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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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Tuesday, 22 December 20
INDIA'S COAL DEMAND IS SET TO EXPAND DESPITE PLUMMETING IN 2020 - IEA
Coal consumption in India amounted to 979 Mt in 2019, with the largest share being thermal coal (including lignite) for electricity generation (687 ...
Tuesday, 22 December 20
SOUTHEAST ASIA'S COAL DEMAND IS SET TO EXPAND AFTER THE PANDEMIC-INDUCED HIATUS IN 2020 - IEA
Coal consumption in Southeast Asia has more than doubled in the last decade, with the largest growth in Indonesia and Viet Nam, followed by Malaysi ...
Tuesday, 22 December 20
COAL DEMAND IS RISING QUICKLY IN PAKISTAN AND MORE SLOWLY IN BANGLADESH - IEA
Pakistan had 150 MW of installed coal power capacity in 2015. Since 2017, in addition to a few small plants for industry, Pakistan has commissioned ...
Tuesday, 22 December 20
AFRICA PERSPECTIVE INDICATES NO MAJOR SHIFTS FOR COAL CONSUMPTION - IEA
Overall countries on the African continent consumed 197 Mt of coal in 2019, 12 Mt less (-6%) than 2018.
South Africa, the continent& ...
Monday, 21 December 20
COAL PRICES WITHSTAND DESPITE COVID-19 AND CHINESE IMPORT QUOTAS - IEA
Coal prices vary by region as well as by grade and quality. The price rebound starting in 2016 ended in 2018, moving in a downward trend in 2019. A ...
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- Siam City Cement PLC, Thailand
- Electricity Generating Authority of Thailand
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- Bhoruka Overseas - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- GN Power Mariveles Coal Plant, Philippines
- CIMB Investment Bank - Malaysia
- Africa Commodities Group - South Africa
- Therma Luzon, Inc, Philippines
- International Coal Ventures Pvt Ltd - India
- Manunggal Multi Energi - Indonesia
- Interocean Group of Companies - India
- Petron Corporation, Philippines
- White Energy Company Limited
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- European Bulk Services B.V. - Netherlands
- Eastern Coal Council - USA
- Vedanta Resources Plc - India
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- GMR Energy Limited - India
- Meenaskhi Energy Private Limited - India
- London Commodity Brokers - England
- Agrawal Coal Company - India
- Georgia Ports Authority, United States
- Binh Thuan Hamico - Vietnam
- Cigading International Bulk Terminal - Indonesia
- Wilmar Investment Holdings
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- Energy Development Corp, Philippines
- Ceylon Electricity Board - Sri Lanka
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- Medco Energi Mining Internasional
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- GAC Shipping (India) Pvt Ltd
- Asmin Koalindo Tuhup - Indonesia
- Iligan Light & Power Inc, Philippines
- Orica Mining Services - Indonesia
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- Savvy Resources Ltd - HongKong
- Simpson Spence & Young - Indonesia
- Bhushan Steel Limited - India
- Central Java Power - Indonesia
- Banpu Public Company Limited - Thailand
- SMG Consultants - Indonesia
- Barasentosa Lestari - Indonesia
- Romanian Commodities Exchange
- TNB Fuel Sdn Bhd - Malaysia
- Timah Investasi Mineral - Indoneisa
- Global Business Power Corporation, Philippines
- Sree Jayajothi Cements Limited - India
- Port Waratah Coal Services - Australia
- Chamber of Mines of South Africa
- Rashtriya Ispat Nigam Limited - India
- Goldman Sachs - Singapore
- Alfred C Toepfer International GmbH - Germany
- Bukit Makmur.PT - Indonesia
- ICICI Bank Limited - India
- IHS Mccloskey Coal Group - USA
- Parry Sugars Refinery, India
- Larsen & Toubro Limited - India
- Essar Steel Hazira Ltd - India
- Oldendorff Carriers - Singapore
- Indian Oil Corporation Limited
- Kalimantan Lumbung Energi - Indonesia
- Malabar Cements Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Price Waterhouse Coopers - Russia
- Sical Logistics Limited - India
- Commonwealth Bank - Australia
- Minerals Council of Australia
