HIGH IN 2022 - IEA
The world’s consumption of coal is set to rise slightly in 2022, taking it back to the record level it reached nearly a decade ago, according ...
Thursday, 28 July 22
CREW FAMILIARISATION IS CRITICAL WHEN TAKING OVER A VESSEL - WEST P&I CLUB
Knowledge to Elevate
When a vessel changes ownership and/or manager, it can take some considerable time before the new crew and mana ...
Thursday, 28 July 22
RETURN OF COAL A THREAT TO EUROPEAN COMPANIES' ESG RATINGS - REUTERS
European companies turning to coal as an alternative to Russian gas face a hit to their environmental, social and governance ratings, leaving them ...
Wednesday, 27 July 22
MARKET INSIGHT - INTERMODAL
Amid the upcoming ban on Russian coal from the EU, which will be in full effect on August 10th, EU nations have been accelerating their coal import ...
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- Kepco SPC Power Corporation, Philippines
- PowerSource Philippines DevCo
- PetroVietnam Power Coal Import and Supply Company
- Riau Bara Harum - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Goldman Sachs - Singapore
- Eastern Coal Council - USA
- PTC India Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Kohat Cement Company Ltd. - Pakistan
- Gujarat Electricity Regulatory Commission - India
- Wilmar Investment Holdings
- Karbindo Abesyapradhi - Indoneisa
- Global Business Power Corporation, Philippines
- Makarim & Taira - Indonesia
- Karaikal Port Pvt Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Anglo American - United Kingdom
- GAC Shipping (India) Pvt Ltd
- Essar Steel Hazira Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Kartika Selabumi Mining - Indonesia
- Central Java Power - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Mjunction Services Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Commonwealth Bank - Australia
- Binh Thuan Hamico - Vietnam
- South Luzon Thermal Energy Corporation
- AsiaOL BioFuels Corp., Philippines
- Xindia Steels Limited - India
- Global Green Power PLC Corporation, Philippines
- Krishnapatnam Port Company Ltd. - India
- Cigading International Bulk Terminal - Indonesia
- Videocon Industries ltd - India
- Maheswari Brothers Coal Limited - India
- Antam Resourcindo - Indonesia
- White Energy Company Limited
- Petron Corporation, Philippines
- Kumho Petrochemical, South Korea
- Vedanta Resources Plc - India
- TeaM Sual Corporation - Philippines
- Bulk Trading Sa - Switzerland
- Coal and Oil Company - UAE
- Parliament of New Zealand
- ASAPP Information Group - India
- Directorate Of Revenue Intelligence - India
- Simpson Spence & Young - Indonesia
- Jaiprakash Power Ventures ltd
- Manunggal Multi Energi - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Salva Resources Pvt Ltd - India
- Aditya Birla Group - India
- Sical Logistics Limited - India
- Agrawal Coal Company - India
- Energy Link Ltd, New Zealand
- VISA Power Limited - India
- Edison Trading Spa - Italy
- Bharathi Cement Corporation - India
- McConnell Dowell - Australia
- Bangladesh Power Developement Board
- Georgia Ports Authority, United States
- Siam City Cement PLC, Thailand
- Dalmia Cement Bharat India
- Barasentosa Lestari - Indonesia
- Kobexindo Tractors - Indoneisa
- Heidelberg Cement - Germany
- Eastern Energy - Thailand
- Sakthi Sugars Limited - India
- Indogreen Group - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- IHS Mccloskey Coal Group - USA
- OPG Power Generation Pvt Ltd - India
- Bhatia International Limited - India
- SMG Consultants - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Maharashtra Electricity Regulatory Commission - India
- Samtan Co., Ltd - South Korea
- European Bulk Services B.V. - Netherlands
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bukit Asam (Persero) Tbk - Indonesia
- Lanco Infratech Ltd - India
- Coastal Gujarat Power Limited - India
- Savvy Resources Ltd - HongKong
- Merrill Lynch Commodities Europe
- Kaltim Prima Coal - Indonesia
- Chamber of Mines of South Africa
- TNB Fuel Sdn Bhd - Malaysia
- Electricity Authority, New Zealand
- MS Steel International - UAE
- Jindal Steel & Power Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Port Waratah Coal Services - Australia
- Rashtriya Ispat Nigam Limited - India
- International Coal Ventures Pvt Ltd - India
- Sindya Power Generating Company Private Ltd
