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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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Monday, 08 January 24
KOSPO TO BUY 80000 MT OF INDONESIAN LOW CALORIFIC VALUE COAL FOR FEB 2024
Korea Southern Power Co., Ltd. (KOSPO), is inviting bids for the supply of Indonesian Low Calorific Value Coal from qualified suppliers for Korean ...
Monday, 08 January 24
SEABORNE TRADE REACHES 12.4BN TONNES - CLARKSONS
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 ...
Monday, 08 January 24
CAPESIZES START THE NEW YEAR ON POSITIVE NOTE - BALTIC EXCHANGE
Capesize
This week the capsize market has been marked by a mix of activities and challenges. Despite a slow start following the Christmas and N ...
Friday, 05 January 24
MORGAN STANLEY SEES LOWER OIL PRICES IN 2024 ON OVERSUPPLY CONCERNS - REUTERS
Morgan Stanley sees Brent crude prices anchored near $80 per barrel in the first half in 2024 before declining towards the end of the year as it ex ...
Friday, 05 January 24
INDIA'S COAL OUTPUT RISES NEARLY 11 PC IN DEC TO 92.87 MT - PTI
India’s coal production increased by 10.75 per cent to 92.87 million tonne in December 2023 as compared to the year-ago period, an official s ...
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- South Luzon Thermal Energy Corporation
- Electricity Generating Authority of Thailand
- Petrochimia International Co. Ltd.- Taiwan
- Orica Mining Services - Indonesia
- Posco Energy - South Korea
- Ceylon Electricity Board - Sri Lanka
- Offshore Bulk Terminal Pte Ltd, Singapore
- Tata Chemicals Ltd - India
- PowerSource Philippines DevCo
- Cigading International Bulk Terminal - Indonesia
- Xindia Steels Limited - India
- Cement Manufacturers Association - India
- Minerals Council of Australia
- Bukit Makmur.PT - Indonesia
- Energy Development Corp, Philippines
- Australian Commodity Traders Exchange
- Riau Bara Harum - Indonesia
- Formosa Plastics Group - Taiwan
- Ministry of Transport, Egypt
- Petron Corporation, Philippines
- Timah Investasi Mineral - Indoneisa
- Vizag Seaport Private Limited - India
- Bayan Resources Tbk. - Indonesia
- Sojitz Corporation - Japan
- McConnell Dowell - Australia
- Sarangani Energy Corporation, Philippines
- Leighton Contractors Pty Ltd - Australia
- Sakthi Sugars Limited - India
- Uttam Galva Steels Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Kobexindo Tractors - Indoneisa
- Independent Power Producers Association of India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- IHS Mccloskey Coal Group - USA
- Sree Jayajothi Cements Limited - India
- Meralco Power Generation, Philippines
- OPG Power Generation Pvt Ltd - India
- Heidelberg Cement - Germany
- Eastern Energy - Thailand
- Aboitiz Power Corporation - Philippines
- Trasteel International SA, Italy
- Metalloyd Limited - United Kingdom
- Energy Link Ltd, New Zealand
- SN Aboitiz Power Inc, Philippines
- Directorate Of Revenue Intelligence - India
- Global Coal Blending Company Limited - Australia
- Lanco Infratech Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Australian Coal Association
- Wilmar Investment Holdings
- Indogreen Group - Indonesia
- Thai Mozambique Logistica
- Siam City Cement PLC, Thailand
- Attock Cement Pakistan Limited
- Carbofer General Trading SA - India
- Rashtriya Ispat Nigam Limited - India
- Billiton Holdings Pty Ltd - Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ministry of Mines - Canada
- Ind-Barath Power Infra Limited - India
- Parliament of New Zealand
- Indian Energy Exchange, India
- Electricity Authority, New Zealand
- Madhucon Powers Ltd - India
- Planning Commission, India
- Tamil Nadu electricity Board
- Savvy Resources Ltd - HongKong
- Toyota Tsusho Corporation, Japan
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bangladesh Power Developement Board
- Karbindo Abesyapradhi - Indoneisa
- IEA Clean Coal Centre - UK
- Kohat Cement Company Ltd. - Pakistan
- Thiess Contractors Indonesia
- Marubeni Corporation - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Deloitte Consulting - India
- Kalimantan Lumbung Energi - Indonesia
- Renaissance Capital - South Africa
- Oldendorff Carriers - Singapore
- Power Finance Corporation Ltd., India
- SMC Global Power, Philippines
- White Energy Company Limited
- Edison Trading Spa - Italy
- SMG Consultants - Indonesia
- Indian Oil Corporation Limited
- Chamber of Mines of South Africa
- Miang Besar Coal Terminal - Indonesia
- Samtan Co., Ltd - South Korea
- Aditya Birla Group - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Global Business Power Corporation, Philippines
