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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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Tuesday, 19 July 22
SEEING RED? - WOOD MACKENZIE
What a Republican mid-term victory could mean for US energy and climate policy
According to current polling the Republican Party has ...
Thursday, 14 July 22
INDIA'S COAL IMPORTS HIT RECORD HIGH IN JUNE - REUTERS
India's coal imports hit a record high in June despite high global prices, data from three trade sources and Refinitiv ship tracking showed, as ...
Thursday, 14 July 22
CHINA'S JUNE COAL IMPORTS SLUMP AS TRADERS SHUN EXPENSIVE OVERSEAS CARGOES - REUTERS
China’s coal imports fell 33% in June from a year ago, with traders turning down expensive overseas cargoes in favor of domestic ones with ca ...
Wednesday, 13 July 22
KOWEPO TO IMPORT 2.79 MILLION TONS OF LOW TO MEDIUM COAL
COALspot.com: Korea Western Power Co., Ltd. (KOWEPO) has issued an International tender for Total 1360k MT of Min.4400 kcal/kg NCV coal and Total 1 ...
Wednesday, 13 July 22
HAVE MINERS MISSED THE BOAT TO INVEST AND GET AHEAD OF THE ENERGY TRANSITION? - WOOD MACKENZIE
Miners are in rude health, benefiting from economic stimuli, the post-pandemic recovery and associated supply constraints. Initially the Ukraine wa ...
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- Meralco Power Generation, Philippines
- Sakthi Sugars Limited - India
- Georgia Ports Authority, United States
- Maheswari Brothers Coal Limited - India
- Electricity Generating Authority of Thailand
- GVK Power & Infra Limited - India
- SMC Global Power, Philippines
- CIMB Investment Bank - Malaysia
- Kepco SPC Power Corporation, Philippines
- Oldendorff Carriers - Singapore
- Bhatia International Limited - India
- Australian Coal Association
- Xindia Steels Limited - India
- Interocean Group of Companies - India
- Deloitte Consulting - India
- Kartika Selabumi Mining - Indonesia
- PNOC Exploration Corporation - Philippines
- Karaikal Port Pvt Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Bayan Resources Tbk. - Indonesia
- Madhucon Powers Ltd - India
- Banpu Public Company Limited - Thailand
- Holcim Trading Pte Ltd - Singapore
- Maharashtra Electricity Regulatory Commission - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Sinarmas Energy and Mining - Indonesia
- Indogreen Group - Indonesia
- Mintek Dendrill Indonesia
- Kumho Petrochemical, South Korea
- Mercuria Energy - Indonesia
- Renaissance Capital - South Africa
- Timah Investasi Mineral - Indoneisa
- Siam City Cement PLC, Thailand
- Toyota Tsusho Corporation, Japan
- Petron Corporation, Philippines
- Bhushan Steel Limited - India
- Semirara Mining and Power Corporation, Philippines
- Eastern Energy - Thailand
- Central Java Power - Indonesia
- International Coal Ventures Pvt Ltd - India
- Romanian Commodities Exchange
- Africa Commodities Group - South Africa
- Indo Tambangraya Megah - Indonesia
- Carbofer General Trading SA - India
- TNB Fuel Sdn Bhd - Malaysia
- Dalmia Cement Bharat India
- OPG Power Generation Pvt Ltd - India
- Agrawal Coal Company - India
- Heidelberg Cement - Germany
- Gujarat Sidhee Cement - India
- Ministry of Mines - Canada
- Straits Asia Resources Limited - Singapore
- Simpson Spence & Young - Indonesia
- Central Electricity Authority - India
- Cement Manufacturers Association - India
- The Treasury - Australian Government
- Sindya Power Generating Company Private Ltd
- Vizag Seaport Private Limited - India
- VISA Power Limited - India
- Miang Besar Coal Terminal - Indonesia
- Ministry of Transport, Egypt
- Semirara Mining Corp, Philippines
- IEA Clean Coal Centre - UK
- Mercator Lines Limited - India
- Wood Mackenzie - Singapore
- Pendopo Energi Batubara - Indonesia
- Larsen & Toubro Limited - India
- Chamber of Mines of South Africa
- Parry Sugars Refinery, India
- Indian Oil Corporation Limited
- Singapore Mercantile Exchange
- Formosa Plastics Group - Taiwan
- Parliament of New Zealand
- Wilmar Investment Holdings
- Vedanta Resources Plc - India
- Vijayanagar Sugar Pvt Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Global Green Power PLC Corporation, Philippines
- Directorate Of Revenue Intelligence - India
- Electricity Authority, New Zealand
- Edison Trading Spa - Italy
- Savvy Resources Ltd - HongKong
- Price Waterhouse Coopers - Russia
- Commonwealth Bank - Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Latin American Coal - Colombia
- SMG Consultants - Indonesia
- Eastern Coal Council - USA
- GAC Shipping (India) Pvt Ltd
