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