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