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