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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, 22 February 22
CHINA'S DAILY OUTPUT OF COAL REBOUNDS TO OVER 12 MLN TONNES - REUTERS
China’s coal output returned to more than 12 million tonnes per day as of Feb. 20, the country’s state planner said on Monday, a level ...
Thursday, 17 February 22
MAJOR INSTITUTIONS PROVIDED OVER $1.5 TRLN TO COAL SECTOR IN 2019-2021, SAYS NGO GROUP - REUTERS
Financial institutions channelled more than $1.5 trillion into the coal industry in loans and underwriting from January 2019 to November 2021, even ...
Thursday, 17 February 22
APAC THERMAL COAL PRICES TO EASE ON END OF INDONESIA EXPORT BAN - FITCH RATINGS
Fitch Ratings-Shanghai/Singapore-14 February 2022: APAC thermal coal prices are likely to come under pressure in the near term due to seasonally we ...
Tuesday, 15 February 22
IS ANOTHER COAL SHORTAGE CRISIS LOOMING OVER INDIA? - BUSINESS STANDARD
In December last year, the Federation of Indian Mineral Industries (FIMI) shot off a letter to the Prime Minister claiming that the coal crisis was ...
Tuesday, 15 February 22
THERMAL COAL'S RECORD PRICE RUN MAY END UP ITS OWN WORST ENEMY - REUTERS
The price of benchmark Australian thermal coal rose last week to trade near record highs, providing a short-term boost to producers but increasing ...
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- Toyota Tsusho Corporation, Japan
- Asia Pacific Energy Resources Ventures Inc, Philippines
- GMR Energy Limited - India
- CNBM International Corporation - China
- Makarim & Taira - Indonesia
- Cement Manufacturers Association - India
- Leighton Contractors Pty Ltd - Australia
- Bayan Resources Tbk. - Indonesia
- Africa Commodities Group - South Africa
- Marubeni Corporation - India
- New Zealand Coal & Carbon
- Electricity Authority, New Zealand
- Grasim Industreis Ltd - India
- International Coal Ventures Pvt Ltd - India
- Thiess Contractors Indonesia
- Mjunction Services Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Singapore Mercantile Exchange
- Maharashtra Electricity Regulatory Commission - India
- Semirara Mining and Power Corporation, Philippines
- Ceylon Electricity Board - Sri Lanka
- Siam City Cement - Thailand
- Straits Asia Resources Limited - Singapore
- Intertek Mineral Services - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Maheswari Brothers Coal Limited - India
- Carbofer General Trading SA - India
- Baramulti Group, Indonesia
- Bharathi Cement Corporation - India
- Kepco SPC Power Corporation, Philippines
- Vedanta Resources Plc - India
- Energy Development Corp, Philippines
- Cigading International Bulk Terminal - Indonesia
- Goldman Sachs - Singapore
- Attock Cement Pakistan Limited
- SMC Global Power, Philippines
- Coal and Oil Company - UAE
- Ambuja Cements Ltd - India
- Renaissance Capital - South Africa
- Eastern Coal Council - USA
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Tata Chemicals Ltd - India
- Global Coal Blending Company Limited - Australia
- Borneo Indobara - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Meenaskhi Energy Private Limited - India
- Binh Thuan Hamico - Vietnam
- Barasentosa Lestari - Indonesia
- Bhushan Steel Limited - India
- Aditya Birla Group - India
- Alfred C Toepfer International GmbH - Germany
- Indian Oil Corporation Limited
- Orica Mining Services - Indonesia
- Indian Energy Exchange, India
- Eastern Energy - Thailand
- Tamil Nadu electricity Board
- Bank of Tokyo Mitsubishi UFJ Ltd
- Wood Mackenzie - Singapore
- Offshore Bulk Terminal Pte Ltd, Singapore
- Timah Investasi Mineral - Indoneisa
- Kobexindo Tractors - Indoneisa
- Kaltim Prima Coal - Indonesia
- Indogreen Group - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Energy Link Ltd, New Zealand
- Lanco Infratech Ltd - India
- Iligan Light & Power Inc, Philippines
- Madhucon Powers Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Oldendorff Carriers - Singapore
- Coalindo Energy - Indonesia
- Uttam Galva Steels Limited - India
- Latin American Coal - Colombia
- Parliament of New Zealand
- Bukit Asam (Persero) Tbk - Indonesia
- Sical Logistics Limited - India
- Sindya Power Generating Company Private Ltd
- Meralco Power Generation, Philippines
- Rio Tinto Coal - Australia
- GAC Shipping (India) Pvt Ltd
- Directorate Of Revenue Intelligence - India
- Simpson Spence & Young - Indonesia
- Wilmar Investment Holdings
- Chettinad Cement Corporation Ltd - India
- Salva Resources Pvt Ltd - India
- Merrill Lynch Commodities Europe
- Gujarat Electricity Regulatory Commission - India
- Bukit Makmur.PT - Indonesia
