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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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- Commonwealth Bank - Australia
- McConnell Dowell - Australia
- Vedanta Resources Plc - India
- PetroVietnam Power Coal Import and Supply Company
- Ind-Barath Power Infra Limited - India
- Orica Mining Services - Indonesia
- Thiess Contractors Indonesia
- Deloitte Consulting - India
- Aditya Birla Group - India
- Cement Manufacturers Association - India
- PowerSource Philippines DevCo
- Chettinad Cement Corporation Ltd - India
- Power Finance Corporation Ltd., India
- Binh Thuan Hamico - Vietnam
- Chamber of Mines of South Africa
- Bhushan Steel Limited - India
- Mercator Lines Limited - India
- Siam City Cement PLC, Thailand
- Indian Energy Exchange, India
- Jindal Steel & Power Ltd - India
- Vizag Seaport Private Limited - India
- ICICI Bank Limited - India
- Maheswari Brothers Coal Limited - India
- OPG Power Generation Pvt Ltd - India
- Bangladesh Power Developement Board
- Australian Coal Association
- IHS Mccloskey Coal Group - USA
- Banpu Public Company Limited - Thailand
- Bhoruka Overseas - Indonesia
- Sakthi Sugars Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Sree Jayajothi Cements Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Malabar Cements Ltd - India
- Electricity Authority, New Zealand
- Asmin Koalindo Tuhup - Indonesia
- Parliament of New Zealand
- Agrawal Coal Company - India
- Interocean Group of Companies - India
- South Luzon Thermal Energy Corporation
- Sojitz Corporation - Japan
- Metalloyd Limited - United Kingdom
- Kartika Selabumi Mining - Indonesia
- Intertek Mineral Services - Indonesia
- Central Electricity Authority - India
- Standard Chartered Bank - UAE
- Coastal Gujarat Power Limited - India
- SN Aboitiz Power Inc, Philippines
- AsiaOL BioFuels Corp., Philippines
- Kobexindo Tractors - Indoneisa
- Gujarat Electricity Regulatory Commission - India
- Larsen & Toubro Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Price Waterhouse Coopers - Russia
- GVK Power & Infra Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Rio Tinto Coal - Australia
- Altura Mining Limited, Indonesia
- Xindia Steels Limited - India
- White Energy Company Limited
- Holcim Trading Pte Ltd - Singapore
- Indika Energy - Indonesia
- Bulk Trading Sa - Switzerland
- Karaikal Port Pvt Ltd - India
- Bayan Resources Tbk. - Indonesia
- PNOC Exploration Corporation - Philippines
- Renaissance Capital - South Africa
- Directorate General of MIneral and Coal - Indonesia
- Straits Asia Resources Limited - Singapore
- New Zealand Coal & Carbon
- Romanian Commodities Exchange
- Kapuas Tunggal Persada - Indonesia
- Samtan Co., Ltd - South Korea
- GMR Energy Limited - India
- TeaM Sual Corporation - Philippines
- Latin American Coal - Colombia
- Salva Resources Pvt Ltd - India
- Australian Commodity Traders Exchange
- Vijayanagar Sugar Pvt Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- MS Steel International - UAE
- Planning Commission, India
- Energy Link Ltd, New Zealand
- Kumho Petrochemical, South Korea
- Sindya Power Generating Company Private Ltd
- Mercuria Energy - Indonesia
- Miang Besar Coal Terminal - Indonesia
- The State Trading Corporation of India Ltd
- Savvy Resources Ltd - HongKong
- Ceylon Electricity Board - Sri Lanka
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Heidelberg Cement - Germany
- Africa Commodities Group - South Africa
- Uttam Galva Steels Limited - India
- Siam City Cement - Thailand
- Global Business Power Corporation, Philippines
- Essar Steel Hazira Ltd - India
- Indogreen Group - Indonesia
- Wilmar Investment Holdings
- Independent Power Producers Association of India
- Bharathi Cement Corporation - India
- Wood Mackenzie - Singapore
- Meralco Power Generation, Philippines
- Antam Resourcindo - Indonesia
- Therma Luzon, Inc, Philippines
- ASAPP Information Group - India
