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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, 17 December 20
CHINA'S BAN IS LESS OF A THREAT TO AUSTRALIA'S COAL INDUSTRY THAN INTERNATIONAL CLIMATE AMBITION - IEEFA
Australian coal exporters will survive this near-term political fight but there are longterm structural headwinds
The decision by Ch ...
Thursday, 17 December 20
BUMA SIGNED US$1.0 BILLION WORTH OF EXTENSION CONTRACT WITH BERAU COAL
PT Bukit Makmur Mandiri Utama, subsidiary of PT Delta Dunia Makmur Tbk., has extended its mining services contracts with PT Berau Coal, in relation ...
Wednesday, 16 December 20
INDONESIA 2020 COAL CONSUMPTION ESTIMATED AT 140-145 MLN TONNES - OFFICIAL, REUTERS REPORTED
Indonesia’s domestic coal consumption is estimated at 140-145 million tonnes this year, Dodik Ariyanto, an official at the energy ministry, t ...
Wednesday, 16 December 20
RUSSIA REVISES DOWN EXPORT EXPECTATION - FITCH
The Ministry of Economy of Russia, the world’s third largest thermal coal exporting country, released its annual forecasts ...
Wednesday, 16 December 20
INDIAN COAL IMPORTS TO REMAIN SUBDUED - FITCH RATINGS
Fitch Rating commented on Indian Coal Imports, Fitch said, coal imports by Indian utilities fell by about 24% yoy to 44 million tonnes (mt) i ...
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- Deloitte Consulting - India
- Price Waterhouse Coopers - Russia
- GMR Energy Limited - India
- The Treasury - Australian Government
- VISA Power Limited - India
- AsiaOL BioFuels Corp., Philippines
- Goldman Sachs - Singapore
- Tata Chemicals Ltd - India
- Trasteel International SA, Italy
- Banpu Public Company Limited - Thailand
- Dalmia Cement Bharat India
- Pipit Mutiara Jaya. PT, Indonesia
- Iligan Light & Power Inc, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- GN Power Mariveles Coal Plant, Philippines
- Agrawal Coal Company - India
- IHS Mccloskey Coal Group - USA
- Parry Sugars Refinery, India
- Bhatia International Limited - India
- Cigading International Bulk Terminal - Indonesia
- Siam City Cement - Thailand
- Planning Commission, India
- Jindal Steel & Power Ltd - India
- Commonwealth Bank - Australia
- Gujarat Sidhee Cement - India
- Bukit Asam (Persero) Tbk - Indonesia
- Barasentosa Lestari - Indonesia
- Anglo American - United Kingdom
- Global Business Power Corporation, Philippines
- Kepco SPC Power Corporation, Philippines
- Siam City Cement PLC, Thailand
- Indonesian Coal Mining Association
- Bulk Trading Sa - Switzerland
- Sarangani Energy Corporation, Philippines
- New Zealand Coal & Carbon
- Power Finance Corporation Ltd., India
- Bangladesh Power Developement Board
- Leighton Contractors Pty Ltd - Australia
- Mjunction Services Limited - India
- Carbofer General Trading SA - India
- Mercuria Energy - Indonesia
- Eastern Energy - Thailand
- Heidelberg Cement - Germany
- Kideco Jaya Agung - Indonesia
- Posco Energy - South Korea
- Kartika Selabumi Mining - Indonesia
- Makarim & Taira - Indonesia
- Riau Bara Harum - Indonesia
- Indian Oil Corporation Limited
- Latin American Coal - Colombia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Jorong Barutama Greston.PT - Indonesia
- Ministry of Mines - Canada
- Kohat Cement Company Ltd. - Pakistan
- Wilmar Investment Holdings
- Alfred C Toepfer International GmbH - Germany
- Meenaskhi Energy Private Limited - India
- Larsen & Toubro Limited - India
- Antam Resourcindo - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- The State Trading Corporation of India Ltd
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Indika Energy - Indonesia
- Sindya Power Generating Company Private Ltd
- OPG Power Generation Pvt Ltd - India
- GVK Power & Infra Limited - India
- McConnell Dowell - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Holcim Trading Pte Ltd - Singapore
- PowerSource Philippines DevCo
- Bank of Tokyo Mitsubishi UFJ Ltd
- Meralco Power Generation, Philippines
- Uttam Galva Steels Limited - India
- Ind-Barath Power Infra Limited - India
- CIMB Investment Bank - Malaysia
- Electricity Generating Authority of Thailand
- Sical Logistics Limited - India
- Thiess Contractors Indonesia
- Orica Australia Pty. Ltd.
