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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, 24 November 23
WHY AUSTRALIA'S COAL MINES ARE GETTING BIGGER - IEEFA
Australia’s largest coal mines are getting larger. Mines in New South Wales (NSW) are ramping up production following the state’s recov ...
Wednesday, 22 November 23
INDIA: GOVERNMENT PLANS 1.4 BILLION TONNE COAL OUTPUT BY 2027 - LIVEMINT
The Union coal ministry on Monday announced plans to increase India’s coal production to 1.404 billion tonne by 2027, with an eye to further ...
Wednesday, 22 November 23
OBLIGATION. INDONESIA AIMS TO START COLLECTING LEVIES FROM COAL MINERS IN JANUARY - REUTERS
Indonesia plans to start collecting levies from coal miners in January to be used to compensate miners who sell coal to the state utility at lower ...
Tuesday, 21 November 23
INDIAN COAL POWER PLANTS’ CAPACITY UTILISATION WILL IMPROVE TO 65% THIS FISCAL: - CRISIL
Coal-based thermal power units’ plant load factor (PLF) or capacity utilisation will improve to 65 percent in the current fiscal year despite ...
Tuesday, 14 November 23
CAPITAL PRODUCT PARTNERS L.P. ANNOUNCES TRANSFORMATIVE TRANSACTION INCLUDING THE ACQUISITION OF 11 NEWBUILD LNG CARRIERS FOR $3.1 BILLION
Capital Product Partners L.P. announced that it has entered into an umbrella agreement (the “Umbrella Agreement”) with Capital Maritime ...
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- SMC Global Power, Philippines
- Jindal Steel & Power Ltd - India
- Grasim Industreis Ltd - India
- IHS Mccloskey Coal Group - USA
- Alfred C Toepfer International GmbH - Germany
- Bhoruka Overseas - Indonesia
- Deloitte Consulting - India
- GAC Shipping (India) Pvt Ltd
- The Treasury - Australian Government
- Minerals Council of Australia
- Toyota Tsusho Corporation, Japan
- Meralco Power Generation, Philippines
- PTC India Limited - India
- Formosa Plastics Group - Taiwan
- White Energy Company Limited
- Ind-Barath Power Infra Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Ceylon Electricity Board - Sri Lanka
- CIMB Investment Bank - Malaysia
- Dalmia Cement Bharat India
- Vizag Seaport Private Limited - India
- Electricity Generating Authority of Thailand
- Parliament of New Zealand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Indika Energy - Indonesia
- Ministry of Finance - Indonesia
- Chamber of Mines of South Africa
- Economic Council, Georgia
- Kartika Selabumi Mining - Indonesia
- Uttam Galva Steels Limited - India
- Semirara Mining Corp, Philippines
- Bangladesh Power Developement Board
- Xindia Steels Limited - India
- Energy Link Ltd, New Zealand
- Renaissance Capital - South Africa
- Altura Mining Limited, Indonesia
- Miang Besar Coal Terminal - Indonesia
- Goldman Sachs - Singapore
- Heidelberg Cement - Germany
- Tata Chemicals Ltd - India
- Sinarmas Energy and Mining - Indonesia
- The State Trading Corporation of India Ltd
- Anglo American - United Kingdom
- Sical Logistics Limited - India
- Aboitiz Power Corporation - Philippines
- Jaiprakash Power Ventures ltd
- Leighton Contractors Pty Ltd - Australia
- Latin American Coal - Colombia
- Metalloyd Limited - United Kingdom
- TeaM Sual Corporation - Philippines
- Wood Mackenzie - Singapore
- Kalimantan Lumbung Energi - Indonesia
- Sojitz Corporation - Japan
- Commonwealth Bank - Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- International Coal Ventures Pvt Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Petron Corporation, Philippines
- Marubeni Corporation - India
- SMG Consultants - Indonesia
- Aditya Birla Group - India
- SN Aboitiz Power Inc, Philippines
- Timah Investasi Mineral - Indoneisa
- London Commodity Brokers - England
- Meenaskhi Energy Private Limited - India
- Videocon Industries ltd - India
- Kaltim Prima Coal - Indonesia
- GVK Power & Infra Limited - India
- Billiton Holdings Pty Ltd - Australia
- Kepco SPC Power Corporation, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Eastern Energy - Thailand
- Oldendorff Carriers - Singapore
- Banpu Public Company Limited - Thailand
- Ministry of Mines - Canada
- Trasteel International SA, Italy
- Binh Thuan Hamico - Vietnam
- Simpson Spence & Young - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Thiess Contractors Indonesia
- Orica Australia Pty. Ltd.
