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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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Wednesday, 31 January 24
CHINA'S INNER MONGOLIA COAL OUTPUT HIT 1.21B TONS IN 2023 - XINHUA
North China’s Inner Mongolia autonomous region churned out 1.21 billion tons of coal in 2023 as it strives to guarantee the country’s e ...
Wednesday, 31 January 24
GAS EXPORTS COST U.S. CONSUMERS MORE THAN $100 BILLION OVER 16-MONTH PERIOD - IEEFA
Limited Demand Growth Could Dampen the Dry Bulk Market in the Coming Months BIMCOStarting in late 2021—before its invasion of Ukraine—R ...
Tuesday, 30 January 24
LIMITED DEMAND GROWTH COULD DAMPEN THE DRY BULK MARKET IN THE COMING MONTHS - BIMCO
Demand
In our base scenario, we expect cargo demand to grow by 0-1% in 2024 and 0.5-1.5% in 2025. This is a 0.5 percentage point reduction for ...
Friday, 26 January 24
RED SEA DIVERSIONS ADD NEARLY A MILLION DOLLARS PER VOYAGE TO SHIPPING COSTS WHILE DOUBLING TRANSIT TIME - LSEG
The incremental costs of diverting a tanker from Asia to NW Europe via the Cape of Good Hope is accounting for an extra $932,905 USD per voyage whi ...
Friday, 26 January 24
HARD COAL GUARDIAN ANGEL OF THE ENERGY SUPPLY - GERMANY COAL IMPORTERS ASSOCIATION
- No security of supply without hard coal
- The Substitute Power Plant Provision Act (EKBG) must be extended
- Higher grid fees due to the ...
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- Electricity Generating Authority of Thailand
- TNB Fuel Sdn Bhd - Malaysia
- Neyveli Lignite Corporation Ltd, - India
- Wood Mackenzie - Singapore
- Holcim Trading Pte Ltd - Singapore
- Planning Commission, India
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- Grasim Industreis Ltd - India
- Sical Logistics Limited - India
- Indian Energy Exchange, India
- Sakthi Sugars Limited - India
- Essar Steel Hazira Ltd - India
- Iligan Light & Power Inc, Philippines
- Siam City Cement PLC, Thailand
- Ceylon Electricity Board - Sri Lanka
- Price Waterhouse Coopers - Russia
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- Romanian Commodities Exchange
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- Eastern Coal Council - USA
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- Bank of Tokyo Mitsubishi UFJ Ltd
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- Barasentosa Lestari - Indonesia
- Billiton Holdings Pty Ltd - Australia
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- Orica Australia Pty. Ltd.
- Orica Mining Services - Indonesia
- Coal and Oil Company - UAE
- Bukit Baiduri Energy - Indonesia
- Straits Asia Resources Limited - Singapore
- Formosa Plastics Group - Taiwan
- Malabar Cements Ltd - India
- Heidelberg Cement - Germany
- Xindia Steels Limited - India
- SMG Consultants - Indonesia
- Global Business Power Corporation, Philippines
- Ambuja Cements Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Vizag Seaport Private Limited - India
- Australian Coal Association
- Videocon Industries ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Aboitiz Power Corporation - Philippines
- Energy Development Corp, Philippines
- India Bulls Power Limited - India
- OPG Power Generation Pvt Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Madhucon Powers Ltd - India
- Simpson Spence & Young - Indonesia
- Sojitz Corporation - Japan
- Bulk Trading Sa - Switzerland
- Chamber of Mines of South Africa
- White Energy Company Limited
- Singapore Mercantile Exchange
- Mintek Dendrill Indonesia
- Australian Commodity Traders Exchange
- Interocean Group of Companies - India
- Chettinad Cement Corporation Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Mercuria Energy - Indonesia
- Meralco Power Generation, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Sarangani Energy Corporation, Philippines
- CIMB Investment Bank - Malaysia
- Rio Tinto Coal - Australia
- Lanco Infratech Ltd - India
- Ministry of Finance - Indonesia
- Deloitte Consulting - India
- International Coal Ventures Pvt Ltd - India
- Coalindo Energy - Indonesia
- Coastal Gujarat Power Limited - India
- ICICI Bank Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Semirara Mining and Power Corporation, Philippines
- VISA Power Limited - India
- Medco Energi Mining Internasional
- Eastern Energy - Thailand
- Globalindo Alam Lestari - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Economic Council, Georgia
- Maheswari Brothers Coal Limited - India
- SN Aboitiz Power Inc, Philippines
- Karaikal Port Pvt Ltd - India