- Singapore Mercantile Exchange
- VISA Power Limited - India
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- Heidelberg Cement - Germany
- Pipit Mutiara Jaya. PT, Indonesia
- Indonesian Coal Mining Association
- Billiton Holdings Pty Ltd - Australia
- OPG Power Generation Pvt Ltd - India
- Thiess Contractors Indonesia
- Edison Trading Spa - Italy
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- Karbindo Abesyapradhi - Indoneisa
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- Energy Link Ltd, New Zealand
- Altura Mining Limited, Indonesia
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- Kepco SPC Power Corporation, Philippines
- Jindal Steel & Power Ltd - India
- CNBM International Corporation - China
- Kaltim Prima Coal - Indonesia
- The Treasury - Australian Government
- Central Electricity Authority - India
- Kapuas Tunggal Persada - Indonesia
- Tata Chemicals Ltd - India
- Marubeni Corporation - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Power Finance Corporation Ltd., India
- Jaiprakash Power Ventures ltd
- Makarim & Taira - Indonesia
- Renaissance Capital - South Africa
- Mjunction Services Limited - India
- Independent Power Producers Association of India
- Samtan Co., Ltd - South Korea
- Madhucon Powers Ltd - India
- Ministry of Finance - Indonesia
- Coalindo Energy - Indonesia
- Kumho Petrochemical, South Korea
- LBH Netherlands Bv - Netherlands
- Aditya Birla Group - India
- Mercator Lines Limited - India
- Siam City Cement - Thailand
- Anglo American - United Kingdom
- India Bulls Power Limited - India
- Miang Besar Coal Terminal - Indonesia
- Australian Coal Association
- Semirara Mining Corp, Philippines
- Merrill Lynch Commodities Europe
- Krishnapatnam Port Company Ltd. - India
- Vijayanagar Sugar Pvt Ltd - India
- Bharathi Cement Corporation - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Intertek Mineral Services - Indonesia
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- Metalloyd Limited - United Kingdom
- Neyveli Lignite Corporation Ltd, - India
- Eastern Energy - Thailand
- The State Trading Corporation of India Ltd
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- TeaM Sual Corporation - Philippines
- Indogreen Group - Indonesia
- Bayan Resources Tbk. - Indonesia
- Coal and Oil Company - UAE
- Global Coal Blending Company Limited - Australia
- Ind-Barath Power Infra Limited - India
- Xindia Steels Limited - India
- Gujarat Sidhee Cement - India
- SN Aboitiz Power Inc, Philippines
- Sojitz Corporation - Japan
- McConnell Dowell - Australia
- Bangladesh Power Developement Board
- Mintek Dendrill Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Meralco Power Generation, Philippines
- Borneo Indobara - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Posco Energy - South Korea
- Semirara Mining and Power Corporation, Philippines
- Indian Energy Exchange, India
- Kohat Cement Company Ltd. - Pakistan
- Straits Asia Resources Limited - Singapore
- Riau Bara Harum - Indonesia
- Latin American Coal - Colombia
- Trasteel International SA, Italy
- Directorate General of MIneral and Coal - Indonesia
- Dalmia Cement Bharat India
- Holcim Trading Pte Ltd - Singapore
- Kartika Selabumi Mining - Indonesia
- Ministry of Transport, Egypt
- Chettinad Cement Corporation Ltd - India
- Grasim Industreis Ltd - India
- Kobexindo Tractors - Indoneisa
- Tamil Nadu electricity Board
- Bulk Trading Sa - Switzerland
- Electricity Authority, New Zealand
- Petrochimia International Co. Ltd.- Taiwan
- Formosa Plastics Group - Taiwan
- Globalindo Alam Lestari - Indonesia
- Sindya Power Generating Company Private Ltd
- Planning Commission, India
- The University of Queensland
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- IEA Clean Coal Centre - UK
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- Videocon Industries ltd - India
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- Wood Mackenzie - Singapore
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- Parliament of New Zealand
- Baramulti Group, Indonesia
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