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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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Saturday, 23 July 22
STABILITY OF RUSSIAN GAS FLOWS REMAIN UNCERTAIN, DESPITE THE REOPENING OF NORD STREAM - WOOD MACKENZIE
Gazprom confirmed today that regular annual maintenance of Nord Stream is officially over and gas flows restarted at 63 million cubic metres per da ...
Friday, 22 July 22
MARKET INSIGHT - INTERMODAL
Faced with uncertainty regarding the most cost-efficient alternative fuels and the future dominant method to reduce their greenhouse emissions, man ...
Friday, 22 July 22
YANCOAL AUSTRALIA CUTS 2022 COAL OUTPUT VIEW AS FLOODS, COVID BITE - REUTERS
Coal miner Yancoal Australia Ltd YAL.AX cut its 2022 output forecast on Wednesday, signalling a hit from higher-than-expected rainfall, COVID-19-le ...
Wednesday, 20 July 22
BOOST FOR BIOFUELS AS IMO REMOVES REGULATORY HURDLE - GARD
MARPOL Annex VI regulations were written for petroleum derived fuels but also apply to biofuels. It has been a challenge to meet the regulatory req ...
Wednesday, 20 July 22
INDONESIA’S COAL EXPORTS TO THE EU INCREASED SIGNIFICANTLY RECENTLY
European countries have increased coal imports from Indonesia due to the energy crisis that hit the region after Russia cuts gas exports to Europe. ...
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- ICICI Bank Limited - India
- Posco Energy - South Korea
- Vedanta Resources Plc - India
- Indonesian Coal Mining Association
- Bukit Makmur.PT - Indonesia
- Orica Australia Pty. Ltd.
- International Coal Ventures Pvt Ltd - India
- Mercuria Energy - Indonesia
- Formosa Plastics Group - Taiwan
- Ceylon Electricity Board - Sri Lanka
- Australian Commodity Traders Exchange
- Kaltim Prima Coal - Indonesia
- Global Green Power PLC Corporation, Philippines
- Sakthi Sugars Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Krishnapatnam Port Company Ltd. - India
- GN Power Mariveles Coal Plant, Philippines
- Coastal Gujarat Power Limited - India
- Economic Council, Georgia
- Georgia Ports Authority, United States
- Videocon Industries ltd - India
- Standard Chartered Bank - UAE
- Ind-Barath Power Infra Limited - India
- Aboitiz Power Corporation - Philippines
- Miang Besar Coal Terminal - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Xindia Steels Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Mercator Lines Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- MS Steel International - UAE
- TNB Fuel Sdn Bhd - Malaysia
- Sindya Power Generating Company Private Ltd
- Bhoruka Overseas - Indonesia
- White Energy Company Limited
- Jindal Steel & Power Ltd - India
- Electricity Generating Authority of Thailand
- GVK Power & Infra Limited - India
- Thai Mozambique Logistica
- Latin American Coal - Colombia
- Ministry of Finance - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kumho Petrochemical, South Korea
- Kapuas Tunggal Persada - Indonesia
- Medco Energi Mining Internasional
- Independent Power Producers Association of India
- Ministry of Transport, Egypt
- Singapore Mercantile Exchange
- Offshore Bulk Terminal Pte Ltd, Singapore
- Barasentosa Lestari - Indonesia
- Sojitz Corporation - Japan
- Indian Energy Exchange, India
- Borneo Indobara - Indonesia
- Parry Sugars Refinery, India
- Global Coal Blending Company Limited - Australia
- Australian Coal Association
- Essar Steel Hazira Ltd - India
- Vizag Seaport Private Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- VISA Power Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Meenaskhi Energy Private Limited - India
- Bhushan Steel Limited - India
- Billiton Holdings Pty Ltd - Australia
- Vijayanagar Sugar Pvt Ltd - India
- Grasim Industreis Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Baramulti Group, Indonesia
- Chettinad Cement Corporation Ltd - India
- Rio Tinto Coal - Australia
- Wilmar Investment Holdings
- Maheswari Brothers Coal Limited - India
- Jaiprakash Power Ventures ltd
- CIMB Investment Bank - Malaysia
- Central Java Power - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Cement Manufacturers Association - India
- Power Finance Corporation Ltd., India
- The State Trading Corporation of India Ltd
- Banpu Public Company Limited - Thailand
- Savvy Resources Ltd - HongKong
- Kohat Cement Company Ltd. - Pakistan
- Kobexindo Tractors - Indoneisa
- The University of Queensland
- Straits Asia Resources Limited - Singapore
- Port Waratah Coal Services - Australia
- Marubeni Corporation - India
