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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, 05 January 24
BANGLADESH’S 2023 COAL-FIRED POWER OUTPUT TRIPLED, EASING SHORTAGES - REUTERS
Bangladesh nearly tripled its coal-fired power output in 2023, a Reuters analysis of government data showed, helping it tide over the worst power s ...
Tuesday, 02 January 24
COAL TRADE CONTINUES TO HEAD EAST - BALTIC EXCHANGE
The global coal trade, once concentrated in the Pacific and Atlantic basins, is undergoing a significant transformation, as highlighted in the Inte ...
Tuesday, 02 January 24
COAL CARGOES: AVOIDING EXPLOSION AND SELF-HEATING - GARD
KNOWLEDGE TO ELEVATE
Despite its contribution to greenhouse gas emissions, global coal consumption climbed to an all-time high in 2022 and is ...
Tuesday, 02 January 24
SINOPEC FORECASTS CHINA’S COAL CONSUMPTION TO PEAK AROUND 2025 - REUTERS
China Petrochemical Corp, or Sinopec, expects coal consumption to peak around 2025 at 4.37 billion metric tons, the state energy group said in an o ...
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 ...
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- Deloitte Consulting - India
- Sindya Power Generating Company Private Ltd
- Energy Link Ltd, New Zealand
- Kapuas Tunggal Persada - Indonesia
- Global Business Power Corporation, Philippines
- Attock Cement Pakistan Limited
- Timah Investasi Mineral - Indoneisa
- Iligan Light & Power Inc, Philippines
- Ambuja Cements Ltd - India
- Standard Chartered Bank - UAE
- Dalmia Cement Bharat India
- IEA Clean Coal Centre - UK
- GN Power Mariveles Coal Plant, Philippines
- Economic Council, Georgia
- Wilmar Investment Holdings
- Bhatia International Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Pipit Mutiara Jaya. PT, Indonesia
- Commonwealth Bank - Australia
- Miang Besar Coal Terminal - Indonesia
- Trasteel International SA, Italy
- Goldman Sachs - Singapore
- London Commodity Brokers - England
- Krishnapatnam Port Company Ltd. - India
- Thai Mozambique Logistica
- AsiaOL BioFuels Corp., Philippines
- Electricity Authority, New Zealand
- Indian Energy Exchange, India
- Samtan Co., Ltd - South Korea
- Billiton Holdings Pty Ltd - Australia
- Gujarat Sidhee Cement - India
- Orica Mining Services - Indonesia
- New Zealand Coal & Carbon
- Bhushan Steel Limited - India
- Bayan Resources Tbk. - Indonesia
- Australian Commodity Traders Exchange
- Antam Resourcindo - Indonesia
- Singapore Mercantile Exchange
- Mercator Lines Limited - India
- Kumho Petrochemical, South Korea
- Indika Energy - Indonesia
- The Treasury - Australian Government
- PTC India Limited - India
- IHS Mccloskey Coal Group - USA
- Videocon Industries ltd - India
- Essar Steel Hazira Ltd - India
- Star Paper Mills Limited - India
- Jindal Steel & Power Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Global Coal Blending Company Limited - Australia
- PetroVietnam Power Coal Import and Supply Company
- Marubeni Corporation - India
- Meenaskhi Energy Private Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Indo Tambangraya Megah - Indonesia
- PNOC Exploration Corporation - Philippines
- Kartika Selabumi Mining - Indonesia
- ASAPP Information Group - India
- Borneo Indobara - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Posco Energy - South Korea
- SMG Consultants - Indonesia
- Edison Trading Spa - Italy
- India Bulls Power Limited - India
- Sical Logistics Limited - India
- Baramulti Group, Indonesia
- Maharashtra Electricity Regulatory Commission - India
- European Bulk Services B.V. - Netherlands
- Bangladesh Power Developement Board
- Romanian Commodities Exchange
- Directorate Of Revenue Intelligence - India
- Vedanta Resources Plc - India
- Banpu Public Company Limited - Thailand
- Vizag Seaport Private Limited - India
- Electricity Generating Authority of Thailand
- Kaltim Prima Coal - Indonesia
- Formosa Plastics Group - Taiwan
- TeaM Sual Corporation - Philippines
- Malabar Cements Ltd - India
- Petron Corporation, Philippines
- Merrill Lynch Commodities Europe
- Africa Commodities Group - South Africa
- Leighton Contractors Pty Ltd - Australia
- South Luzon Thermal Energy Corporation
- Madhucon Powers Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- International Coal Ventures Pvt Ltd - India
- Orica Australia Pty. Ltd.
