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