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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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Friday, 15 October 21
GLOBAL STEEL DEMAND GROWTH DOWNGRADED FOR 2021 DUE TO CHINA - WORLD STEEL ASSOCIATION
The World Steel Association (worldsteel) today released an update of its Short Range Outlook (SRO) for 2021 and 2022. worldsteel forecasts that ste ...
Thursday, 14 October 21
SPIKING COAL PRICES: DON’T BLAME THE ENERGY TRANSITION - IEEFA
Volatility highlights urgency for renewables-based energy solutions
“Energy crisis.” The phrase evokes nearly-forgotten ...
Thursday, 14 October 21
EIA FORECASTS U.S. COAL PRODUCTION TOTALS 588 MMST IN 2021, UP 53 MMST YOY
U.S. coal production in EIA's forecasts totals 588 million short tons (MMst) in 2021, 53 MMst more than in 2020.
According ...
Wednesday, 13 October 21
COAL PRICES ARE ROARING BACK AMID A GLOBAL ENERGY CRUNCH - SYDNEY MORNING HERALD
Soaring coal prices have placed Australia’s mining and energy exports on track to reach a record $349 billion this year evenas the value of t ...
Wednesday, 13 October 21
CHINA ISN'T THE ONLY HUGE ASIAN ECONOMY WITH A COAL SHORTAGE NOW - CNBC
China is not the only Asian giant grappling with an energy crunch — India is also teetering on the edge of a power crisis.
Mos ...
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- Energy Link Ltd, New Zealand
- Georgia Ports Authority, United States
- Agrawal Coal Company - India
- Latin American Coal - Colombia
- Orica Mining Services - Indonesia
- Tata Chemicals Ltd - India
- Tamil Nadu electricity Board
- Interocean Group of Companies - India
- Samtan Co., Ltd - South Korea
- Karbindo Abesyapradhi - Indoneisa
- Meralco Power Generation, Philippines
- Bukit Baiduri Energy - Indonesia
- Banpu Public Company Limited - Thailand
- Iligan Light & Power Inc, Philippines
- Semirara Mining Corp, Philippines
- GMR Energy Limited - India
- Edison Trading Spa - Italy
- Indo Tambangraya Megah - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Kartika Selabumi Mining - Indonesia
- Coal and Oil Company - UAE
- Orica Australia Pty. Ltd.
- McConnell Dowell - Australia
- Goldman Sachs - Singapore
- Uttam Galva Steels Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Renaissance Capital - South Africa
- Grasim Industreis Ltd - India
- GVK Power & Infra Limited - India
- MS Steel International - UAE
- Kohat Cement Company Ltd. - Pakistan
- Therma Luzon, Inc, Philippines
- Rashtriya Ispat Nigam Limited - India
- Standard Chartered Bank - UAE
- Australian Coal Association
- Siam City Cement - Thailand
- Krishnapatnam Port Company Ltd. - India
- Romanian Commodities Exchange
- Baramulti Group, Indonesia
- IHS Mccloskey Coal Group - USA
- Bulk Trading Sa - Switzerland
- Ministry of Finance - Indonesia
- Siam City Cement PLC, Thailand
- GN Power Mariveles Coal Plant, Philippines
- The State Trading Corporation of India Ltd
- The University of Queensland
- Barasentosa Lestari - Indonesia
- Jindal Steel & Power Ltd - India
- Aboitiz Power Corporation - Philippines
- White Energy Company Limited
- OPG Power Generation Pvt Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Makarim & Taira - Indonesia
- Maheswari Brothers Coal Limited - India
- Sakthi Sugars Limited - India
- Alfred C Toepfer International GmbH - Germany
- Gujarat Mineral Development Corp Ltd - India
- Marubeni Corporation - India
- Indogreen Group - Indonesia
- Australian Commodity Traders Exchange
- Wood Mackenzie - Singapore
- Parliament of New Zealand
- European Bulk Services B.V. - Netherlands
- Ministry of Mines - Canada
- Kobexindo Tractors - Indoneisa
- Thiess Contractors Indonesia
- Parry Sugars Refinery, India
- New Zealand Coal & Carbon
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Videocon Industries ltd - India
- Xindia Steels Limited - India
- Straits Asia Resources Limited - Singapore
- PowerSource Philippines DevCo
- Simpson Spence & Young - Indonesia
- Oldendorff Carriers - Singapore
- Billiton Holdings Pty Ltd - Australia
- Anglo American - United Kingdom
- Bhoruka Overseas - Indonesia
- Petron Corporation, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Directorate General of MIneral and Coal - Indonesia
- GAC Shipping (India) Pvt Ltd
- Jorong Barutama Greston.PT - Indonesia
- Binh Thuan Hamico - Vietnam
- Global Business Power Corporation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Pendopo Energi Batubara - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- India Bulls Power Limited - India
- Malabar Cements Ltd - India