- Petron Corporation, Philippines
- Jindal Steel & Power Ltd - India
- Jaiprakash Power Ventures ltd
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Planning Commission, India
- Vijayanagar Sugar Pvt Ltd - India
- LBH Netherlands Bv - Netherlands
- Posco Energy - South Korea
- Essar Steel Hazira Ltd - India
- Sakthi Sugars Limited - India
- Mercator Lines Limited - India
- Global Business Power Corporation, Philippines
- Port Waratah Coal Services - Australia
- Australian Commodity Traders Exchange
- White Energy Company Limited
- Indonesian Coal Mining Association
- Mintek Dendrill Indonesia
- Australian Coal Association
- Kideco Jaya Agung - Indonesia
- Samtan Co., Ltd - South Korea
- Gujarat Sidhee Cement - India
- Bukit Baiduri Energy - Indonesia
- McConnell Dowell - Australia
- Kapuas Tunggal Persada - Indonesia
- Economic Council, Georgia
- Siam City Cement PLC, Thailand
- IHS Mccloskey Coal Group - USA
- PNOC Exploration Corporation - Philippines
- Bulk Trading Sa - Switzerland
- Mercuria Energy - Indonesia
- Medco Energi Mining Internasional
- CIMB Investment Bank - Malaysia
- Deloitte Consulting - India
- Kumho Petrochemical, South Korea
- Manunggal Multi Energi - Indonesia
- Pendopo Energi Batubara - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Dalmia Cement Bharat India
- OPG Power Generation Pvt Ltd - India
- Sojitz Corporation - Japan
- Bhatia International Limited - India
- Bhoruka Overseas - Indonesia
- Heidelberg Cement - Germany
- Coastal Gujarat Power Limited - India
- India Bulls Power Limited - India
- Interocean Group of Companies - India
- Electricity Generating Authority of Thailand
- Videocon Industries ltd - India
- Bangladesh Power Developement Board
- Ind-Barath Power Infra Limited - India
- Price Waterhouse Coopers - Russia
- Larsen & Toubro Limited - India
- MS Steel International - UAE
- Agrawal Coal Company - India
- Antam Resourcindo - Indonesia
- Chamber of Mines of South Africa
- Power Finance Corporation Ltd., India
- South Luzon Thermal Energy Corporation
- San Jose City I Power Corp, Philippines
- Edison Trading Spa - Italy
- Minerals Council of Australia
- The State Trading Corporation of India Ltd
- Thai Mozambique Logistica
- The University of Queensland
- Karaikal Port Pvt Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Ministry of Finance - Indonesia
- Standard Chartered Bank - UAE
- SMG Consultants - Indonesia
- Parry Sugars Refinery, India
- Holcim Trading Pte Ltd - Singapore
- GN Power Mariveles Coal Plant, Philippines
- GVK Power & Infra Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Ministry of Transport, Egypt
- IEA Clean Coal Centre - UK
- AsiaOL BioFuels Corp., Philippines
- Kohat Cement Company Ltd. - Pakistan
- Globalindo Alam Lestari - Indonesia
- VISA Power Limited - India
- ICICI Bank Limited - India
- TeaM Sual Corporation - Philippines
- Ministry of Mines - Canada
- Romanian Commodities Exchange
- Commonwealth Bank - Australia
- Rashtriya Ispat Nigam Limited - India
- Sarangani Energy Corporation, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Metalloyd Limited - United Kingdom
- Kartika Selabumi Mining - Indonesia
- Star Paper Mills Limited - India
- The Treasury - Australian Government
- Trasteel International SA, Italy
- Bahari Cakrawala Sebuku - Indonesia
- Global Green Power PLC Corporation, Philippines
- Krishnapatnam Port Company Ltd. - India
- Malabar Cements Ltd - India
- Therma Luzon, Inc, Philippines
- ASAPP Information Group - India
- Pipit Mutiara Jaya. PT, Indonesia
- Formosa Plastics Group - Taiwan
- PTC India Limited - India
- Anglo American - United Kingdom
- Vizag Seaport Private Limited - India
- Savvy Resources Ltd - HongKong
- Altura Mining Limited, Indonesia
- Xindia Steels Limited - India
- Central Electricity Authority - India
- Orica Australia Pty. Ltd.
- Gujarat Mineral Development Corp Ltd - India
- Semirara Mining Corp, Philippines
- Aboitiz Power Corporation - Philippines
- Riau Bara Harum - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Banpu Public Company Limited - Thailand
- European Bulk Services B.V. - Netherlands
- Indika Energy - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Independent Power Producers Association of India
- Directorate General of MIneral and Coal - Indonesia
- Indo Tambangraya Megah - Indonesia
- PowerSource Philippines DevCo
- London Commodity Brokers - England
- Sree Jayajothi Cements Limited - India
- Central Java Power - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Georgia Ports Authority, United States
- SN Aboitiz Power Inc, Philippines
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