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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, 25 January 24
THE RED SEA ESCALATION IMPLICATIONS ON GLOBAL SEABORNE TRADE - MARIA BERTZELETOU
In recent days, discussions have intensified about the potential impact on the seaborne trade and ton-miles due to the evolving dynamics of market ...
Thursday, 25 January 24
RED SEA SHIPPING DISRUPTIONS KEEP GEOPOLITICAL PREMIUM FOR COMMODITIES - FITCH RATINGS
Shipping disruptions and re-routing away from the Red Sea will maintain the geopolitical premium in the main commodity markets, including for oil a ...
Friday, 19 January 24
INDONESIA TARGETS 710 MLN METRIC TONS COAL OUTPUT IN 2024 AFTER RECORD 2023 - REUTERS
Indonesia, a major thermal coal exporter, aims to produce 710 million metric tons of coal in 2024, its mining minister said on Monday, after postin ...
Friday, 19 January 24
DRUMMOND COLOMBIA COAL OUTPUT ROSE 7.1% IN 2023 - REUTERS
Coal production from miner Drummond’s Colombia operations rose 7.1% in 2023 to 29.5 million metric tons, while exports declined by 2.6% to 27 ...
Friday, 19 January 24
CHINA'S 2023 COAL OUTPUT HITS RECORD HIGH - REUTERS
China’s coal output reached a record high in 2023, data from the statistics bureau showed on Wednesday, amid an ongoing focus on energy secur ...
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- McConnell Dowell - Australia
- Cement Manufacturers Association - India
- Holcim Trading Pte Ltd - Singapore
- Minerals Council of Australia
- Indika Energy - Indonesia
- Star Paper Mills Limited - India
- Sakthi Sugars Limited - India
- Heidelberg Cement - Germany
- Georgia Ports Authority, United States
- Singapore Mercantile Exchange
- European Bulk Services B.V. - Netherlands
- Riau Bara Harum - Indonesia
- Jindal Steel & Power Ltd - India
- Thiess Contractors Indonesia
- Mintek Dendrill Indonesia
- San Jose City I Power Corp, Philippines
- Globalindo Alam Lestari - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Bukit Baiduri Energy - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Chamber of Mines of South Africa
- Indian Energy Exchange, India
- Standard Chartered Bank - UAE
- Goldman Sachs - Singapore
- PTC India Limited - India
- Videocon Industries ltd - India
- Ministry of Mines - Canada
- Larsen & Toubro Limited - India
- OPG Power Generation Pvt Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- SMC Global Power, Philippines
- Coal and Oil Company - UAE
- Vijayanagar Sugar Pvt Ltd - India
- Coastal Gujarat Power Limited - India
- White Energy Company Limited
- Semirara Mining Corp, Philippines
- Kartika Selabumi Mining - Indonesia
- Sojitz Corporation - Japan
- Offshore Bulk Terminal Pte Ltd, Singapore
- Maharashtra Electricity Regulatory Commission - India
- Edison Trading Spa - Italy
- The University of Queensland
- Bhushan Steel Limited - India
- Madhucon Powers Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Siam City Cement - Thailand
- Krishnapatnam Port Company Ltd. - India
- Manunggal Multi Energi - Indonesia
- Chettinad Cement Corporation Ltd - India
- Bhoruka Overseas - Indonesia
- Banpu Public Company Limited - Thailand
- Simpson Spence & Young - Indonesia
- Merrill Lynch Commodities Europe
- Siam City Cement PLC, Thailand
- Africa Commodities Group - South Africa
- Xindia Steels Limited - India
- IHS Mccloskey Coal Group - USA
- AsiaOL BioFuels Corp., Philippines
- Bukit Makmur.PT - Indonesia
- Timah Investasi Mineral - Indoneisa
- Rio Tinto Coal - Australia
- Commonwealth Bank - Australia
- Oldendorff Carriers - Singapore
- Tamil Nadu electricity Board
- Marubeni Corporation - India
- Electricity Authority, New Zealand
- Kalimantan Lumbung Energi - Indonesia
- Gujarat Electricity Regulatory Commission - India
- The State Trading Corporation of India Ltd
- Malabar Cements Ltd - India
- Binh Thuan Hamico - Vietnam
- Global Green Power PLC Corporation, Philippines
- VISA Power Limited - India
- GVK Power & Infra Limited - India
- Energy Link Ltd, New Zealand
- TNB Fuel Sdn Bhd - Malaysia
- Bhatia International Limited - India
- Vizag Seaport Private Limited - India
- Bulk Trading Sa - Switzerland
- Toyota Tsusho Corporation, Japan
- Jorong Barutama Greston.PT - Indonesia
- New Zealand Coal & Carbon
- Alfred C Toepfer International GmbH - Germany
- Price Waterhouse Coopers - Russia
- Attock Cement Pakistan Limited
- Romanian Commodities Exchange
- CIMB Investment Bank - Malaysia
- Anglo American - United Kingdom
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Intertek Mineral Services - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Sarangani Energy Corporation, Philippines
