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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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Monday, 18 April 22
DEMAND FOR THERMAL COAL TO RISE DUE TO INCREASE IN ELECTRICITY DEMAND: INDIAN COAL MINISTRY - PTI
Coal block allocatees have a golden opportunity to augment production as the demand for thermal coal will rise due to an increase in electricity de ...
Tuesday, 05 April 22
INDONESIAN COAL PRICE REFERENCE HITS RECORD ABOVE $288
COALspot.com: Indonesian Coal Price Reference for April in a steep climb from March 2022.
As expected, Russia – Ukraine war dr ...
Thursday, 31 March 22
CHINA STATE PLANNER ASKS COAL INDEX PROVIDERS TO RECTIFY IRREGULARITIES - REUTERS
China’s state planner has asked some major coal price index providers to rectify “severe irregularities” it had identified in the ...
Thursday, 31 March 22
IMPORTED COAL PRICES TO JUMP 55% IN APR-JUN, IMPACT INDIAN FIRMS: ICRA - LIVEMINT
Supply disruption owing to the Russia-Ukraine conflict could push the price of imported coal by 45-55% in Q1FY23 compared to the previous quarter, ...
Thursday, 31 March 22
CHINA'S COAL OUTPUT SET FOR MODERATE GROWTH IN 2022 - INDUSTRY BODY - REUTERS
China is expected to see its coal output to grow further in 2022 after hitting a record last year, an industry body forecast on Wednesday, as the c ...
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- Altura Mining Limited, Indonesia
- Planning Commission, India
- Electricity Generating Authority of Thailand
- Energy Link Ltd, New Zealand
- Makarim & Taira - Indonesia
- OPG Power Generation Pvt Ltd - India
- Jaiprakash Power Ventures ltd
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Chettinad Cement Corporation Ltd - India
- Indo Tambangraya Megah - Indonesia
- Indogreen Group - Indonesia
- Bhatia International Limited - India
- Jindal Steel & Power Ltd - India
- Marubeni Corporation - India
- Vizag Seaport Private Limited - India
- Straits Asia Resources Limited - Singapore
- Electricity Authority, New Zealand
- Thiess Contractors Indonesia
- Karbindo Abesyapradhi - Indoneisa
- LBH Netherlands Bv - Netherlands
- Bukit Makmur.PT - Indonesia
- Economic Council, Georgia
- PNOC Exploration Corporation - Philippines
- Iligan Light & Power Inc, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Grasim Industreis Ltd - India
- Price Waterhouse Coopers - Russia
- Kobexindo Tractors - Indoneisa
- Tata Chemicals Ltd - India
- Meenaskhi Energy Private Limited - India
- Medco Energi Mining Internasional
- Bahari Cakrawala Sebuku - Indonesia
- Parliament of New Zealand
- Trasteel International SA, Italy
- Mintek Dendrill Indonesia
- Mjunction Services Limited - India
- Commonwealth Bank - Australia
- Parry Sugars Refinery, India
- Globalindo Alam Lestari - Indonesia
- Indian Energy Exchange, India
- IEA Clean Coal Centre - UK
- Kalimantan Lumbung Energi - Indonesia
- Central Electricity Authority - India
- Standard Chartered Bank - UAE
- Ministry of Transport, Egypt
- Merrill Lynch Commodities Europe
- Anglo American - United Kingdom
- Attock Cement Pakistan Limited
- Africa Commodities Group - South Africa
- Posco Energy - South Korea
- Bangladesh Power Developement Board
- Bank of Tokyo Mitsubishi UFJ Ltd
- Independent Power Producers Association of India
- Maharashtra Electricity Regulatory Commission - India
- White Energy Company Limited
- Sindya Power Generating Company Private Ltd
- CNBM International Corporation - China
- Maheswari Brothers Coal Limited - India
- Alfred C Toepfer International GmbH - Germany
- VISA Power Limited - India
- Salva Resources Pvt Ltd - India
- Karaikal Port Pvt Ltd - India
- The State Trading Corporation of India Ltd
- Malabar Cements Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- South Luzon Thermal Energy Corporation
- Agrawal Coal Company - India
- London Commodity Brokers - England
- Vedanta Resources Plc - India
- Latin American Coal - Colombia
- Singapore Mercantile Exchange
- PetroVietnam Power Coal Import and Supply Company
- Wood Mackenzie - Singapore
- Rashtriya Ispat Nigam Limited - India
- Orica Australia Pty. Ltd.
