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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, 26 April 22
CHINA'S APPETITE FOR BAUXITE HITS NEW RECORD AS Q1 IMPORTS JUMP 15.4% Y/Y - BIMCO
Bauxite shipments arriving in China hit new record levels in the first quarter of 2022 and grew at an average annual rate of 12.8% between 2017 and ...
Tuesday, 26 April 22
INDIA'S COAL IMPORTS ARE SHIFTING, THERMAL MORE THAN COKING - REUTERS
India’s coal imports are starting to reflect shifting world trade and pricing dynamics in the wake of Russia’s invasion of neighbouring ...
Monday, 18 April 22
GERMAN COAL IMPORTERS EXPECT A BRIEF SPIKE IN PRICES ON EU BAN - REUTERS
A European Union embargo on Russian coal imports will push up prices in the short term before alternative supplies become available to steady the c ...
Monday, 18 April 22
FINNISH 'LOOPHOLES' ALLOW IMPORTS OF RUSSIAN COAL AND OIL TO CONTINUE - EURONEWS
Activists in Finland are calling for the government to clamp down faster on state-owned companies that continue to import raw materials from Russia ...
Monday, 18 April 22
GOVT IN DISCUSSION WITH WORLD BANK ON FRAMEWORK FOR COAL MINE CLOSURE - BUSINESS STANDARD
The coal ministry is in discussions with the World Bank for collaboration on the mine closure framework, a government official said on Wednesday.
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- Cement Manufacturers Association - India
- Leighton Contractors Pty Ltd - Australia
- London Commodity Brokers - England
- GAC Shipping (India) Pvt Ltd
- Samtan Co., Ltd - South Korea
- Grasim Industreis Ltd - India
- ICICI Bank Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Karaikal Port Pvt Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Indian Energy Exchange, India
- Maheswari Brothers Coal Limited - India
- Coalindo Energy - Indonesia
- Parry Sugars Refinery, India
- Vijayanagar Sugar Pvt Ltd - India
- Marubeni Corporation - India
- Bahari Cakrawala Sebuku - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Baramulti Group, Indonesia
- Alfred C Toepfer International GmbH - Germany
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Rashtriya Ispat Nigam Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Planning Commission, India
- Wilmar Investment Holdings
- Romanian Commodities Exchange
- Coal and Oil Company - UAE
- Star Paper Mills Limited - India
- Sojitz Corporation - Japan
- Kapuas Tunggal Persada - Indonesia
- Ministry of Transport, Egypt
- Petrochimia International Co. Ltd.- Taiwan
- Eastern Coal Council - USA
- Australian Coal Association
- Interocean Group of Companies - India
- GN Power Mariveles Coal Plant, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Lanco Infratech Ltd - India
- Indika Energy - Indonesia
- McConnell Dowell - Australia
- Economic Council, Georgia
- Makarim & Taira - Indonesia
- Uttam Galva Steels Limited - India
- Australian Commodity Traders Exchange
- Metalloyd Limited - United Kingdom
- Anglo American - United Kingdom
- Electricity Generating Authority of Thailand
- Independent Power Producers Association of India
- Semirara Mining and Power Corporation, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Kaltim Prima Coal - Indonesia
- The State Trading Corporation of India Ltd
- Kohat Cement Company Ltd. - Pakistan
- Bukit Makmur.PT - Indonesia
- Jindal Steel & Power Ltd - India
- MS Steel International - UAE
- Cigading International Bulk Terminal - Indonesia
- Intertek Mineral Services - Indonesia
- Energy Link Ltd, New Zealand
- Simpson Spence & Young - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Sarangani Energy Corporation, Philippines
- Aditya Birla Group - India
- Posco Energy - South Korea
- Directorate Of Revenue Intelligence - India
- Eastern Energy - Thailand
- Riau Bara Harum - Indonesia
- IEA Clean Coal Centre - UK
- Essar Steel Hazira Ltd - India
- CIMB Investment Bank - Malaysia
- Rio Tinto Coal - Australia
- SMC Global Power, Philippines
- Agrawal Coal Company - India
- PTC India Limited - India
- Bulk Trading Sa - Switzerland
- Ceylon Electricity Board - Sri Lanka
- LBH Netherlands Bv - Netherlands
- Kobexindo Tractors - Indoneisa
- Globalindo Alam Lestari - Indonesia
- Ambuja Cements Ltd - India
- OPG Power Generation Pvt Ltd - India
- Petron Corporation, Philippines
- Singapore Mercantile Exchange
- VISA Power Limited - India
- Indonesian Coal Mining Association
- IHS Mccloskey Coal Group - USA
- Bhoruka Overseas - Indonesia
- Siam City Cement PLC, Thailand
- Bukit Asam (Persero) Tbk - Indonesia
- Chamber of Mines of South Africa
- Kumho Petrochemical, South Korea
