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