- Bukit Baiduri Energy - Indonesia
- South Luzon Thermal Energy Corporation
- Ambuja Cements Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Leighton Contractors Pty Ltd - Australia
- The University of Queensland
- White Energy Company Limited
- India Bulls Power Limited - India
- Alfred C Toepfer International GmbH - Germany
- Samtan Co., Ltd - South Korea
- Offshore Bulk Terminal Pte Ltd, Singapore
- Australian Commodity Traders Exchange
- European Bulk Services B.V. - Netherlands
- Bulk Trading Sa - Switzerland
- MS Steel International - UAE
- Cigading International Bulk Terminal - Indonesia
- Thai Mozambique Logistica
- GN Power Mariveles Coal Plant, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- TeaM Sual Corporation - Philippines
- Chettinad Cement Corporation Ltd - India
- Anglo American - United Kingdom
- Bangladesh Power Developement Board
- Lanco Infratech Ltd - India
- Coastal Gujarat Power Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Sical Logistics Limited - India
- Meenaskhi Energy Private Limited - India
- Tata Chemicals Ltd - India
- Aditya Birla Group - India
- Aboitiz Power Corporation - Philippines
- Grasim Industreis Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Ind-Barath Power Infra Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Sojitz Corporation - Japan
- Therma Luzon, Inc, Philippines
- Borneo Indobara - Indonesia
- Intertek Mineral Services - Indonesia
- Globalindo Alam Lestari - Indonesia
- Bhoruka Overseas - Indonesia
- Energy Development Corp, Philippines
- Barasentosa Lestari - Indonesia
- Star Paper Mills Limited - India
- PowerSource Philippines DevCo
- Salva Resources Pvt Ltd - India
- Videocon Industries ltd - India
- The State Trading Corporation of India Ltd
- CNBM International Corporation - China
- Jaiprakash Power Ventures ltd
- ASAPP Information Group - India
- Standard Chartered Bank - UAE
- Posco Energy - South Korea
- Kohat Cement Company Ltd. - Pakistan
- Kaltim Prima Coal - Indonesia
- Tamil Nadu electricity Board
- Global Business Power Corporation, Philippines
- Port Waratah Coal Services - Australia
- Energy Link Ltd, New Zealand
- Merrill Lynch Commodities Europe
- Coalindo Energy - Indonesia
- Jindal Steel & Power Ltd - India
- ICICI Bank Limited - India
- Antam Resourcindo - Indonesia
- GMR Energy Limited - India
- Economic Council, Georgia
- Krishnapatnam Port Company Ltd. - India
- Indian Energy Exchange, India
- Gujarat Electricity Regulatory Commission - India
- Uttam Galva Steels Limited - India
- San Jose City I Power Corp, Philippines
- Kobexindo Tractors - Indoneisa
- Iligan Light & Power Inc, Philippines
- Sarangani Energy Corporation, Philippines
- Goldman Sachs - Singapore
- Orica Mining Services - Indonesia
- SN Aboitiz Power Inc, Philippines
- Medco Energi Mining Internasional
- McConnell Dowell - Australia
- Ceylon Electricity Board - Sri Lanka
- Planning Commission, India
- Coal and Oil Company - UAE
- Indika Energy - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Sree Jayajothi Cements Limited - India
- London Commodity Brokers - England
- Malabar Cements Ltd - India
- Independent Power Producers Association of India
- Kapuas Tunggal Persada - Indonesia
- Thiess Contractors Indonesia
- PetroVietnam Power Coal Import and Supply Company
- IHS Mccloskey Coal Group - USA
- New Zealand Coal & Carbon
- Baramulti Group, Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Indonesian Coal Mining Association
- Bharathi Cement Corporation - India
- Metalloyd Limited - United Kingdom
- Riau Bara Harum - Indonesia
- Trasteel International SA, Italy
- Marubeni Corporation - India
- Essar Steel Hazira Ltd - India
- Bukit Makmur.PT - Indonesia
- LBH Netherlands Bv - Netherlands
- Pipit Mutiara Jaya. PT, Indonesia
- Attock Cement Pakistan Limited
- Minerals Council of Australia
- Siam City Cement - Thailand
- Power Finance Corporation Ltd., India
- Altura Mining Limited, Indonesia
- Orica Australia Pty. Ltd.
- Bahari Cakrawala Sebuku - Indonesia
- Binh Thuan Hamico - Vietnam
- Rio Tinto Coal - Australia
- Mjunction Services Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Billiton Holdings Pty Ltd - Australia
- Bukit Asam (Persero) Tbk - Indonesia
- Kideco Jaya Agung - Indonesia
- Ministry of Finance - Indonesia
- Manunggal Multi Energi - Indonesia
- Global Coal Blending Company Limited - Australia
- Makarim & Taira - Indonesia
- PTC India Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- AsiaOL BioFuels Corp., Philippines
- Asmin Koalindo Tuhup - Indonesia
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