- Independent Power Producers Association of India
- London Commodity Brokers - England
- Global Coal Blending Company Limited - Australia
- Indian Energy Exchange, India
- Africa Commodities Group - South Africa
- Madhucon Powers Ltd - India
- Indian Oil Corporation Limited
- IEA Clean Coal Centre - UK
- Salva Resources Pvt Ltd - India
- Mjunction Services Limited - India
- Wilmar Investment Holdings
- Indika Energy - Indonesia
- Manunggal Multi Energi - Indonesia
- Kideco Jaya Agung - Indonesia
- ICICI Bank Limited - India
- Eastern Coal Council - USA
- Maharashtra Electricity Regulatory Commission - India
- Kaltim Prima Coal - Indonesia
- LBH Netherlands Bv - Netherlands
- Intertek Mineral Services - Indonesia
- Directorate Of Revenue Intelligence - India
- Merrill Lynch Commodities Europe
- Bhushan Steel Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Singapore Mercantile Exchange
- Toyota Tsusho Corporation, Japan
- Kumho Petrochemical, South Korea
- Mercuria Energy - Indonesia
- Sical Logistics Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- South Luzon Thermal Energy Corporation
- Thai Mozambique Logistica
- Ind-Barath Power Infra Limited - India
- Vizag Seaport Private Limited - India
- Sojitz Corporation - Japan
- Carbofer General Trading SA - India
- Leighton Contractors Pty Ltd - Australia
- Sree Jayajothi Cements Limited - India
- Meenaskhi Energy Private Limited - India
- Global Green Power PLC Corporation, Philippines
- Altura Mining Limited, Indonesia
- Jaiprakash Power Ventures ltd
- Riau Bara Harum - Indonesia
- Sarangani Energy Corporation, Philippines
- Kepco SPC Power Corporation, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Attock Cement Pakistan Limited
- Cement Manufacturers Association - India
- Borneo Indobara - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Heidelberg Cement - Germany
- Planning Commission, India
- Trasteel International SA, Italy
- Cigading International Bulk Terminal - Indonesia
- Antam Resourcindo - Indonesia
- Coastal Gujarat Power Limited - India
- Aditya Birla Group - India
- PNOC Exploration Corporation - Philippines
- VISA Power Limited - India
- PTC India Limited - India
- Bayan Resources Tbk. - Indonesia
- Bhatia International Limited - India
- Rio Tinto Coal - Australia
- Eastern Energy - Thailand
- Gujarat Electricity Regulatory Commission - India
- Medco Energi Mining Internasional
- Karaikal Port Pvt Ltd - India
- Bharathi Cement Corporation - India
- SN Aboitiz Power Inc, Philippines
- Mercator Lines Limited - India
- Power Finance Corporation Ltd., India
- Bukit Makmur.PT - Indonesia
- Economic Council, Georgia
- SMC Global Power, Philippines
- Lanco Infratech Ltd - India
- Chettinad Cement Corporation Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Gujarat Sidhee Cement - India
- The Treasury - Australian Government
- Ministry of Transport, Egypt
- Electricity Generating Authority of Thailand
- Ambuja Cements Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Chamber of Mines of South Africa
- Bangladesh Power Developement Board
- Kapuas Tunggal Persada - Indonesia
- TeaM Sual Corporation - Philippines
- Savvy Resources Ltd - HongKong
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- CNBM International Corporation - China
- Indonesian Coal Mining Association
- International Coal Ventures Pvt Ltd - India
- Timah Investasi Mineral - Indoneisa
- Central Java Power - Indonesia
- Formosa Plastics Group - Taiwan
- Energy Development Corp, Philippines
- Mintek Dendrill Indonesia
- SMG Consultants - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Minerals Council of Australia
- San Jose City I Power Corp, Philippines
- Vedanta Resources Plc - India
- Star Paper Mills Limited - India
- Miang Besar Coal Terminal - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Price Waterhouse Coopers - Russia
- Electricity Authority, New Zealand
- CIMB Investment Bank - Malaysia
- Dalmia Cement Bharat India
- ASAPP Information Group - India
- Globalindo Alam Lestari - Indonesia
- Sindya Power Generating Company Private Ltd
- Larsen & Toubro Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Coalindo Energy - Indonesia
- Posco Energy - South Korea
- Metalloyd Limited - United Kingdom
- PetroVietnam Power Coal Import and Supply Company
- Sinarmas Energy and Mining - Indonesia
- Port Waratah Coal Services - Australia
- Essar Steel Hazira Ltd - India
- Central Electricity Authority - India
- Commonwealth Bank - Australia
- Deloitte Consulting - India
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