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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, 16 January 17
WHY THE SOLUTION TO INDIA'S ENERGY CHALLENGE LIES IN COAL POWER PLANTS - BENJAMIN SPORTON
India’s huge development and energy challenges mean there are economic and development arguments for investing in new coal power plants for t ...
Friday, 13 January 17
U.S. COAL PRICES TO INCREASE IN 2017 AND IN 2018 - EIA
Coal Supply
EIA estimates that U.S. coal production declined by 158 million short tons (MMst) (18%) in 2016, to 739 MMst, which would be the lowe ...
Friday, 13 January 17
U.S. COAL IMPORTS IN THIRD QUARTER 2016 TOTALED 2.7 MMST, SAYS EIA
COALspot.com – U.S., the world’s second largest coal producers have produced approximately totalled an estimated 13.8 million short ton ...
Thursday, 12 January 17
ASIA: COAL'S FUTURE - BENJAMIN SPORTON
As economies develop and the United Nations’ Sustainable Development Goals (SDGs) are realised, demand for energy will increase as more peopl ...
Wednesday, 11 January 17
MARKET INSIGHT - GEORGE DERMATIS
A new year has dawned upon us and it sure promises to be an exciting one which makes it practically impossible to resist the challenge of making a ...
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- Mercator Lines Limited - India
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- Cigading International Bulk Terminal - Indonesia
- Kideco Jaya Agung - Indonesia
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- PTC India Limited - India
- Goldman Sachs - Singapore
- Savvy Resources Ltd - HongKong
- Posco Energy - South Korea
- Krishnapatnam Port Company Ltd. - India
- Bulk Trading Sa - Switzerland
- Global Business Power Corporation, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Parliament of New Zealand
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- Attock Cement Pakistan Limited
- Ministry of Transport, Egypt
- Larsen & Toubro Limited - India
- Sojitz Corporation - Japan
- Independent Power Producers Association of India
- Medco Energi Mining Internasional
- Indonesian Coal Mining Association
- Romanian Commodities Exchange
- Altura Mining Limited, Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Electricity Generating Authority of Thailand
- Singapore Mercantile Exchange
- The State Trading Corporation of India Ltd
- Orica Mining Services - Indonesia
- The University of Queensland
- Central Java Power - Indonesia
- SN Aboitiz Power Inc, Philippines
- Eastern Energy - Thailand
- SMG Consultants - Indonesia
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- Africa Commodities Group - South Africa
- Global Green Power PLC Corporation, Philippines
- Rio Tinto Coal - Australia
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- Sindya Power Generating Company Private Ltd
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- Meralco Power Generation, Philippines
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- Borneo Indobara - Indonesia
- Ministry of Finance - Indonesia
- Globalindo Alam Lestari - Indonesia
- McConnell Dowell - Australia
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- Central Electricity Authority - India
- India Bulls Power Limited - India
- Kaltim Prima Coal - Indonesia
- MS Steel International - UAE
- Star Paper Mills Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Ceylon Electricity Board - Sri Lanka
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- Price Waterhouse Coopers - Russia
- Ambuja Cements Ltd - India
- White Energy Company Limited
- The Treasury - Australian Government
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Heidelberg Cement - Germany
- Metalloyd Limited - United Kingdom
- Mjunction Services Limited - India
- PNOC Exploration Corporation - Philippines
- Orica Australia Pty. Ltd.