- London Commodity Brokers - England
- Manunggal Multi Energi - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Rio Tinto Coal - Australia
- Bukit Asam (Persero) Tbk - Indonesia
- Agrawal Coal Company - India
- LBH Netherlands Bv - Netherlands
- International Coal Ventures Pvt Ltd - India
- New Zealand Coal & Carbon
- Commonwealth Bank - Australia
- Asmin Koalindo Tuhup - Indonesia
- The Treasury - Australian Government
- Wood Mackenzie - Singapore
- CIMB Investment Bank - Malaysia
- PTC India Limited - India
- Gujarat Sidhee Cement - India
- Port Waratah Coal Services - Australia
- Iligan Light & Power Inc, Philippines
- Directorate General of MIneral and Coal - Indonesia
- GMR Energy Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Standard Chartered Bank - UAE
- ICICI Bank Limited - India
- Mercuria Energy - Indonesia
- Indo Tambangraya Megah - Indonesia
- Straits Asia Resources Limited - Singapore
- GAC Shipping (India) Pvt Ltd
- Altura Mining Limited, Indonesia
- Semirara Mining Corp, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Latin American Coal - Colombia
- Coal and Oil Company - UAE
- Mercator Lines Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Sindya Power Generating Company Private Ltd
- Eastern Coal Council - USA
- Siam City Cement - Thailand
- Makarim & Taira - Indonesia
- PNOC Exploration Corporation - Philippines
- Price Waterhouse Coopers - Russia
- AsiaOL BioFuels Corp., Philippines
- VISA Power Limited - India
- Romanian Commodities Exchange
- Bhoruka Overseas - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Krishnapatnam Port Company Ltd. - India
- TeaM Sual Corporation - Philippines
- Barasentosa Lestari - Indonesia
- Larsen & Toubro Limited - India
- The University of Queensland
- Dalmia Cement Bharat India
- Singapore Mercantile Exchange
- San Jose City I Power Corp, Philippines
- Semirara Mining and Power Corporation, Philippines
- Maheswari Brothers Coal Limited - India
- Vedanta Resources Plc - India
- Mjunction Services Limited - India
- Salva Resources Pvt Ltd - India
- Bhatia International Limited - India
- Banpu Public Company Limited - Thailand
- MS Steel International - UAE
- Holcim Trading Pte Ltd - Singapore
- Gujarat Electricity Regulatory Commission - India
- Coastal Gujarat Power Limited - India
- GVK Power & Infra Limited - India
- Africa Commodities Group - South Africa
- CNBM International Corporation - China
- Sical Logistics Limited - India
- Medco Energi Mining Internasional
- Goldman Sachs - Singapore
- Bulk Trading Sa - Switzerland
- Grasim Industreis Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Indonesian Coal Mining Association
- Intertek Mineral Services - Indonesia
- Merrill Lynch Commodities Europe
- Kapuas Tunggal Persada - Indonesia
- Borneo Indobara - Indonesia
- ASAPP Information Group - India
- Pendopo Energi Batubara - Indonesia
- Jaiprakash Power Ventures ltd
- Georgia Ports Authority, United States
- European Bulk Services B.V. - Netherlands
- Bukit Baiduri Energy - Indonesia
- Mintek Dendrill Indonesia
- Binh Thuan Hamico - Vietnam
- Alfred C Toepfer International GmbH - Germany
- Malabar Cements Ltd - India
- Therma Luzon, Inc, Philippines
- Central Java Power - Indonesia
- Kartika Selabumi Mining - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Parry Sugars Refinery, India
- Global Green Power PLC Corporation, Philippines
- Kideco Jaya Agung - Indonesia
- The State Trading Corporation of India Ltd
- Anglo American - United Kingdom
- Orica Australia Pty. Ltd.
- Coalindo Energy - Indonesia
- Kumho Petrochemical, South Korea
- Essar Steel Hazira Ltd - India
- Interocean Group of Companies - India
- Bhushan Steel Limited - India
- Globalindo Alam Lestari - Indonesia
- Ministry of Finance - Indonesia
- Simpson Spence & Young - Indonesia
- Ambuja Cements Ltd - India
- Jindal Steel & Power Ltd - India
- Videocon Industries ltd - India
- Karaikal Port Pvt Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Central Electricity Authority - India
- Bharathi Cement Corporation - India
- Meenaskhi Energy Private Limited - India
- Chettinad Cement Corporation Ltd - India
- India Bulls Power Limited - India
- Indika Energy - Indonesia
- Antam Resourcindo - Indonesia
- Kaltim Prima Coal - Indonesia
- Star Paper Mills Limited - India
- Economic Council, Georgia
- Neyveli Lignite Corporation Ltd, - India
- Baramulti Group, Indonesia
- Sinarmas Energy and Mining - Indonesia
- Kepco SPC Power Corporation, Philippines
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