- Bhatia International Limited - India
- AsiaOL BioFuels Corp., Philippines
- Malabar Cements Ltd - India
- The Treasury - Australian Government
- Maharashtra Electricity Regulatory Commission - India
- Intertek Mineral Services - Indonesia
- Siam City Cement PLC, Thailand
- Bulk Trading Sa - Switzerland
- Mintek Dendrill Indonesia
- McConnell Dowell - Australia
- Parliament of New Zealand
- Sinarmas Energy and Mining - Indonesia
- Kepco SPC Power Corporation, Philippines
- Larsen & Toubro Limited - India
- Eastern Energy - Thailand
- Bukit Baiduri Energy - Indonesia
- Minerals Council of Australia
- GMR Energy Limited - India
- Goldman Sachs - Singapore
- Ambuja Cements Ltd - India
- Altura Mining Limited, Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- GAC Shipping (India) Pvt Ltd
- Iligan Light & Power Inc, Philippines
- Indika Energy - Indonesia
- Sical Logistics Limited - India
- Planning Commission, India
- Binh Thuan Hamico - Vietnam
- PTC India Limited - India
- Samtan Co., Ltd - South Korea
- Price Waterhouse Coopers - Russia
- Global Business Power Corporation, Philippines
- European Bulk Services B.V. - Netherlands
- Siam City Cement - Thailand
- Gujarat Sidhee Cement - India
- SN Aboitiz Power Inc, Philippines
- Interocean Group of Companies - India
- Renaissance Capital - South Africa
- Central Electricity Authority - India
- Chamber of Mines of South Africa
- Orica Mining Services - Indonesia
- TeaM Sual Corporation - Philippines
- CNBM International Corporation - China
- Indian Oil Corporation Limited
- Rashtriya Ispat Nigam Limited - India
- Bharathi Cement Corporation - India
- Madhucon Powers Ltd - India
- Uttam Galva Steels Limited - India
- Sree Jayajothi Cements Limited - India
- Semirara Mining and Power Corporation, Philippines
- LBH Netherlands Bv - Netherlands
- Kalimantan Lumbung Energi - Indonesia
- Karaikal Port Pvt Ltd - India
- Pendopo Energi Batubara - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Globalindo Alam Lestari - Indonesia
- Petron Corporation, Philippines
- Energy Development Corp, Philippines
- Therma Luzon, Inc, Philippines
- Star Paper Mills Limited - India
- IEA Clean Coal Centre - UK
- Alfred C Toepfer International GmbH - Germany
- Directorate Of Revenue Intelligence - India
- Africa Commodities Group - South Africa
- Agrawal Coal Company - India
- Ministry of Mines - Canada
- PowerSource Philippines DevCo
- Antam Resourcindo - Indonesia
- Carbofer General Trading SA - India
- Attock Cement Pakistan Limited
- Wood Mackenzie - Singapore
- Salva Resources Pvt Ltd - India
- Coal and Oil Company - UAE
- Dalmia Cement Bharat India
- Coalindo Energy - Indonesia
- San Jose City I Power Corp, Philippines
- Semirara Mining Corp, Philippines
- Tata Chemicals Ltd - India
- Bangladesh Power Developement Board
- Timah Investasi Mineral - Indoneisa
- Riau Bara Harum - Indonesia
- Trasteel International SA, Italy
- Indo Tambangraya Megah - Indonesia
- Merrill Lynch Commodities Europe
- IHS Mccloskey Coal Group - USA
- Sarangani Energy Corporation, Philippines
- Eastern Coal Council - USA
- Oldendorff Carriers - Singapore
- PNOC Exploration Corporation - Philippines
- Bayan Resources Tbk. - Indonesia
- India Bulls Power Limited - India
- Energy Link Ltd, New Zealand
- South Luzon Thermal Energy Corporation
- Kartika Selabumi Mining - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Anglo American - United Kingdom
- New Zealand Coal & Carbon
- Metalloyd Limited - United Kingdom
- Deloitte Consulting - India
- Mjunction Services Limited - India
- Makarim & Taira - Indonesia
- Lanco Infratech Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Kideco Jaya Agung - Indonesia
- OPG Power Generation Pvt Ltd - India
- Commonwealth Bank - Australia
- Simpson Spence & Young - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- London Commodity Brokers - England
- Heidelberg Cement - Germany
- Edison Trading Spa - Italy
- Asmin Koalindo Tuhup - Indonesia
- Tamil Nadu electricity Board
- Romanian Commodities Exchange
- Holcim Trading Pte Ltd - Singapore
- Toyota Tsusho Corporation, Japan
- Manunggal Multi Energi - Indonesia
- Indogreen Group - Indonesia
- ASAPP Information Group - India
- Meralco Power Generation, Philippines
- SMG Consultants - Indonesia
- Thiess Contractors Indonesia
- Electricity Authority, New Zealand
- Aditya Birla Group - India
- Karbindo Abesyapradhi - Indoneisa
- Leighton Contractors Pty Ltd - Australia
- SMC Global Power, Philippines
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