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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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Thursday, 23 December 21
COAL DEMAND TO PEAK IN INDIA BY 2030, WILL BACK UP RENEWABLES: NITI REPORT - BUSINESS STANDARD
Coal will remain India’s mainstay energy source and the country will shape global demand this decade, two reports have said a month after the ...
Thursday, 23 December 21
INDONESIA’S 2022 COAL OUTPUT SEEN BETWEEN 637 MLN-664 MLN T- OFFICIAL - REUTERS
Indonesia’s 2022 coal output is estimated at between 637 million to 664 million tonnes based on production plans currently being finalised, s ...
Thursday, 23 December 21
VALE ANNOUNCES THE SALE OF ITS COAL ASSETS
Vale informs that, on this date, it has entered into a binding agreement with Vulcan to sell the Moatize coal mine and the Nacala Logistics Corrido ...
Thursday, 23 December 21
INDIA: CAPTIVE POWER PRODUCERS URGE GOVT TO ENSURE NORMAL COAL SUPPLIES - PTI
A captive power producers’ association has urged the government for 100 per cent normalisation of coal supply to captive power producers whil ...
Thursday, 23 December 21
MARKET INSIGHT - INTERMODAL
As an outstanding year for the dry bulk freight market comes to a close, so does a thriving year for the SnP market which can only be compared to 2 ...
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- Uttam Galva Steels Limited - India
- Banpu Public Company Limited - Thailand
- Bhatia International Limited - India
- ICICI Bank Limited - India
- Eastern Energy - Thailand
- South Luzon Thermal Energy Corporation
- Wilmar Investment Holdings
- Energy Development Corp, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Vizag Seaport Private Limited - India
- Riau Bara Harum - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Orica Australia Pty. Ltd.
- Orica Mining Services - Indonesia
- Heidelberg Cement - Germany
- Africa Commodities Group - South Africa
- Indian Oil Corporation Limited
- Thai Mozambique Logistica
- Straits Asia Resources Limited - Singapore
- Price Waterhouse Coopers - Russia
- Independent Power Producers Association of India
- Romanian Commodities Exchange
- Miang Besar Coal Terminal - Indonesia
- ASAPP Information Group - India
- San Jose City I Power Corp, Philippines
- Planning Commission, India
- Petrochimia International Co. Ltd.- Taiwan
- Global Business Power Corporation, Philippines
- Sakthi Sugars Limited - India
- CIMB Investment Bank - Malaysia
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- Merrill Lynch Commodities Europe
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- Kumho Petrochemical, South Korea
- Minerals Council of Australia
- Power Finance Corporation Ltd., India
- Bhushan Steel Limited - India
- The State Trading Corporation of India Ltd
- Mjunction Services Limited - India
- Formosa Plastics Group - Taiwan
- Larsen & Toubro Limited - India
- Renaissance Capital - South Africa
- Bharathi Cement Corporation - India
- Gujarat Electricity Regulatory Commission - India
- Mintek Dendrill Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- London Commodity Brokers - England
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- IEA Clean Coal Centre - UK
- Energy Link Ltd, New Zealand
- Mercator Lines Limited - India
- AsiaOL BioFuels Corp., Philippines
- Coal and Oil Company - UAE
- Indonesian Coal Mining Association
- PTC India Limited - India
- Intertek Mineral Services - Indonesia
- Timah Investasi Mineral - Indoneisa
- Gujarat Mineral Development Corp Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- TeaM Sual Corporation - Philippines
- Sinarmas Energy and Mining - Indonesia
- GMR Energy Limited - India
- Kobexindo Tractors - Indoneisa
- Indo Tambangraya Megah - Indonesia
- Ministry of Mines - Canada
- Parry Sugars Refinery, India
- Baramulti Group, Indonesia
- Malabar Cements Ltd - India
- Bulk Trading Sa - Switzerland
- Indika Energy - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Samtan Co., Ltd - South Korea
- Sarangani Energy Corporation, Philippines
- Meralco Power Generation, Philippines
- SN Aboitiz Power Inc, Philippines
- OPG Power Generation Pvt Ltd - India
- The University of Queensland
- Rashtriya Ispat Nigam Limited - India
- Vedanta Resources Plc - India
- Posco Energy - South Korea
- Kideco Jaya Agung - Indonesia
- Tata Chemicals Ltd - India
- PNOC Exploration Corporation - Philippines
- Kalimantan Lumbung Energi - Indonesia
- Chettinad Cement Corporation Ltd - India
- Aboitiz Power Corporation - Philippines
- Manunggal Multi Energi - Indonesia
- Indogreen Group - Indonesia
