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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, 07 December 23
CHINA TO SET UP COAL PRODUCTION RESERVE TO STABILISE PRICES - REUTERS
China will establish a back-up coal production system by 2027 to stabilise prices and secure coal supply, the state planner said on Wednesday, even ...
Friday, 01 December 23
COAL MINERS GROUP EXPECTS INDONESIA’S 2023 COAL OUTPUT TO SURPASS TARGET - REUTERS
The Indonesian Coal Mining Association (ICMA) expects the country’s 2023 coal output to surpass the official target of 695 million metric ton ...
Friday, 24 November 23
COAL IMPORTS TO INDIA IN OCTOBER 2023 REACHED HIGHEST LEVELS IN NEARLY A YEAR AND A HALF - VESSELSVALUE, VESON NAUTICAL
In October, coal imports to India reached 13.8 mt in October 2023, according to Oceanbolt, a Veson Nautical solution, the highest level since May 2 ...
Friday, 24 November 23
COAL SHIPMENTS TO ADVANCED ECONOMIES DOWN 17% SO FAR IN 2023 - BIMCO
In the first ten months of 2023, coal shipments to advanced economies fell by 17% y/y, as demand for electricity declined and the share of electric ...
Friday, 24 November 23
INTELLIGENT COAL MINES CONTRIBUTE TO IMPROVING SAFETY STANDARDS - CHINA DAILY
Mechanization, automation and intelligent upgrades have contributed to improved safety in coal mines, though the level of development of intelligen ...
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- Xindia Steels Limited - India
- Tata Chemicals Ltd - India
- Oldendorff Carriers - Singapore
- Wood Mackenzie - Singapore
- Bharathi Cement Corporation - India
- Carbofer General Trading SA - India
- Bulk Trading Sa - Switzerland
- Simpson Spence & Young - Indonesia
- CNBM International Corporation - China
- South Luzon Thermal Energy Corporation
- OPG Power Generation Pvt Ltd - India
- LBH Netherlands Bv - Netherlands
- Bahari Cakrawala Sebuku - Indonesia
- Mercator Lines Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Bhushan Steel Limited - India
- Billiton Holdings Pty Ltd - Australia
- Banpu Public Company Limited - Thailand
- MS Steel International - UAE
- CIMB Investment Bank - Malaysia
- Borneo Indobara - Indonesia
- The State Trading Corporation of India Ltd
- San Jose City I Power Corp, Philippines
- Gujarat Sidhee Cement - India
- Coastal Gujarat Power Limited - India
- Romanian Commodities Exchange
- Georgia Ports Authority, United States
- PowerSource Philippines DevCo
- The Treasury - Australian Government
- Leighton Contractors Pty Ltd - Australia
- Baramulti Group, Indonesia
- McConnell Dowell - Australia
- Jaiprakash Power Ventures ltd
- Maharashtra Electricity Regulatory Commission - India
- Riau Bara Harum - Indonesia
- Singapore Mercantile Exchange
- Indian Oil Corporation Limited
- Offshore Bulk Terminal Pte Ltd, Singapore
- Tamil Nadu electricity Board
- PTC India Limited - India
- Rio Tinto Coal - Australia
- Thiess Contractors Indonesia
- ICICI Bank Limited - India
- Vedanta Resources Plc - India
- Deloitte Consulting - India
- Gujarat Electricity Regulatory Commission - India
- Meenaskhi Energy Private Limited - India
- Lanco Infratech Ltd - India
- Economic Council, Georgia
- Indogreen Group - Indonesia
- Maheswari Brothers Coal Limited - India
- Sakthi Sugars Limited - India
- New Zealand Coal & Carbon
- Star Paper Mills Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Thai Mozambique Logistica
- Barasentosa Lestari - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Port Waratah Coal Services - Australia
- Energy Link Ltd, New Zealand
- Toyota Tsusho Corporation, Japan
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kepco SPC Power Corporation, Philippines
- Indonesian Coal Mining Association
- Makarim & Taira - Indonesia
- Indian Energy Exchange, India
- Petrochimia International Co. Ltd.- Taiwan
- Jindal Steel & Power Ltd - India
- Ind-Barath Power Infra Limited - India
- Metalloyd Limited - United Kingdom
- Meralco Power Generation, Philippines
- Bhatia International Limited - India
- Orica Australia Pty. Ltd.