- Kumho Petrochemical, South Korea
- Offshore Bulk Terminal Pte Ltd, Singapore
- Coastal Gujarat Power Limited - India
- Indian Oil Corporation Limited
- Eastern Energy - Thailand
- Chamber of Mines of South Africa
- Gujarat Mineral Development Corp Ltd - India
- Australian Commodity Traders Exchange
- Manunggal Multi Energi - Indonesia
- Xindia Steels Limited - India
- Global Business Power Corporation, Philippines
- Sojitz Corporation - Japan
- Barasentosa Lestari - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Uttam Galva Steels Limited - India
- Mercator Lines Limited - India
- Petron Corporation, Philippines
- Krishnapatnam Port Company Ltd. - India
- CIMB Investment Bank - Malaysia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Gujarat Sidhee Cement - India
- Pendopo Energi Batubara - Indonesia
- Siam City Cement - Thailand
- Sinarmas Energy and Mining - Indonesia
- Baramulti Group, Indonesia
- Sakthi Sugars Limited - India
- Cement Manufacturers Association - India
- Videocon Industries ltd - India
- Goldman Sachs - Singapore
- Bharathi Cement Corporation - India
- Georgia Ports Authority, United States
- Global Green Power PLC Corporation, Philippines
- Binh Thuan Hamico - Vietnam
- Coal and Oil Company - UAE
- Essar Steel Hazira Ltd - India
- Heidelberg Cement - Germany
- Mercuria Energy - Indonesia
- Dalmia Cement Bharat India
- Holcim Trading Pte Ltd - Singapore
- Savvy Resources Ltd - HongKong
- San Jose City I Power Corp, Philippines
- Sree Jayajothi Cements Limited - India
- Central Java Power - Indonesia
- IHS Mccloskey Coal Group - USA
- Interocean Group of Companies - India
- McConnell Dowell - Australia
- Thai Mozambique Logistica
- Orica Mining Services - Indonesia
- Kepco SPC Power Corporation, Philippines
- The Treasury - Australian Government
- Kideco Jaya Agung - Indonesia
- Timah Investasi Mineral - Indoneisa
- GN Power Mariveles Coal Plant, Philippines
- Sical Logistics Limited - India
- Riau Bara Harum - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Coalindo Energy - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Larsen & Toubro Limited - India
- Aditya Birla Group - India
- Bulk Trading Sa - Switzerland
- Formosa Plastics Group - Taiwan
- Indonesian Coal Mining Association
- Deloitte Consulting - India
- Borneo Indobara - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Bayan Resources Tbk. - Indonesia
- Australian Coal Association
- International Coal Ventures Pvt Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Meralco Power Generation, Philippines
- Lanco Infratech Ltd - India
- Global Coal Blending Company Limited - Australia
- PTC India Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Renaissance Capital - South Africa
- Energy Development Corp, Philippines
- GVK Power & Infra Limited - India
- Bhushan Steel Limited - India
- Kartika Selabumi Mining - Indonesia
- Port Waratah Coal Services - Australia
- Miang Besar Coal Terminal - Indonesia
- PowerSource Philippines DevCo
- Semirara Mining Corp, Philippines
- ICICI Bank Limited - India
- India Bulls Power Limited - India
- Indika Energy - Indonesia
- Directorate Of Revenue Intelligence - India
- Leighton Contractors Pty Ltd - Australia
- The University of Queensland
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Simpson Spence & Young - Indonesia
- Power Finance Corporation Ltd., India
- Aboitiz Power Corporation - Philippines
- Semirara Mining and Power Corporation, Philippines
- Banpu Public Company Limited - Thailand
- Kapuas Tunggal Persada - Indonesia
- TeaM Sual Corporation - Philippines
- Bukit Baiduri Energy - Indonesia
- Carbofer General Trading SA - India
- European Bulk Services B.V. - Netherlands
- Therma Luzon, Inc, Philippines
- Intertek Mineral Services - Indonesia
- Tamil Nadu electricity Board
- Neyveli Lignite Corporation Ltd, - India
- Sarangani Energy Corporation, Philippines
- Edison Trading Spa - Italy
- Romanian Commodities Exchange
- Ind-Barath Power Infra Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- SMC Global Power, Philippines
- SN Aboitiz Power Inc, Philippines
- Kaltim Prima Coal - Indonesia
- Metalloyd Limited - United Kingdom
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Ambuja Cements Ltd - India
- Wilmar Investment Holdings
- MS Steel International - UAE
- Samtan Co., Ltd - South Korea
- Cigading International Bulk Terminal - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Madhucon Powers Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Siam City Cement PLC, Thailand
- Minerals Council of Australia
- SMG Consultants - Indonesia
- Oldendorff Carriers - Singapore
- GMR Energy Limited - India
- Ministry of Mines - Canada
- Asmin Koalindo Tuhup - Indonesia
- Antam Resourcindo - Indonesia
- ASAPP Information Group - India
- Jorong Barutama Greston.PT - Indonesia
- Star Paper Mills Limited - India
- New Zealand Coal & Carbon
- GAC Shipping (India) Pvt Ltd
- Ministry of Finance - Indonesia
- Toyota Tsusho Corporation, Japan
- Eastern Coal Council - USA
- Rio Tinto Coal - Australia
- Bhoruka Overseas - Indonesia
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