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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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Wednesday, 17 August 22
CHINA'S COAL-RICH SHANXI MAKES STRIDES IN HIGH-QUALITY DEVELOPMENT - XINHUA
Shanxi, a major coal-producing province in north China, has made continuous advances in high-quality development over the past decade, according to ...
Wednesday, 17 August 22
PAXOCEAN, HONG LAM MARINE AND BUREAU VERITAS SIGN MOU TO DEVELOP AMMONIA BUNKER VESSEL DESIGN - BUREAU VERITAS
PaxOcean Engineering Pte. Ltd. has signed a Memorandum of Understanding (MOU) with Singapore-based bunker vessel operator Hong Lam Marine and class ...
Wednesday, 17 August 22
GOODFUELSS ASIA-PACIFIC BRANCH KICKSTARTS SUSTAINABLE BIOFUEL DELIVERIES WITH NYK AS FIRST CLIENT - GOOD FUELS
GoodFuels, the leading biofuels pioneer for the global transport industry, has today announced that it has successfully supplied sustainable marine ...
Tuesday, 16 August 22
EU BAN ON RUSSIAN COAL IMPORTS COMES INTO FORCE - DEUTSCHE WELLE
The European Union banned Russian coal imports in response to the invasion of Ukraine as part of sanctions in April. Since then, it’s been sc ...
Thursday, 11 August 22
MARKET INSIGHT - INTERMODAL
On July 22nd, Ukraine signed a deal with Russia to release 22mn tons of grain from Ukraine’s 3 major ports (Yuzhny, Chornomorsk, Odesa). Such ...
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- Simpson Spence & Young - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Jorong Barutama Greston.PT - Indonesia
- Goldman Sachs - Singapore
- Intertek Mineral Services - Indonesia
- Pendopo Energi Batubara - Indonesia
- Australian Coal Association
- Bulk Trading Sa - Switzerland
- PTC India Limited - India
- Eastern Energy - Thailand
- Romanian Commodities Exchange
- India Bulls Power Limited - India
- Karaikal Port Pvt Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Thiess Contractors Indonesia
- Formosa Plastics Group - Taiwan
- Tata Chemicals Ltd - India
- SN Aboitiz Power Inc, Philippines
- Lanco Infratech Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Indogreen Group - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Bahari Cakrawala Sebuku - Indonesia
- Indika Energy - Indonesia
- Iligan Light & Power Inc, Philippines
- Australian Commodity Traders Exchange
- Riau Bara Harum - Indonesia
- Orica Australia Pty. Ltd.
- Krishnapatnam Port Company Ltd. - India
- Indo Tambangraya Megah - Indonesia
- Ind-Barath Power Infra Limited - India
- Price Waterhouse Coopers - Russia
- Medco Energi Mining Internasional
- ICICI Bank Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- OPG Power Generation Pvt Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Salva Resources Pvt Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- European Bulk Services B.V. - Netherlands
- Antam Resourcindo - Indonesia
- Banpu Public Company Limited - Thailand
- Deloitte Consulting - India
- The Treasury - Australian Government
- Singapore Mercantile Exchange
- PowerSource Philippines DevCo
- Gujarat Mineral Development Corp Ltd - India
- Bhoruka Overseas - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Indian Oil Corporation Limited
- Cement Manufacturers Association - India
- Power Finance Corporation Ltd., India
- Global Coal Blending Company Limited - Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- SMC Global Power, Philippines
- Sakthi Sugars Limited - India
- Manunggal Multi Energi - Indonesia
- Oldendorff Carriers - Singapore
- GMR Energy Limited - India
- Global Business Power Corporation, Philippines
- Indian Energy Exchange, India
- Samtan Co., Ltd - South Korea
- Coastal Gujarat Power Limited - India
- AsiaOL BioFuels Corp., Philippines
- Kartika Selabumi Mining - Indonesia
- Vedanta Resources Plc - India
- Coal and Oil Company - UAE
- PNOC Exploration Corporation - Philippines
- Sojitz Corporation - Japan
- Star Paper Mills Limited - India
- Binh Thuan Hamico - Vietnam
- ASAPP Information Group - India
- Kapuas Tunggal Persada - Indonesia
- Merrill Lynch Commodities Europe
- Energy Link Ltd, New Zealand
- Tamil Nadu electricity Board
- Aboitiz Power Corporation - Philippines
- Electricity Authority, New Zealand
- Siam City Cement - Thailand
- Heidelberg Cement - Germany
- Wilmar Investment Holdings
- Larsen & Toubro Limited - India
- Toyota Tsusho Corporation, Japan
- Chamber of Mines of South Africa
- Latin American Coal - Colombia
- Indonesian Coal Mining Association
- The University of Queensland
- Interocean Group of Companies - India
- Ministry of Transport, Egypt