- Ministry of Mines - Canada
- Renaissance Capital - South Africa
- Globalindo Alam Lestari - Indonesia
- Timah Investasi Mineral - Indoneisa
- Bayan Resources Tbk. - Indonesia
- Gujarat Sidhee Cement - India
- Kapuas Tunggal Persada - Indonesia
- Ministry of Transport, Egypt
- Borneo Indobara - Indonesia
- New Zealand Coal & Carbon
- Trasteel International SA, Italy
- Bukit Baiduri Energy - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Indian Energy Exchange, India
- Neyveli Lignite Corporation Ltd, - India
- Wood Mackenzie - Singapore
- Planning Commission, India
- Pendopo Energi Batubara - Indonesia
- Attock Cement Pakistan Limited
- Tata Chemicals Ltd - India
- CNBM International Corporation - China
- Meralco Power Generation, Philippines
- Oldendorff Carriers - Singapore
- Ind-Barath Power Infra Limited - India
- Indian Oil Corporation Limited
- Grasim Industreis Ltd - India
- Tamil Nadu electricity Board
- GMR Energy Limited - India
- Power Finance Corporation Ltd., India
- Independent Power Producers Association of India
- Posco Energy - South Korea
- London Commodity Brokers - England
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Aboitiz Power Corporation - Philippines
- Uttam Galva Steels Limited - India
- Sree Jayajothi Cements Limited - India
- Sarangani Energy Corporation, Philippines
- Carbofer General Trading SA - India
- The University of Queensland
- Star Paper Mills Limited - India
- Bukit Makmur.PT - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Latin American Coal - Colombia
- Banpu Public Company Limited - Thailand
- Chettinad Cement Corporation Ltd - India
- Formosa Plastics Group - Taiwan
- Cement Manufacturers Association - India
- Price Waterhouse Coopers - Russia
- Siam City Cement - Thailand
- Pipit Mutiara Jaya. PT, Indonesia
- Orica Mining Services - Indonesia
- Global Coal Blending Company Limited - Australia
- Standard Chartered Bank - UAE
- The State Trading Corporation of India Ltd
- The Treasury - Australian Government
- Vizag Seaport Private Limited - India
- Iligan Light & Power Inc, Philippines
- Australian Commodity Traders Exchange
- Deloitte Consulting - India
- Semirara Mining Corp, Philippines
- LBH Netherlands Bv - Netherlands
- Baramulti Group, Indonesia
- Electricity Generating Authority of Thailand
- Parry Sugars Refinery, India
- Ceylon Electricity Board - Sri Lanka
- Indonesian Coal Mining Association
- ICICI Bank Limited - India
- SN Aboitiz Power Inc, Philippines
- PNOC Exploration Corporation - Philippines
- Kideco Jaya Agung - Indonesia
- Indika Energy - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Economic Council, Georgia
- Mercuria Energy - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Africa Commodities Group - South Africa
- Bhoruka Overseas - Indonesia
- Medco Energi Mining Internasional
- Singapore Mercantile Exchange
- Ambuja Cements Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Toyota Tsusho Corporation, Japan
- Romanian Commodities Exchange
- India Bulls Power Limited - India
- Energy Development Corp, Philippines
- Malabar Cements Ltd - India
- Mercator Lines Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Orica Australia Pty. Ltd.
- Metalloyd Limited - United Kingdom
- CIMB Investment Bank - Malaysia
- Intertek Mineral Services - Indonesia
- Madhucon Powers Ltd - India
- Australian Coal Association
- Indo Tambangraya Megah - Indonesia
- Thai Mozambique Logistica
- Thiess Contractors Indonesia
- Ministry of Finance - Indonesia
- Altura Mining Limited, Indonesia
- Marubeni Corporation - India
- Rio Tinto Coal - Australia
- SMC Global Power, Philippines
- Interocean Group of Companies - India
- Therma Luzon, Inc, Philippines
- Sojitz Corporation - Japan
- Larsen & Toubro Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bahari Cakrawala Sebuku - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- San Jose City I Power Corp, Philippines
- Bhushan Steel Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Meenaskhi Energy Private Limited - India
- GVK Power & Infra Limited - India
- IEA Clean Coal Centre - UK
- Mintek Dendrill Indonesia
- Central Electricity Authority - India
- Minerals Council of Australia
- Coalindo Energy - Indonesia
- Straits Asia Resources Limited - Singapore
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