- Eastern Coal Council - USA
- SMC Global Power, Philippines
- Mintek Dendrill Indonesia
- Binh Thuan Hamico - Vietnam
- PowerSource Philippines DevCo
- Georgia Ports Authority, United States
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- International Coal Ventures Pvt Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Intertek Mineral Services - Indonesia
- Formosa Plastics Group - Taiwan
- Billiton Holdings Pty Ltd - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- GVK Power & Infra Limited - India
- Siam City Cement PLC, Thailand
- Merrill Lynch Commodities Europe
- Alfred C Toepfer International GmbH - Germany
- Chettinad Cement Corporation Ltd - India
- New Zealand Coal & Carbon
- Energy Link Ltd, New Zealand
- GMR Energy Limited - India
- Deloitte Consulting - India
- London Commodity Brokers - England
- Pipit Mutiara Jaya. PT, Indonesia
- Bhatia International Limited - India
- Australian Coal Association
- Sarangani Energy Corporation, Philippines
- Commonwealth Bank - Australia
- Indian Energy Exchange, India
- Karbindo Abesyapradhi - Indoneisa
- Power Finance Corporation Ltd., India
- ASAPP Information Group - India
- Barasentosa Lestari - Indonesia
- Minerals Council of Australia
- Wood Mackenzie - Singapore
- Bharathi Cement Corporation - India
- Essar Steel Hazira Ltd - India
- Ministry of Mines - Canada
- Sical Logistics Limited - India
- GAC Shipping (India) Pvt Ltd
- Asmin Koalindo Tuhup - Indonesia
- Thai Mozambique Logistica
- Indian Oil Corporation Limited
- Videocon Industries ltd - India
- Gujarat Electricity Regulatory Commission - India
- Siam City Cement - Thailand
- Banpu Public Company Limited - Thailand
- Salva Resources Pvt Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Xindia Steels Limited - India
- Kobexindo Tractors - Indoneisa
- Tamil Nadu electricity Board
- Jorong Barutama Greston.PT - Indonesia
- Latin American Coal - Colombia
- Aditya Birla Group - India
- Holcim Trading Pte Ltd - Singapore
- Thiess Contractors Indonesia
- Interocean Group of Companies - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Therma Luzon, Inc, Philippines
- Chamber of Mines of South Africa
- San Jose City I Power Corp, Philippines
- AsiaOL BioFuels Corp., Philippines
- Baramulti Group, Indonesia
- Makarim & Taira - Indonesia
- Anglo American - United Kingdom
- Indogreen Group - Indonesia
- Economic Council, Georgia
- Mercuria Energy - Indonesia
- TeaM Sual Corporation - Philippines
- Maheswari Brothers Coal Limited - India
- Sinarmas Energy and Mining - Indonesia
- Bhushan Steel Limited - India
- Madhucon Powers Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- IEA Clean Coal Centre - UK
- Kepco SPC Power Corporation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- CIMB Investment Bank - Malaysia
- IHS Mccloskey Coal Group - USA
- Indo Tambangraya Megah - Indonesia
- Antam Resourcindo - Indonesia
- Sakthi Sugars Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Trasteel International SA, Italy
- Straits Asia Resources Limited - Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bukit Makmur.PT - Indonesia
- Riau Bara Harum - Indonesia
- Grasim Industreis Ltd - India
- Bangladesh Power Developement Board
- Bayan Resources Tbk. - Indonesia
- Timah Investasi Mineral - Indoneisa
- Coal and Oil Company - UAE
- European Bulk Services B.V. - Netherlands
- Pendopo Energi Batubara - Indonesia
- Carbofer General Trading SA - India
- Coastal Gujarat Power Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Parry Sugars Refinery, India
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- OPG Power Generation Pvt Ltd - India
- Australian Commodity Traders Exchange
- Jaiprakash Power Ventures ltd
- Semirara Mining Corp, Philippines
- Bhoruka Overseas - Indonesia
- Cement Manufacturers Association - India
- Edison Trading Spa - Italy
- Semirara Mining and Power Corporation, Philippines
- Petron Corporation, Philippines
- Electricity Authority, New Zealand
- Bukit Baiduri Energy - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Wilmar Investment Holdings
- Tata Chemicals Ltd - India
- Lanco Infratech Ltd - India
- Karaikal Port Pvt Ltd - India
- Renaissance Capital - South Africa
- Manunggal Multi Energi - Indonesia
- Port Waratah Coal Services - Australia
- Sree Jayajothi Cements Limited - India
- Aboitiz Power Corporation - Philippines
- Ind-Barath Power Infra Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Oldendorff Carriers - Singapore
- Samtan Co., Ltd - South Korea
- LBH Netherlands Bv - Netherlands
- Toyota Tsusho Corporation, Japan
- Kumho Petrochemical, South Korea
- Standard Chartered Bank - UAE
- Meenaskhi Energy Private Limited - India
- CNBM International Corporation - China
- Vedanta Resources Plc - India
- Planning Commission, India
- Dalmia Cement Bharat India
- Global Coal Blending Company Limited - Australia
- Kapuas Tunggal Persada - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- ICICI Bank Limited - India
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- Energy Development Corp, Philippines
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- VISA Power Limited - India
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- Vijayanagar Sugar Pvt Ltd - India
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