- Goldman Sachs - Singapore
- Bukit Asam (Persero) Tbk - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Sindya Power Generating Company Private Ltd
- Gujarat Mineral Development Corp Ltd - India
- White Energy Company Limited
- Central Electricity Authority - India
- Kapuas Tunggal Persada - Indonesia
- Kaltim Prima Coal - Indonesia
- Central Java Power - Indonesia
- Bukit Baiduri Energy - Indonesia
- Bhoruka Overseas - Indonesia
- Bangladesh Power Developement Board
- Sojitz Corporation - Japan
- Global Green Power PLC Corporation, Philippines
- Agrawal Coal Company - India
- India Bulls Power Limited - India
- Kideco Jaya Agung - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Manunggal Multi Energi - Indonesia
- International Coal Ventures Pvt Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Mjunction Services Limited - India
- Sinarmas Energy and Mining - Indonesia
- Iligan Light & Power Inc, Philippines
- Antam Resourcindo - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Formosa Plastics Group - Taiwan
- Africa Commodities Group - South Africa
- Semirara Mining and Power Corporation, Philippines
- Power Finance Corporation Ltd., India
- IEA Clean Coal Centre - UK
- Petron Corporation, Philippines
- Coal and Oil Company - UAE
- Electricity Authority, New Zealand
- Dalmia Cement Bharat India
- Chamber of Mines of South Africa
- Planning Commission, India
- Kartika Selabumi Mining - Indonesia
- Straits Asia Resources Limited - Singapore
- Merrill Lynch Commodities Europe
- Intertek Mineral Services - Indonesia
- Indo Tambangraya Megah - Indonesia
- Edison Trading Spa - Italy
- Karbindo Abesyapradhi - Indoneisa
- Anglo American - United Kingdom
- Mercuria Energy - Indonesia
- Ministry of Finance - Indonesia
- GAC Shipping (India) Pvt Ltd
- Aboitiz Power Corporation - Philippines
- European Bulk Services B.V. - Netherlands
- Vijayanagar Sugar Pvt Ltd - India
- Trasteel International SA, Italy
- Altura Mining Limited, Indonesia
- PNOC Exploration Corporation - Philippines
- Posco Energy - South Korea
- Renaissance Capital - South Africa
- Pipit Mutiara Jaya. PT, Indonesia
- Price Waterhouse Coopers - Russia
- Ministry of Transport, Egypt
- Vizag Seaport Private Limited - India
- GMR Energy Limited - India
- Cement Manufacturers Association - India
- Aditya Birla Group - India
- Sree Jayajothi Cements Limited - India
- Independent Power Producers Association of India
- London Commodity Brokers - England
- AsiaOL BioFuels Corp., Philippines
- Medco Energi Mining Internasional
- Directorate Of Revenue Intelligence - India
- Salva Resources Pvt Ltd - India
- Orica Mining Services - Indonesia
- Chettinad Cement Corporation Ltd - India
- Marubeni Corporation - India
- Pendopo Energi Batubara - Indonesia
- Global Coal Blending Company Limited - Australia
- Binh Thuan Hamico - Vietnam
- Videocon Industries ltd - India
- Ambuja Cements Ltd - India
- Wilmar Investment Holdings
- Electricity Generating Authority of Thailand
- IHS Mccloskey Coal Group - USA
- Ceylon Electricity Board - Sri Lanka
- Timah Investasi Mineral - Indoneisa
- Eastern Coal Council - USA
- Parry Sugars Refinery, India
- SMG Consultants - Indonesia
- Latin American Coal - Colombia
- Commonwealth Bank - Australia
- VISA Power Limited - India
- Eastern Energy - Thailand
- Minerals Council of Australia
- Karaikal Port Pvt Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Semirara Mining Corp, Philippines
- Siam City Cement - Thailand
- Siam City Cement PLC, Thailand
- SN Aboitiz Power Inc, Philippines
- GVK Power & Infra Limited - India
- Alfred C Toepfer International GmbH - Germany
- Larsen & Toubro Limited - India
- Sarangani Energy Corporation, Philippines
- Malabar Cements Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Interocean Group of Companies - India
- Savvy Resources Ltd - HongKong
- Therma Luzon, Inc, Philippines
- Kumho Petrochemical, South Korea
- Global Business Power Corporation, Philippines
- Bukit Makmur.PT - Indonesia
- Australian Commodity Traders Exchange
- TeaM Sual Corporation - Philippines
- GN Power Mariveles Coal Plant, Philippines
- Essar Steel Hazira Ltd - India
- Uttam Galva Steels Limited - India
- ASAPP Information Group - India
- PetroVietnam Power Coal Import and Supply Company
- Neyveli Lignite Corporation Ltd, - India
- Heidelberg Cement - Germany
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Grasim Industreis Ltd - India
- Sical Logistics Limited - India
- Ministry of Mines - Canada
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kalimantan Lumbung Energi - Indonesia
- Indika Energy - Indonesia
- Coalindo Energy - Indonesia
- Australian Coal Association
- SMC Global Power, Philippines
- Holcim Trading Pte Ltd - Singapore
- Mintek Dendrill Indonesia
- Standard Chartered Bank - UAE
- Parliament of New Zealand
- TNB Fuel Sdn Bhd - Malaysia
- The University of Queensland
- Samtan Co., Ltd - South Korea
- Miang Besar Coal Terminal - Indonesia
- Bayan Resources Tbk. - Indonesia
- Attock Cement Pakistan Limited
- Kobexindo Tractors - Indoneisa
- Globalindo Alam Lestari - Indonesia
- Energy Development Corp, Philippines
- Rashtriya Ispat Nigam Limited - India
- Madhucon Powers Ltd - India
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