- Global Green Power PLC Corporation, Philippines
- Krishnapatnam Port Company Ltd. - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- PNOC Exploration Corporation - Philippines
- Salva Resources Pvt Ltd - India
- Manunggal Multi Energi - Indonesia
- Sarangani Energy Corporation, Philippines
- Agrawal Coal Company - India
- Global Coal Blending Company Limited - Australia
- Posco Energy - South Korea
- Vijayanagar Sugar Pvt Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Global Business Power Corporation, Philippines
- Romanian Commodities Exchange
- Kobexindo Tractors - Indoneisa
- Price Waterhouse Coopers - Russia
- Petrochimia International Co. Ltd.- Taiwan
- Siam City Cement PLC, Thailand
- South Luzon Thermal Energy Corporation
- Savvy Resources Ltd - HongKong
- Rio Tinto Coal - Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Merrill Lynch Commodities Europe
- Malabar Cements Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Makarim & Taira - Indonesia
- Standard Chartered Bank - UAE
- Bayan Resources Tbk. - Indonesia
- India Bulls Power Limited - India
- PowerSource Philippines DevCo
- Indonesian Coal Mining Association
- Indian Energy Exchange, India
- Gujarat Mineral Development Corp Ltd - India
- Australian Commodity Traders Exchange
- Larsen & Toubro Limited - India
- Cement Manufacturers Association - India
- Holcim Trading Pte Ltd - Singapore
- Bulk Trading Sa - Switzerland
- MS Steel International - UAE
- Electricity Authority, New Zealand
- Lanco Infratech Ltd - India
- Indo Tambangraya Megah - Indonesia
- Carbofer General Trading SA - India
- Directorate Of Revenue Intelligence - India
- Coastal Gujarat Power Limited - India
- Rashtriya Ispat Nigam Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Singapore Mercantile Exchange
- Ambuja Cements Ltd - India
- Siam City Cement - Thailand
- Riau Bara Harum - Indonesia
- Indian Oil Corporation Limited
- Gujarat Sidhee Cement - India
- IEA Clean Coal Centre - UK
- Neyveli Lignite Corporation Ltd, - India
- Borneo Indobara - Indonesia
- Chettinad Cement Corporation Ltd - India
- ASAPP Information Group - India
- Star Paper Mills Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Independent Power Producers Association of India
- CNBM International Corporation - China
- Maheswari Brothers Coal Limited - India
- ICICI Bank Limited - India
- Sree Jayajothi Cements Limited - India
- Coal and Oil Company - UAE
- Baramulti Group, Indonesia
- Medco Energi Mining Internasional
- Jorong Barutama Greston.PT - Indonesia
- Eastern Coal Council - USA
- Sindya Power Generating Company Private Ltd
- Tamil Nadu electricity Board
- Planning Commission, India
- OPG Power Generation Pvt Ltd - India
- Straits Asia Resources Limited - Singapore
- Offshore Bulk Terminal Pte Ltd, Singapore
- Samtan Co., Ltd - South Korea
- Bukit Baiduri Energy - Indonesia
- Orica Mining Services - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Pendopo Energi Batubara - Indonesia
- Port Waratah Coal Services - Australia
- Mercuria Energy - Indonesia
- Thai Mozambique Logistica
- Interocean Group of Companies - India
- Parry Sugars Refinery, India
- Gujarat Electricity Regulatory Commission - India
- Georgia Ports Authority, United States
- Mercator Lines Limited - India
- Mintek Dendrill Indonesia
- Kideco Jaya Agung - Indonesia
- European Bulk Services B.V. - Netherlands
- The University of Queensland
- Bhatia International Limited - India
- Edison Trading Spa - Italy
- Sakthi Sugars Limited - India
- Cigading International Bulk Terminal - Indonesia
- Karaikal Port Pvt Ltd - India
- Kumho Petrochemical, South Korea
- Madhucon Powers Ltd - India
- Bhushan Steel Limited - India
- VISA Power Limited - India
- Therma Luzon, Inc, Philippines
- Globalindo Alam Lestari - Indonesia
- Intertek Mineral Services - Indonesia
- Wilmar Investment Holdings
- Ministry of Transport, Egypt
- Indogreen Group - Indonesia
- New Zealand Coal & Carbon
- Kohat Cement Company Ltd. - Pakistan
- Essar Steel Hazira Ltd - India
- Central Java Power - Indonesia
- Africa Commodities Group - South Africa
- Energy Development Corp, Philippines
- Coalindo Energy - Indonesia
- San Jose City I Power Corp, Philippines
- Attock Cement Pakistan Limited
- Bukit Makmur.PT - Indonesia
- GMR Energy Limited - India
- PetroVietnam Power Coal Import and Supply Company
- AsiaOL BioFuels Corp., Philippines
- Antam Resourcindo - Indonesia
- McConnell Dowell - Australia
- Barasentosa Lestari - Indonesia
- Central Electricity Authority - India
- Maharashtra Electricity Regulatory Commission - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Vedanta Resources Plc - India
- LBH Netherlands Bv - Netherlands
- Bharathi Cement Corporation - India
- Kapuas Tunggal Persada - Indonesia
- Australian Coal Association
- Mjunction Services Limited - India
- Power Finance Corporation Ltd., India
- Bahari Cakrawala Sebuku - Indonesia
- Iligan Light & Power Inc, Philippines
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