- Sakthi Sugars Limited - India
- The University of Queensland
- Karbindo Abesyapradhi - Indoneisa
- Intertek Mineral Services - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- India Bulls Power Limited - India
- Mercator Lines Limited - India
- Rio Tinto Coal - Australia
- Standard Chartered Bank - UAE
- Energy Development Corp, Philippines
- LBH Netherlands Bv - Netherlands
- Jaiprakash Power Ventures ltd
- Simpson Spence & Young - Indonesia
- Altura Mining Limited, Indonesia
- Ambuja Cements Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Semirara Mining Corp, Philippines
- Metalloyd Limited - United Kingdom
- Aditya Birla Group - India
- Ministry of Finance - Indonesia
- Bayan Resources Tbk. - Indonesia
- San Jose City I Power Corp, Philippines
- Kumho Petrochemical, South Korea
- Marubeni Corporation - India
- Straits Asia Resources Limited - Singapore
- White Energy Company Limited
- Global Green Power PLC Corporation, Philippines
- Bharathi Cement Corporation - India
- Parliament of New Zealand
- Krishnapatnam Port Company Ltd. - India
- Bukit Baiduri Energy - Indonesia
- Kaltim Prima Coal - Indonesia
- Samtan Co., Ltd - South Korea
- Baramulti Group, Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Karaikal Port Pvt Ltd - India
- Indogreen Group - Indonesia
- Borneo Indobara - Indonesia
- ASAPP Information Group - India
- TNB Fuel Sdn Bhd - Malaysia
- SMC Global Power, Philippines
- Mintek Dendrill Indonesia
- Petron Corporation, Philippines
- Billiton Holdings Pty Ltd - Australia
- Ministry of Transport, Egypt
- ICICI Bank Limited - India
- Salva Resources Pvt Ltd - India
- Coalindo Energy - Indonesia
- International Coal Ventures Pvt Ltd - India
- Vizag Seaport Private Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Savvy Resources Ltd - HongKong
- Tamil Nadu electricity Board
- Cement Manufacturers Association - India
- Thai Mozambique Logistica
- GAC Shipping (India) Pvt Ltd
- Bukit Makmur.PT - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Lanco Infratech Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Essar Steel Hazira Ltd - India
- Eastern Coal Council - USA
- London Commodity Brokers - England
- Sojitz Corporation - Japan
- Africa Commodities Group - South Africa
- Maheswari Brothers Coal Limited - India
- Sree Jayajothi Cements Limited - India
- Australian Coal Association
- Chettinad Cement Corporation Ltd - India
- Merrill Lynch Commodities Europe
- Oldendorff Carriers - Singapore
- Bahari Cakrawala Sebuku - Indonesia
- Global Coal Blending Company Limited - Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Rashtriya Ispat Nigam Limited - India
- IEA Clean Coal Centre - UK
- Xindia Steels Limited - India
- Port Waratah Coal Services - Australia
- Bhushan Steel Limited - India
- Manunggal Multi Energi - Indonesia
- SN Aboitiz Power Inc, Philippines
- Vedanta Resources Plc - India
- CNBM International Corporation - China
- Maharashtra Electricity Regulatory Commission - India
- Coal and Oil Company - UAE
- Directorate Of Revenue Intelligence - India
- Independent Power Producers Association of India
- Attock Cement Pakistan Limited
- Madhucon Powers Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- PTC India Limited - India
- Australian Commodity Traders Exchange
- Georgia Ports Authority, United States
- Minerals Council of Australia
- Formosa Plastics Group - Taiwan
- Interocean Group of Companies - India
- Binh Thuan Hamico - Vietnam
- Orica Mining Services - Indonesia
- Coastal Gujarat Power Limited - India
- South Luzon Thermal Energy Corporation
- Videocon Industries ltd - India
- Indian Energy Exchange, India
- Central Java Power - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Therma Luzon, Inc, Philippines
- Renaissance Capital - South Africa
- Globalindo Alam Lestari - Indonesia
- Medco Energi Mining Internasional
- PNOC Exploration Corporation - Philippines
- Gujarat Electricity Regulatory Commission - India
- Romanian Commodities Exchange
- Timah Investasi Mineral - Indoneisa
- Edison Trading Spa - Italy
- Singapore Mercantile Exchange
- Star Paper Mills Limited - India
- Pendopo Energi Batubara - Indonesia
- Central Electricity Authority - India
- European Bulk Services B.V. - Netherlands
- MS Steel International - UAE
- Aboitiz Power Corporation - Philippines
- Grasim Industreis Ltd - India
- Wood Mackenzie - Singapore
- Semirara Mining and Power Corporation, Philippines
- Toyota Tsusho Corporation, Japan
- Electricity Authority, New Zealand
- Sinarmas Energy and Mining - Indonesia
- SMG Consultants - Indonesia
- Kobexindo Tractors - Indoneisa
- Economic Council, Georgia
- TeaM Sual Corporation - Philippines
- Indo Tambangraya Megah - Indonesia
- Malabar Cements Ltd - India
- Chamber of Mines of South Africa
- Bhoruka Overseas - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Energy Link Ltd, New Zealand
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