- Planning Commission, India
- Ministry of Finance - Indonesia
- Larsen & Toubro Limited - India
- Sinarmas Energy and Mining - Indonesia
- Thiess Contractors Indonesia
- Agrawal Coal Company - India
- Grasim Industreis Ltd - India
- Barasentosa Lestari - Indonesia
- Xindia Steels Limited - India
- Mintek Dendrill Indonesia
- GMR Energy Limited - India
- Medco Energi Mining Internasional
- Eastern Energy - Thailand
- Central Electricity Authority - India
- Aditya Birla Group - India
- The University of Queensland
- Directorate General of MIneral and Coal - Indonesia
- Toyota Tsusho Corporation, Japan
- Uttam Galva Steels Limited - India
- CIMB Investment Bank - Malaysia
- Globalindo Alam Lestari - Indonesia
- Riau Bara Harum - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Savvy Resources Ltd - HongKong
- Semirara Mining Corp, Philippines
- Therma Luzon, Inc, Philippines
- Indonesian Coal Mining Association
- PowerSource Philippines DevCo
- Meralco Power Generation, Philippines
- Aboitiz Power Corporation - Philippines
- Price Waterhouse Coopers - Russia
- Australian Coal Association
- Manunggal Multi Energi - Indonesia
- Bulk Trading Sa - Switzerland
- Heidelberg Cement - Germany
- Siam City Cement - Thailand
- Tata Chemicals Ltd - India
- Mercuria Energy - Indonesia
- Salva Resources Pvt Ltd - India
- Ministry of Transport, Egypt
- Binh Thuan Hamico - Vietnam
- Maheswari Brothers Coal Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Sarangani Energy Corporation, Philippines
- Georgia Ports Authority, United States
- Parliament of New Zealand
- Indogreen Group - Indonesia
- Cement Manufacturers Association - India
- OPG Power Generation Pvt Ltd - India
- Eastern Coal Council - USA
- McConnell Dowell - Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Coalindo Energy - Indonesia
- Jaiprakash Power Ventures ltd
- Bhoruka Overseas - Indonesia
- Bukit Baiduri Energy - Indonesia
- Power Finance Corporation Ltd., India
- Mjunction Services Limited - India
- Central Java Power - Indonesia
- Intertek Mineral Services - Indonesia
- Sakthi Sugars Limited - India
- The State Trading Corporation of India Ltd
- Kohat Cement Company Ltd. - Pakistan
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- White Energy Company Limited
- Wood Mackenzie - Singapore
- ICICI Bank Limited - India
- Lanco Infratech Ltd - India
- Chamber of Mines of South Africa
- Bukit Makmur.PT - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Ministry of Mines - Canada
- Interocean Group of Companies - India
- Independent Power Producers Association of India
- Minerals Council of Australia
- Vijayanagar Sugar Pvt Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Metalloyd Limited - United Kingdom
- Indian Oil Corporation Limited
- Altura Mining Limited, Indonesia
- Kepco SPC Power Corporation, Philippines
- Energy Development Corp, Philippines
- Alfred C Toepfer International GmbH - Germany
- Pendopo Energi Batubara - Indonesia
- Parry Sugars Refinery, India
- Tamil Nadu electricity Board
- GVK Power & Infra Limited - India
- Ceylon Electricity Board - Sri Lanka
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Makarim & Taira - Indonesia
- SN Aboitiz Power Inc, Philippines
- San Jose City I Power Corp, Philippines
- Carbofer General Trading SA - India
- Kideco Jaya Agung - Indonesia
- GAC Shipping (India) Pvt Ltd
- TNB Fuel Sdn Bhd - Malaysia
- Karbindo Abesyapradhi - Indoneisa
- MS Steel International - UAE
- Simpson Spence & Young - Indonesia
- Sree Jayajothi Cements Limited - India
- Global Green Power PLC Corporation, Philippines
- Gujarat Electricity Regulatory Commission - India
- Renaissance Capital - South Africa
- Port Waratah Coal Services - Australia
- Siam City Cement PLC, Thailand
- Holcim Trading Pte Ltd - Singapore
- Gujarat Mineral Development Corp Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Bharathi Cement Corporation - India
- Kobexindo Tractors - Indoneisa
- Offshore Bulk Terminal Pte Ltd, Singapore
- LBH Netherlands Bv - Netherlands
- Straits Asia Resources Limited - Singapore
- Oldendorff Carriers - Singapore
- CNBM International Corporation - China
- SMC Global Power, Philippines
- Coastal Gujarat Power Limited - India
- Rio Tinto Coal - Australia
- Latin American Coal - Colombia
- Semirara Mining and Power Corporation, Philippines
- Karaikal Port Pvt Ltd - India
- Coal and Oil Company - UAE
- Ind-Barath Power Infra Limited - India
- Chettinad Cement Corporation Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- VISA Power Limited - India
- Sojitz Corporation - Japan
- Anglo American - United Kingdom
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