- PNOC Exploration Corporation - Philippines
- Therma Luzon, Inc, Philippines
- Baramulti Group, Indonesia
- Antam Resourcindo - Indonesia
- IEA Clean Coal Centre - UK
- Indian Oil Corporation Limited
- Sree Jayajothi Cements Limited - India
- Anglo American - United Kingdom
- Port Waratah Coal Services - Australia
- Mercator Lines Limited - India
- Ministry of Transport, Egypt
- Mjunction Services Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Indonesian Coal Mining Association
- Parliament of New Zealand
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- LBH Netherlands Bv - Netherlands
- GVK Power & Infra Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Directorate Of Revenue Intelligence - India
- Kepco SPC Power Corporation, Philippines
- Pendopo Energi Batubara - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Toyota Tsusho Corporation, Japan
- Aditya Birla Group - India
- Energy Link Ltd, New Zealand
- Minerals Council of Australia
- Bahari Cakrawala Sebuku - Indonesia
- The Treasury - Australian Government
- Indogreen Group - Indonesia
- Kartika Selabumi Mining - Indonesia
- Jindal Steel & Power Ltd - India
- PowerSource Philippines DevCo
- Altura Mining Limited, Indonesia
- Kideco Jaya Agung - Indonesia
- Wilmar Investment Holdings
- Samtan Co., Ltd - South Korea
- San Jose City I Power Corp, Philippines
- AsiaOL BioFuels Corp., Philippines
- ASAPP Information Group - India
- Sindya Power Generating Company Private Ltd
- Bukit Makmur.PT - Indonesia
- Commonwealth Bank - Australia
- Semirara Mining Corp, Philippines
- Star Paper Mills Limited - India
- Bharathi Cement Corporation - India
- Cigading International Bulk Terminal - Indonesia
- Tamil Nadu electricity Board
- Attock Cement Pakistan Limited
- Parry Sugars Refinery, India
- CNBM International Corporation - China
- MS Steel International - UAE
- Thiess Contractors Indonesia
- Standard Chartered Bank - UAE
- Cement Manufacturers Association - India
- Marubeni Corporation - India
- Riau Bara Harum - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Oldendorff Carriers - Singapore
- Makarim & Taira - Indonesia
- Bhoruka Overseas - Indonesia
- Renaissance Capital - South Africa
- Metalloyd Limited - United Kingdom
- Africa Commodities Group - South Africa
- Kalimantan Lumbung Energi - Indonesia
- Gujarat Sidhee Cement - India
- Posco Energy - South Korea
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Edison Trading Spa - Italy
- Intertek Mineral Services - Indonesia
- Power Finance Corporation Ltd., India
- Latin American Coal - Colombia
- Central Java Power - Indonesia
- Alfred C Toepfer International GmbH - Germany
- SMC Global Power, Philippines
- Bayan Resources Tbk. - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Thai Mozambique Logistica
- Georgia Ports Authority, United States
- Global Coal Blending Company Limited - Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- GAC Shipping (India) Pvt Ltd
- Indika Energy - Indonesia
- South Luzon Thermal Energy Corporation
- Kaltim Prima Coal - Indonesia
- The University of Queensland
- Bangladesh Power Developement Board
- Timah Investasi Mineral - Indoneisa
- IHS Mccloskey Coal Group - USA
- GMR Energy Limited - India
- Carbofer General Trading SA - India
- Manunggal Multi Energi - Indonesia
- European Bulk Services B.V. - Netherlands
- Jaiprakash Power Ventures ltd
- Savvy Resources Ltd - HongKong
- The State Trading Corporation of India Ltd
- Agrawal Coal Company - India
- Meenaskhi Energy Private Limited - India
- TeaM Sual Corporation - Philippines
- New Zealand Coal & Carbon
- Global Green Power PLC Corporation, Philippines
- Petron Corporation, Philippines
- Leighton Contractors Pty Ltd - Australia
- Gujarat Electricity Regulatory Commission - India
- PTC India Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- London Commodity Brokers - England
- Larsen & Toubro Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Vedanta Resources Plc - India
- Goldman Sachs - Singapore
- Tata Chemicals Ltd - India
- Dalmia Cement Bharat India
- Kumho Petrochemical, South Korea
- Siam City Cement - Thailand
- Rashtriya Ispat Nigam Limited - India
- Independent Power Producers Association of India
- Borneo Indobara - Indonesia
- Banpu Public Company Limited - Thailand
- Sinarmas Energy and Mining - Indonesia
- McConnell Dowell - Australia
- Karbindo Abesyapradhi - Indoneisa
- Pipit Mutiara Jaya. PT, Indonesia
- Asmin Koalindo Tuhup - Indonesia
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