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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, 29 July 22
GLENCORE TO SUPPLY COAL TO NIPPON STEEL AT $375 PER TON - BLOOMBERG
Glencore Plc, agreed to supply coal to Nippon Steel at one of the highest prices ever paid by the Japan Bloomberg reported on July 27.
...
Friday, 29 July 22
GLOBAL COAL DEMAND IS SET TO RETURN TO ITS ALL-TIME HIGH IN 2022 - IEA
The world’s consumption of coal is set to rise slightly in 2022, taking it back to the record level it reached nearly a decade ago, according ...
Thursday, 28 July 22
CREW FAMILIARISATION IS CRITICAL WHEN TAKING OVER A VESSEL - WEST P&I CLUB
Knowledge to Elevate
When a vessel changes ownership and/or manager, it can take some considerable time before the new crew and mana ...
Thursday, 28 July 22
RETURN OF COAL A THREAT TO EUROPEAN COMPANIES' ESG RATINGS - REUTERS
European companies turning to coal as an alternative to Russian gas face a hit to their environmental, social and governance ratings, leaving them ...
Wednesday, 27 July 22
MARKET INSIGHT - INTERMODAL
Amid the upcoming ban on Russian coal from the EU, which will be in full effect on August 10th, EU nations have been accelerating their coal import ...
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- Wilmar Investment Holdings
- Merrill Lynch Commodities Europe
- Indian Energy Exchange, India
- Kaltim Prima Coal - Indonesia
- Bangladesh Power Developement Board
- Mjunction Services Limited - India
- GAC Shipping (India) Pvt Ltd
- McConnell Dowell - Australia
- Eastern Energy - Thailand
- Semirara Mining Corp, Philippines
- Orica Mining Services - Indonesia
- Dalmia Cement Bharat India
- Krishnapatnam Port Company Ltd. - India
- The Treasury - Australian Government
- Vedanta Resources Plc - India
- TeaM Sual Corporation - Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- AsiaOL BioFuels Corp., Philippines
- Renaissance Capital - South Africa
- Deloitte Consulting - India
- Commonwealth Bank - Australia
- Electricity Generating Authority of Thailand
- Ind-Barath Power Infra Limited - India
- European Bulk Services B.V. - Netherlands
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Globalindo Alam Lestari - Indonesia
- Sindya Power Generating Company Private Ltd
- Holcim Trading Pte Ltd - Singapore
- South Luzon Thermal Energy Corporation
- Bhoruka Overseas - Indonesia
- CNBM International Corporation - China
- Indogreen Group - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Mintek Dendrill Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Latin American Coal - Colombia
- Romanian Commodities Exchange
- Asia Pacific Energy Resources Ventures Inc, Philippines
- OPG Power Generation Pvt Ltd - India
- Borneo Indobara - Indonesia
- Simpson Spence & Young - Indonesia
- Global Business Power Corporation, Philippines
- ICICI Bank Limited - India
- PNOC Exploration Corporation - Philippines
- MS Steel International - UAE
- Directorate General of MIneral and Coal - Indonesia
- Sree Jayajothi Cements Limited - India
- Gujarat Sidhee Cement - India
- Australian Coal Association
- Attock Cement Pakistan Limited
- Ministry of Finance - Indonesia
- Straits Asia Resources Limited - Singapore
- Miang Besar Coal Terminal - Indonesia
- International Coal Ventures Pvt Ltd - India
- Vizag Seaport Private Limited - India
- The University of Queensland
- Xindia Steels Limited - India
- Bhushan Steel Limited - India
- Siam City Cement - Thailand
- Chettinad Cement Corporation Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Coal and Oil Company - UAE
- Coastal Gujarat Power Limited - India
- Uttam Galva Steels Limited - India
- Edison Trading Spa - Italy
- Videocon Industries ltd - India
- Power Finance Corporation Ltd., India
- Kohat Cement Company Ltd. - Pakistan
- Mercator Lines Limited - India
- Grasim Industreis Ltd - India
- Banpu Public Company Limited - Thailand
- Orica Australia Pty. Ltd.