- Timah Investasi Mineral - Indoneisa
- Gujarat Electricity Regulatory Commission - India
- Africa Commodities Group - South Africa
- Kideco Jaya Agung - Indonesia
- Central Electricity Authority - India
- Xindia Steels Limited - India
- Goldman Sachs - Singapore
- Savvy Resources Ltd - HongKong
- Meralco Power Generation, Philippines
- Energy Development Corp, Philippines
- Therma Luzon, Inc, Philippines
- Bhatia International Limited - India
- Vedanta Resources Plc - India
- Aboitiz Power Corporation - Philippines
- Formosa Plastics Group - Taiwan
- Jorong Barutama Greston.PT - Indonesia
- Bangladesh Power Developement Board
- Jaiprakash Power Ventures ltd
- Kartika Selabumi Mining - Indonesia
- Power Finance Corporation Ltd., India
- Indian Oil Corporation Limited
- TeaM Sual Corporation - Philippines
- New Zealand Coal & Carbon
- Sree Jayajothi Cements Limited - India
- Semirara Mining Corp, Philippines
- Altura Mining Limited, Indonesia
- White Energy Company Limited
- Mercator Lines Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Bhushan Steel Limited - India
- Siam City Cement - Thailand
- Asmin Koalindo Tuhup - Indonesia
- Parliament of New Zealand
- Straits Asia Resources Limited - Singapore
- SN Aboitiz Power Inc, Philippines
- Meenaskhi Energy Private Limited - India
- Tata Chemicals Ltd - India
- Orica Mining Services - Indonesia
- Larsen & Toubro Limited - India
- Minerals Council of Australia
- Electricity Authority, New Zealand
- Vizag Seaport Private Limited - India
- Miang Besar Coal Terminal - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Oldendorff Carriers - Singapore
- Global Coal Blending Company Limited - Australia
- Ind-Barath Power Infra Limited - India
- Thiess Contractors Indonesia
- Port Waratah Coal Services - Australia
- GMR Energy Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Indogreen Group - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Price Waterhouse Coopers - Russia
- Bharathi Cement Corporation - India
- Chettinad Cement Corporation Ltd - India
- Tamil Nadu electricity Board
- CNBM International Corporation - China
- Pendopo Energi Batubara - Indonesia
- Iligan Light & Power Inc, Philippines
- Sinarmas Energy and Mining - Indonesia
- Barasentosa Lestari - Indonesia
- Central Java Power - Indonesia
- San Jose City I Power Corp, Philippines
- Thai Mozambique Logistica
- Sindya Power Generating Company Private Ltd
- Offshore Bulk Terminal Pte Ltd, Singapore
- Heidelberg Cement - Germany
- Binh Thuan Hamico - Vietnam
- Mercuria Energy - Indonesia
- Indo Tambangraya Megah - Indonesia
- Renaissance Capital - South Africa
- Manunggal Multi Energi - Indonesia
- Standard Chartered Bank - UAE
- International Coal Ventures Pvt Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Wood Mackenzie - Singapore
- Gujarat Sidhee Cement - India
- AsiaOL BioFuels Corp., Philippines
- Mintek Dendrill Indonesia
- Videocon Industries ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Ministry of Finance - Indonesia
- Sical Logistics Limited - India
- ASAPP Information Group - India
- Banpu Public Company Limited - Thailand
- GVK Power & Infra Limited - India
- Malabar Cements Ltd - India
- Sakthi Sugars Limited - India
- Latin American Coal - Colombia
- Salva Resources Pvt Ltd - India
- Coastal Gujarat Power Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Antam Resourcindo - Indonesia
- PNOC Exploration Corporation - Philippines
- Global Green Power PLC Corporation, Philippines
- Georgia Ports Authority, United States
- Global Business Power Corporation, Philippines
- The Treasury - Australian Government
- Ministry of Mines - Canada
- Madhucon Powers Ltd - India
- Trasteel International SA, Italy
- Bukit Baiduri Energy - Indonesia
- Borneo Indobara - Indonesia
- Mjunction Services Limited - India
- Commonwealth Bank - Australia
- Edison Trading Spa - Italy
- Kepco SPC Power Corporation, Philippines
- South Luzon Thermal Energy Corporation
- Merrill Lynch Commodities Europe
- PowerSource Philippines DevCo
- Asia Pacific Energy Resources Ventures Inc, Philippines
- India Bulls Power Limited - India
- Carbofer General Trading SA - India
- Dalmia Cement Bharat India
- Attock Cement Pakistan Limited
- Orica Australia Pty. Ltd.
- Medco Energi Mining Internasional
- Bayan Resources Tbk. - Indonesia
- SMG Consultants - Indonesia
- The University of Queensland
- Deloitte Consulting - India
- Kalimantan Lumbung Energi - Indonesia
- European Bulk Services B.V. - Netherlands
- Toyota Tsusho Corporation, Japan
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