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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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- Bharathi Cement Corporation - India
- Malabar Cements Ltd - India
- ASAPP Information Group - India
- Mjunction Services Limited - India
- Indika Energy - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Anglo American - United Kingdom
- Bukit Baiduri Energy - Indonesia
- Indian Energy Exchange, India
- Barasentosa Lestari - Indonesia
- The Treasury - Australian Government
- Goldman Sachs - Singapore
- IEA Clean Coal Centre - UK
- GMR Energy Limited - India
- Carbofer General Trading SA - India
- PowerSource Philippines DevCo
- Heidelberg Cement - Germany
- Ministry of Finance - Indonesia
- Trasteel International SA, Italy
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Parry Sugars Refinery, India
- Meenaskhi Energy Private Limited - India
- Global Business Power Corporation, Philippines
- Aboitiz Power Corporation - Philippines
- Meralco Power Generation, Philippines
- Aditya Birla Group - India
- Bukit Asam (Persero) Tbk - Indonesia
- Bayan Resources Tbk. - Indonesia
- Gujarat Sidhee Cement - India
- Kaltim Prima Coal - Indonesia
- Billiton Holdings Pty Ltd - Australia
- South Luzon Thermal Energy Corporation
- Coalindo Energy - Indonesia
- Australian Coal Association
- Electricity Authority, New Zealand
- Attock Cement Pakistan Limited
- Commonwealth Bank - Australia
- Latin American Coal - Colombia
- Straits Asia Resources Limited - Singapore
- PTC India Limited - India
- Vizag Seaport Private Limited - India
- Grasim Industreis Ltd - India
- Thiess Contractors Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Videocon Industries ltd - India
- Toyota Tsusho Corporation, Japan
- Ministry of Mines - Canada
- CIMB Investment Bank - Malaysia
- Kohat Cement Company Ltd. - Pakistan
- Electricity Generating Authority of Thailand
- Renaissance Capital - South Africa
- Indo Tambangraya Megah - Indonesia
- Wilmar Investment Holdings
- Riau Bara Harum - Indonesia
- Antam Resourcindo - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Coal and Oil Company - UAE
- Chettinad Cement Corporation Ltd - India
- Sree Jayajothi Cements Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Simpson Spence & Young - Indonesia
- TeaM Sual Corporation - Philippines
- Port Waratah Coal Services - Australia
- Mercuria Energy - Indonesia
- Planning Commission, India
- San Jose City I Power Corp, Philippines
- White Energy Company Limited
- Savvy Resources Ltd - HongKong
- McConnell Dowell - Australia
- Indogreen Group - Indonesia
- Samtan Co., Ltd - South Korea
- Essar Steel Hazira Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Minerals Council of Australia
- Standard Chartered Bank - UAE
- Uttam Galva Steels Limited - India
- Deloitte Consulting - India
- Petron Corporation, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Siam City Cement - Thailand
- Orica Australia Pty. Ltd.