- Asmin Koalindo Tuhup - Indonesia
- CNBM International Corporation - China
- Antam Resourcindo - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- International Coal Ventures Pvt Ltd - India
- Latin American Coal - Colombia
- Metalloyd Limited - United Kingdom
- Therma Luzon, Inc, Philippines
- Sindya Power Generating Company Private Ltd
- Bank of Tokyo Mitsubishi UFJ Ltd
- Economic Council, Georgia
- Kapuas Tunggal Persada - Indonesia
- Kaltim Prima Coal - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- GMR Energy Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Leighton Contractors Pty Ltd - Australia
- Energy Development Corp, Philippines
- Interocean Group of Companies - India
- SN Aboitiz Power Inc, Philippines
- Agrawal Coal Company - India
- The Treasury - Australian Government
- Sree Jayajothi Cements Limited - India
- Jaiprakash Power Ventures ltd
- ICICI Bank Limited - India
- Deloitte Consulting - India
- Global Coal Blending Company Limited - Australia
- GN Power Mariveles Coal Plant, Philippines
- Bayan Resources Tbk. - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Eastern Coal Council - USA
- Dalmia Cement Bharat India
- Sical Logistics Limited - India
- SMG Consultants - Indonesia
- Mercuria Energy - Indonesia
- Grasim Industreis Ltd - India
- Central Electricity Authority - India
- Salva Resources Pvt Ltd - India
- Port Waratah Coal Services - Australia
- Formosa Plastics Group - Taiwan
- Ministry of Transport, Egypt
- Mjunction Services Limited - India
- Orica Mining Services - Indonesia
- Indogreen Group - Indonesia
- Indo Tambangraya Megah - Indonesia
- Bangladesh Power Developement Board
- Kobexindo Tractors - Indoneisa
- Renaissance Capital - South Africa
- Planning Commission, India
- Aditya Birla Group - India
- Carbofer General Trading SA - India
- Miang Besar Coal Terminal - Indonesia
- MS Steel International - UAE
- Medco Energi Mining Internasional
- London Commodity Brokers - England
- Gujarat Sidhee Cement - India
- Global Business Power Corporation, Philippines
- Wilmar Investment Holdings
- GAC Shipping (India) Pvt Ltd
- Kohat Cement Company Ltd. - Pakistan
- Bukit Asam (Persero) Tbk - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Indonesian Coal Mining Association
- Directorate General of MIneral and Coal - Indonesia
- Australian Commodity Traders Exchange
- Orica Australia Pty. Ltd.
- Directorate Of Revenue Intelligence - India
- Makarim & Taira - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- India Bulls Power Limited - India
- Vedanta Resources Plc - India
- Altura Mining Limited, Indonesia
- Meralco Power Generation, Philippines
- Rashtriya Ispat Nigam Limited - India
- IEA Clean Coal Centre - UK
- South Luzon Thermal Energy Corporation
- Aboitiz Power Corporation - Philippines
- Eastern Energy - Thailand
- Maheswari Brothers Coal Limited - India
- Tata Chemicals Ltd - India
- Parry Sugars Refinery, India
- Straits Asia Resources Limited - Singapore
- Ambuja Cements Ltd - India
- Petron Corporation, Philippines
- Essar Steel Hazira Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Central Java Power - Indonesia
- Power Finance Corporation Ltd., India
- Kumho Petrochemical, South Korea
- Indian Oil Corporation Limited
- Bharathi Cement Corporation - India
- Parliament of New Zealand
- Borneo Indobara - Indonesia
- TeaM Sual Corporation - Philippines
- Barasentosa Lestari - Indonesia
- Ministry of Finance - Indonesia
- Uttam Galva Steels Limited - India
- Savvy Resources Ltd - HongKong
- Pipit Mutiara Jaya. PT, Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Pendopo Energi Batubara - Indonesia
- Wood Mackenzie - Singapore
- Independent Power Producers Association of India
- Electricity Generating Authority of Thailand
- Iligan Light & Power Inc, Philippines
- Lanco Infratech Ltd - India
- Australian Coal Association
- Semirara Mining and Power Corporation, Philippines
- Mercator Lines Limited - India
- PNOC Exploration Corporation - Philippines
- Trasteel International SA, Italy
- Ind-Barath Power Infra Limited - India
- ASAPP Information Group - India
- Kideco Jaya Agung - Indonesia
- PowerSource Philippines DevCo
- Meenaskhi Energy Private Limited - India
- Kepco SPC Power Corporation, Philippines
- Samtan Co., Ltd - South Korea
- Coalindo Energy - Indonesia
- Karaikal Port Pvt Ltd - India
- Posco Energy - South Korea
- LBH Netherlands Bv - Netherlands
- Baramulti Group, Indonesia
- Thai Mozambique Logistica
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