- Ministry of Finance - Indonesia
- Australian Commodity Traders Exchange
- Indian Energy Exchange, India
- Petron Corporation, Philippines
- Borneo Indobara - Indonesia
- Karaikal Port Pvt Ltd - India
- Eastern Coal Council - USA
- Makarim & Taira - Indonesia
- VISA Power Limited - India
- Chamber of Mines of South Africa
- Antam Resourcindo - Indonesia
- Central Java Power - Indonesia
- Ind-Barath Power Infra Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Port Waratah Coal Services - Australia
- Bhoruka Overseas - Indonesia
- Agrawal Coal Company - India
- Kepco SPC Power Corporation, Philippines
- SMG Consultants - Indonesia
- White Energy Company Limited
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bank of Tokyo Mitsubishi UFJ Ltd
- Sical Logistics Limited - India
- PowerSource Philippines DevCo
- Directorate General of MIneral and Coal - Indonesia
- McConnell Dowell - Australia
- Semirara Mining and Power Corporation, Philippines
- Global Green Power PLC Corporation, Philippines
- Singapore Mercantile Exchange
- Dalmia Cement Bharat India
- Anglo American - United Kingdom
- Holcim Trading Pte Ltd - Singapore
- CNBM International Corporation - China
- Electricity Generating Authority of Thailand
- Billiton Holdings Pty Ltd - Australia
- Siam City Cement - Thailand
- Madhucon Powers Ltd - India
- Standard Chartered Bank - UAE
- Savvy Resources Ltd - HongKong
- PetroVietnam Power Coal Import and Supply Company
- Therma Luzon, Inc, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Ministry of Transport, Egypt
- Kohat Cement Company Ltd. - Pakistan
- Meenaskhi Energy Private Limited - India
- GAC Shipping (India) Pvt Ltd
- Binh Thuan Hamico - Vietnam
- Mercuria Energy - Indonesia
- Metalloyd Limited - United Kingdom
- Sree Jayajothi Cements Limited - India
- Rio Tinto Coal - Australia
- Maheswari Brothers Coal Limited - India
- Bukit Makmur.PT - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Asmin Koalindo Tuhup - Indonesia
- Jaiprakash Power Ventures ltd
- Cement Manufacturers Association - India
- Bangladesh Power Developement Board
- SMC Global Power, Philippines
- International Coal Ventures Pvt Ltd - India
- Attock Cement Pakistan Limited
- Electricity Authority, New Zealand
- Cigading International Bulk Terminal - Indonesia
- Aditya Birla Group - India
- Central Electricity Authority - India
- Carbofer General Trading SA - India
- Siam City Cement PLC, Thailand
- India Bulls Power Limited - India
- Jindal Steel & Power Ltd - India
- Videocon Industries ltd - India
- MS Steel International - UAE
- Essar Steel Hazira Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- GN Power Mariveles Coal Plant, Philippines
- European Bulk Services B.V. - Netherlands
- Coastal Gujarat Power Limited - India
- Iligan Light & Power Inc, Philippines
- Xindia Steels Limited - India
- Lanco Infratech Ltd - India
- Sindya Power Generating Company Private Ltd
- Semirara Mining Corp, Philippines
- Kapuas Tunggal Persada - Indonesia
- The Treasury - Australian Government
- Wood Mackenzie - Singapore
- Star Paper Mills Limited - India
- Altura Mining Limited, Indonesia
- Kaltim Prima Coal - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Simpson Spence & Young - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Marubeni Corporation - India
- Global Coal Blending Company Limited - Australia
- Interocean Group of Companies - India
- Deloitte Consulting - India
- Latin American Coal - Colombia
- Australian Coal Association
- Georgia Ports Authority, United States
- Grasim Industreis Ltd - India
- IHS Mccloskey Coal Group - USA
- Karbindo Abesyapradhi - Indoneisa
- Salva Resources Pvt Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Bayan Resources Tbk. - Indonesia
- Edison Trading Spa - Italy
- New Zealand Coal & Carbon
- Oldendorff Carriers - Singapore
- Krishnapatnam Port Company Ltd. - India
- GVK Power & Infra Limited - India
- Toyota Tsusho Corporation, Japan
- LBH Netherlands Bv - Netherlands
- Directorate Of Revenue Intelligence - India
- Medco Energi Mining Internasional
- Parliament of New Zealand
- Goldman Sachs - Singapore
- Ceylon Electricity Board - Sri Lanka
- Economic Council, Georgia
- Coalindo Energy - Indonesia
- Bukit Baiduri Energy - Indonesia
- Gujarat Sidhee Cement - India
- Kartika Selabumi Mining - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Tamil Nadu electricity Board
- Barasentosa Lestari - Indonesia
- Sojitz Corporation - Japan
- Trasteel International SA, Italy
- Ambuja Cements Ltd - India
- Commonwealth Bank - Australia
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