- Siam City Cement PLC, Thailand
- Altura Mining Limited, Indonesia
- Larsen & Toubro Limited - India
- Formosa Plastics Group - Taiwan
- Oldendorff Carriers - Singapore
- Australian Commodity Traders Exchange
- Global Green Power PLC Corporation, Philippines
- Georgia Ports Authority, United States
- Banpu Public Company Limited - Thailand
- Independent Power Producers Association of India
- Lanco Infratech Ltd - India
- Africa Commodities Group - South Africa
- Sinarmas Energy and Mining - Indonesia
- Eastern Energy - Thailand
- Interocean Group of Companies - India
- Bangladesh Power Developement Board
- Sindya Power Generating Company Private Ltd
- Semirara Mining Corp, Philippines
- PNOC Exploration Corporation - Philippines
- Central Electricity Authority - India
- Jaiprakash Power Ventures ltd
- Gujarat Electricity Regulatory Commission - India
- Medco Energi Mining Internasional
- Rio Tinto Coal - Australia
- Dalmia Cement Bharat India
- Holcim Trading Pte Ltd - Singapore
- OPG Power Generation Pvt Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Indonesian Coal Mining Association
- Parliament of New Zealand
- India Bulls Power Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Asmin Koalindo Tuhup - Indonesia
- Bhushan Steel Limited - India
- Borneo Indobara - Indonesia
- Energy Link Ltd, New Zealand
- Ministry of Transport, Egypt
- GAC Shipping (India) Pvt Ltd
- Singapore Mercantile Exchange
- Merrill Lynch Commodities Europe
- LBH Netherlands Bv - Netherlands
- Vijayanagar Sugar Pvt Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Iligan Light & Power Inc, Philippines
- VISA Power Limited - India
- Bukit Makmur.PT - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Intertek Mineral Services - Indonesia
- Bhatia International Limited - India
- Kobexindo Tractors - Indoneisa
- Baramulti Group, Indonesia
- Salva Resources Pvt Ltd - India
- Semirara Mining and Power Corporation, Philippines
- London Commodity Brokers - England
- Maheswari Brothers Coal Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Power Finance Corporation Ltd., India
- Therma Luzon, Inc, Philippines
- Timah Investasi Mineral - Indoneisa
- Chamber of Mines of South Africa
- Karbindo Abesyapradhi - Indoneisa
- Cement Manufacturers Association - India
- Agrawal Coal Company - India
- Petrochimia International Co. Ltd.- Taiwan
- Leighton Contractors Pty Ltd - Australia
- Thai Mozambique Logistica
- Pendopo Energi Batubara - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Energy Development Corp, Philippines
- Romanian Commodities Exchange
- The University of Queensland
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Tata Chemicals Ltd - India
- Directorate Of Revenue Intelligence - India
- Pipit Mutiara Jaya. PT, Indonesia
- Eastern Coal Council - USA
- Economic Council, Georgia
- SMG Consultants - Indonesia
- Karaikal Port Pvt Ltd - India
- Xindia Steels Limited - India
- Gujarat Mineral Development Corp Ltd - India
- GVK Power & Infra Limited - India
- Makarim & Taira - Indonesia
- Sarangani Energy Corporation, Philippines
- Coastal Gujarat Power Limited - India
- IHS Mccloskey Coal Group - USA
- Globalindo Alam Lestari - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Kepco SPC Power Corporation, Philippines
- The State Trading Corporation of India Ltd
- Kumho Petrochemical, South Korea
- ICICI Bank Limited - India
- Madhucon Powers Ltd - India
- International Coal Ventures Pvt Ltd - India
- MS Steel International - UAE
- GN Power Mariveles Coal Plant, Philippines
- Central Java Power - Indonesia
- Tamil Nadu electricity Board
- Star Paper Mills Limited - India
- Vedanta Resources Plc - India
- SMC Global Power, Philippines
- Indian Oil Corporation Limited
- Mintek Dendrill Indonesia
- Ceylon Electricity Board - Sri Lanka
- Bhoruka Overseas - Indonesia
- Sical Logistics Limited - India
- Binh Thuan Hamico - Vietnam
- Bulk Trading Sa - Switzerland
- Sakthi Sugars Limited - India
- Miang Besar Coal Terminal - Indonesia
- Global Coal Blending Company Limited - Australia
- Manunggal Multi Energi - Indonesia
- Jindal Steel & Power Ltd - India
- CNBM International Corporation - China
- Marubeni Corporation - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Directorate General of MIneral and Coal - Indonesia
- Edison Trading Spa - Italy
- Kartika Selabumi Mining - Indonesia
- European Bulk Services B.V. - Netherlands
- Sojitz Corporation - Japan
- Maharashtra Electricity Regulatory Commission - India
- Metalloyd Limited - United Kingdom
- Mercator Lines Limited - India
- Wood Mackenzie - Singapore
- AsiaOL BioFuels Corp., Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Ind-Barath Power Infra Limited - India
- SN Aboitiz Power Inc, Philippines
- Orica Mining Services - Indonesia
- Kideco Jaya Agung - Indonesia
- Posco Energy - South Korea
- Ambuja Cements Ltd - India
- New Zealand Coal & Carbon
- Rashtriya Ispat Nigam Limited - India
- Price Waterhouse Coopers - Russia
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