- TNB Fuel Sdn Bhd - Malaysia
- Africa Commodities Group - South Africa
- Leighton Contractors Pty Ltd - Australia
- Altura Mining Limited, Indonesia
- London Commodity Brokers - England
- Kobexindo Tractors - Indoneisa
- Karbindo Abesyapradhi - Indoneisa
- Bank of Tokyo Mitsubishi UFJ Ltd
- Medco Energi Mining Internasional
- Malabar Cements Ltd - India
- Aboitiz Power Corporation - Philippines
- Pendopo Energi Batubara - Indonesia
- Iligan Light & Power Inc, Philippines
- Timah Investasi Mineral - Indoneisa
- Cigading International Bulk Terminal - Indonesia
- IHS Mccloskey Coal Group - USA
- Barasentosa Lestari - Indonesia
- Economic Council, Georgia
- India Bulls Power Limited - India
- PTC India Limited - India
- Bukit Makmur.PT - Indonesia
- Sical Logistics Limited - India
- Ambuja Cements Ltd - India
- Bharathi Cement Corporation - India
- Aditya Birla Group - India
- Indika Energy - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Coalindo Energy - Indonesia
- Riau Bara Harum - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- VISA Power Limited - India
- Interocean Group of Companies - India
- San Jose City I Power Corp, Philippines
- LBH Netherlands Bv - Netherlands
- Port Waratah Coal Services - Australia
- Madhucon Powers Ltd - India
- Bhatia International Limited - India
- Petron Corporation, Philippines
- GMR Energy Limited - India
- Kartika Selabumi Mining - Indonesia
- Agrawal Coal Company - India
- SN Aboitiz Power Inc, Philippines
- Global Coal Blending Company Limited - Australia
- Sinarmas Energy and Mining - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Electricity Authority, New Zealand
- Gujarat Electricity Regulatory Commission - India
- Metalloyd Limited - United Kingdom
- Alfred C Toepfer International GmbH - Germany
- Central Java Power - Indonesia
- Essar Steel Hazira Ltd - India
- Minerals Council of Australia
- White Energy Company Limited
- Billiton Holdings Pty Ltd - Australia
- Therma Luzon, Inc, Philippines
- Samtan Co., Ltd - South Korea
- Intertek Mineral Services - Indonesia
- Binh Thuan Hamico - Vietnam
- Indian Oil Corporation Limited
- Maheswari Brothers Coal Limited - India
- Thai Mozambique Logistica
- Formosa Plastics Group - Taiwan
- Parliament of New Zealand
- Ceylon Electricity Board - Sri Lanka
- The State Trading Corporation of India Ltd
- Posco Energy - South Korea
- Mercuria Energy - Indonesia
- Makarim & Taira - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Jindal Steel & Power Ltd - India
- Australian Commodity Traders Exchange
- Marubeni Corporation - India
- Gujarat Mineral Development Corp Ltd - India
- Sakthi Sugars Limited - India
- Larsen & Toubro Limited - India
- Bulk Trading Sa - Switzerland
- Star Paper Mills Limited - India
- Goldman Sachs - Singapore
- Baramulti Group, Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Carbofer General Trading SA - India
- Cement Manufacturers Association - India
- SMG Consultants - Indonesia
- Savvy Resources Ltd - HongKong
- Standard Chartered Bank - UAE
- Ministry of Mines - Canada
- Offshore Bulk Terminal Pte Ltd, Singapore
- ASAPP Information Group - India
- Tamil Nadu electricity Board
- Neyveli Lignite Corporation Ltd, - India
- SMC Global Power, Philippines
- Central Electricity Authority - India
- Jaiprakash Power Ventures ltd
- Price Waterhouse Coopers - Russia
- Antam Resourcindo - Indonesia
- Toyota Tsusho Corporation, Japan
- Independent Power Producers Association of India
- Karaikal Port Pvt Ltd - India
- Tata Chemicals Ltd - India
- Singapore Mercantile Exchange
- Heidelberg Cement - Germany
- IEA Clean Coal Centre - UK
- Indonesian Coal Mining Association
- Planning Commission, India
- Thiess Contractors Indonesia
- Oldendorff Carriers - Singapore
- Bayan Resources Tbk. - Indonesia
- Meralco Power Generation, Philippines
- Global Green Power PLC Corporation, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Indo Tambangraya Megah - Indonesia
- Salva Resources Pvt Ltd - India
- Bukit Baiduri Energy - Indonesia
- Chamber of Mines of South Africa
- GVK Power & Infra Limited - India
- Siam City Cement PLC, Thailand
- Wood Mackenzie - Singapore
- Ministry of Transport, Egypt
- Manunggal Multi Energi - Indonesia
- Kepco SPC Power Corporation, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Energy Link Ltd, New Zealand
- PetroVietnam Power Coal Import and Supply Company
- Anglo American - United Kingdom
- Petrochimia International Co. Ltd.- Taiwan
- Kideco Jaya Agung - Indonesia
- Trasteel International SA, Italy
- New Zealand Coal & Carbon
- Rio Tinto Coal - Australia
- Meenaskhi Energy Private Limited - India
- Kumho Petrochemical, South Korea
- Sarangani Energy Corporation, Philippines
- Lanco Infratech Ltd - India
- Directorate Of Revenue Intelligence - India
- Eastern Coal Council - USA
- Parry Sugars Refinery, India
- PowerSource Philippines DevCo
- Sojitz Corporation - Japan
- Kalimantan Lumbung Energi - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Energy Development Corp, Philippines
- CIMB Investment Bank - Malaysia
- Georgia Ports Authority, United States
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