- South Luzon Thermal Energy Corporation
- Petron Corporation, Philippines
- Sical Logistics Limited - India
- Metalloyd Limited - United Kingdom
- LBH Netherlands Bv - Netherlands
- Kumho Petrochemical, South Korea
- Essar Steel Hazira Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Maharashtra Electricity Regulatory Commission - India
- Kohat Cement Company Ltd. - Pakistan
- Central Java Power - Indonesia
- IEA Clean Coal Centre - UK
- Georgia Ports Authority, United States
- Videocon Industries ltd - India
- Trasteel International SA, Italy
- Gujarat Sidhee Cement - India
- White Energy Company Limited
- Siam City Cement PLC, Thailand
- Karbindo Abesyapradhi - Indoneisa
- CIMB Investment Bank - Malaysia
- Thai Mozambique Logistica
- Sree Jayajothi Cements Limited - India
- Carbofer General Trading SA - India
- Agrawal Coal Company - India
- Vijayanagar Sugar Pvt Ltd - India
- International Coal Ventures Pvt Ltd - India
- Jaiprakash Power Ventures ltd
- Marubeni Corporation - India
- Xindia Steels Limited - India
- Ambuja Cements Ltd - India
- The State Trading Corporation of India Ltd
- Ministry of Finance - Indonesia
- TeaM Sual Corporation - Philippines
- Semirara Mining Corp, Philippines
- Mintek Dendrill Indonesia
- Mjunction Services Limited - India
- Electricity Generating Authority of Thailand
- Ministry of Mines - Canada
- Planning Commission, India
- Altura Mining Limited, Indonesia
- Miang Besar Coal Terminal - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Bayan Resources Tbk. - Indonesia
- Port Waratah Coal Services - Australia
- Directorate General of MIneral and Coal - Indonesia
- Bharathi Cement Corporation - India
- Minerals Council of Australia
- VISA Power Limited - India
- Economic Council, Georgia
- GVK Power & Infra Limited - India
- Mercator Lines Limited - India
- Mercuria Energy - Indonesia
- Commonwealth Bank - Australia
- Kepco SPC Power Corporation, Philippines
- Aditya Birla Group - India
- Barasentosa Lestari - Indonesia
- Bhushan Steel Limited - India
- Posco Energy - South Korea
- Vizag Seaport Private Limited - India
- Rio Tinto Coal - Australia
- Wood Mackenzie - Singapore
- Holcim Trading Pte Ltd - Singapore
- Sarangani Energy Corporation, Philippines
- Energy Development Corp, Philippines
- Africa Commodities Group - South Africa
- Renaissance Capital - South Africa
- Edison Trading Spa - Italy
- Therma Luzon, Inc, Philippines
- Madhucon Powers Ltd - India
- Parliament of New Zealand
- TNB Fuel Sdn Bhd - Malaysia
- Asmin Koalindo Tuhup - Indonesia
- Baramulti Group, Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Savvy Resources Ltd - HongKong
- Global Green Power PLC Corporation, Philippines
- Bukit Makmur.PT - Indonesia
- Independent Power Producers Association of India
- Kideco Jaya Agung - Indonesia
- Meenaskhi Energy Private Limited - India
- Dalmia Cement Bharat India
- Parry Sugars Refinery, India
- Timah Investasi Mineral - Indoneisa
- San Jose City I Power Corp, Philippines
- Bhatia International Limited - India
- Kaltim Prima Coal - Indonesia
- Anglo American - United Kingdom
- Alfred C Toepfer International GmbH - Germany
- CNBM International Corporation - China
- Orica Mining Services - Indonesia
- New Zealand Coal & Carbon
- Standard Chartered Bank - UAE
- Globalindo Alam Lestari - Indonesia
- Directorate Of Revenue Intelligence - India
- Malabar Cements Ltd - India
- Central Electricity Authority - India
- Bangladesh Power Developement Board
- Kobexindo Tractors - Indoneisa
- Billiton Holdings Pty Ltd - Australia
- Grasim Industreis Ltd - India
- Rashtriya Ispat Nigam Limited - India
- SMG Consultants - Indonesia
- Attock Cement Pakistan Limited
- GN Power Mariveles Coal Plant, Philippines
- Eastern Coal Council - USA
- Chettinad Cement Corporation Ltd - India
- London Commodity Brokers - England
- Petrochimia International Co. Ltd.- Taiwan
- MS Steel International - UAE
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kalimantan Lumbung Energi - Indonesia
- Bukit Baiduri Energy - Indonesia
- Jindal Steel & Power Ltd - India
- IHS Mccloskey Coal Group - USA
- Coalindo Energy - Indonesia
- Borneo Indobara - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Straits Asia Resources Limited - Singapore
- Uttam Galva Steels Limited - India
- Makarim & Taira - Indonesia
- McConnell Dowell - Australia
- Sindya Power Generating Company Private Ltd
- Meralco Power Generation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Maheswari Brothers Coal Limited - India
- GAC Shipping (India) Pvt Ltd
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