- CNBM International Corporation - China
- Economic Council, Georgia
- GAC Shipping (India) Pvt Ltd
- Globalindo Alam Lestari - Indonesia
- Formosa Plastics Group - Taiwan
- Ministry of Finance - Indonesia
- Simpson Spence & Young - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- London Commodity Brokers - England
- Meenaskhi Energy Private Limited - India
- Marubeni Corporation - India
- Mintek Dendrill Indonesia
- Parry Sugars Refinery, India
- Toyota Tsusho Corporation, Japan
- The Treasury - Australian Government
- Lanco Infratech Ltd - India
- Grasim Industreis Ltd - India
- Sical Logistics Limited - India
- Videocon Industries ltd - India
- Edison Trading Spa - Italy
- Indian Oil Corporation Limited
- Oldendorff Carriers - Singapore
- Tamil Nadu electricity Board
- Kalimantan Lumbung Energi - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Tata Chemicals Ltd - India
- Dalmia Cement Bharat India
- Star Paper Mills Limited - India
- Energy Development Corp, Philippines
- Kideco Jaya Agung - Indonesia
- Medco Energi Mining Internasional
- Coal and Oil Company - UAE
- Karbindo Abesyapradhi - Indoneisa
- Bahari Cakrawala Sebuku - Indonesia
- Riau Bara Harum - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- India Bulls Power Limited - India
- Billiton Holdings Pty Ltd - Australia
- Gujarat Mineral Development Corp Ltd - India
- Eastern Energy - Thailand
- Ambuja Cements Ltd - India
- LBH Netherlands Bv - Netherlands
- Ministry of Transport, Egypt
- Anglo American - United Kingdom
- Electricity Generating Authority of Thailand
- Thai Mozambique Logistica
- Pendopo Energi Batubara - Indonesia
- Sarangani Energy Corporation, Philippines
- The University of Queensland
- Leighton Contractors Pty Ltd - Australia
- Directorate Of Revenue Intelligence - India
- Global Green Power PLC Corporation, Philippines
- Orica Australia Pty. Ltd.
- Goldman Sachs - Singapore
- Iligan Light & Power Inc, Philippines
- Global Coal Blending Company Limited - Australia
- International Coal Ventures Pvt Ltd - India
- Gujarat Sidhee Cement - India
- Ministry of Mines - Canada
- Barasentosa Lestari - Indonesia
- Timah Investasi Mineral - Indoneisa
- IEA Clean Coal Centre - UK
- Alfred C Toepfer International GmbH - Germany
- CIMB Investment Bank - Malaysia
- Jorong Barutama Greston.PT - Indonesia
- Coalindo Energy - Indonesia
- Carbofer General Trading SA - India
- Attock Cement Pakistan Limited
- Semirara Mining and Power Corporation, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Central Java Power - Indonesia
- Bukit Makmur.PT - Indonesia
- Kepco SPC Power Corporation, Philippines
- European Bulk Services B.V. - Netherlands
- Kaltim Prima Coal - Indonesia
- PTC India Limited - India
- Petron Corporation, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Bukit Asam (Persero) Tbk - Indonesia
- Port Waratah Coal Services - Australia
- Singapore Mercantile Exchange
- Georgia Ports Authority, United States
- Madhucon Powers Ltd - India
- Makarim & Taira - Indonesia
- Borneo Indobara - Indonesia
- Mjunction Services Limited - India
- Aboitiz Power Corporation - Philippines
- Trasteel International SA, Italy
- Bhatia International Limited - India
- Krishnapatnam Port Company Ltd. - India
- Baramulti Group, Indonesia
- Manunggal Multi Energi - Indonesia
- Minerals Council of Australia
- Indo Tambangraya Megah - Indonesia
- SMC Global Power, Philippines
- Jaiprakash Power Ventures ltd
- Merrill Lynch Commodities Europe
- Indonesian Coal Mining Association
- San Jose City I Power Corp, Philippines
- Semirara Mining Corp, Philippines
- Maharashtra Electricity Regulatory Commission - India
- VISA Power Limited - India
- SMG Consultants - Indonesia
- Posco Energy - South Korea
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Rashtriya Ispat Nigam Limited - India
- Cigading International Bulk Terminal - Indonesia
- Eastern Coal Council - USA
- Bukit Baiduri Energy - Indonesia
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