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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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Wednesday, 30 September 20
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Tuesday, 29 September 20
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The index, released by China ...
Tuesday, 29 September 20
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Rated Indonesian coal miners and contractors will have weaker operating and financial performances in the second half of 2020 than in the first, sa ...
Tuesday, 29 September 20
RUSSIA'S COAL PRODUCTION TO DROP BY 10.5% IN 2020, SAYS MINISTRY - TASS
Russia’s Economic Development Ministry projects a 10.5% decrease in coal production in the country in 2020 compared with last year to 395 mln ...
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- Kumho Petrochemical, South Korea
- Offshore Bulk Terminal Pte Ltd, Singapore
- Renaissance Capital - South Africa
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- SMC Global Power, Philippines
- TeaM Sual Corporation - Philippines
- Trasteel International SA, Italy
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- Petron Corporation, Philippines
- India Bulls Power Limited - India
- Coastal Gujarat Power Limited - India
- OPG Power Generation Pvt Ltd - India
- PowerSource Philippines DevCo
- Mercuria Energy - Indonesia
- LBH Netherlands Bv - Netherlands
- Global Coal Blending Company Limited - Australia
- Deloitte Consulting - India
- Medco Energi Mining Internasional
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- Banpu Public Company Limited - Thailand
- VISA Power Limited - India
- Sarangani Energy Corporation, Philippines
- CNBM International Corporation - China
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- Romanian Commodities Exchange
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- Uttam Galva Steels Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- The Treasury - Australian Government
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- Sical Logistics Limited - India
- Thiess Contractors Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Port Waratah Coal Services - Australia
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- Carbofer General Trading SA - India
- Australian Coal Association
- Straits Asia Resources Limited - Singapore
- Global Business Power Corporation, Philippines
- Vizag Seaport Private Limited - India
- Lanco Infratech Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Baramulti Group, Indonesia
- European Bulk Services B.V. - Netherlands
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- Chamber of Mines of South Africa
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- PTC India Limited - India
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- Posco Energy - South Korea
- Parliament of New Zealand
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- Samtan Co., Ltd - South Korea
- Indo Tambangraya Megah - Indonesia
- Minerals Council of Australia
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- Petrochimia International Co. Ltd.- Taiwan
- Australian Commodity Traders Exchange
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- PetroVietnam Power Coal Import and Supply Company
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- Indian Energy Exchange, India
- GN Power Mariveles Coal Plant, Philippines
- SN Aboitiz Power Inc, Philippines
- Central Electricity Authority - India
- Merrill Lynch Commodities Europe
- Tamil Nadu electricity Board
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- Orica Australia Pty. Ltd.
- Bharathi Cement Corporation - India
- Parry Sugars Refinery, India
- Global Green Power PLC Corporation, Philippines
- Manunggal Multi Energi - Indonesia
- Economic Council, Georgia
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- Bhoruka Overseas - Indonesia
- Singapore Mercantile Exchange
- Billiton Holdings Pty Ltd - Australia
- New Zealand Coal & Carbon
- Tata Chemicals Ltd - India
- Metalloyd Limited - United Kingdom
- Goldman Sachs - Singapore
- Makarim & Taira - Indonesia
- Malabar Cements Ltd - India
- Sindya Power Generating Company Private Ltd
- Meralco Power Generation, Philippines
- Wilmar Investment Holdings
- Planning Commission, India
- Wood Mackenzie - Singapore
- GVK Power & Infra Limited - India
- Agrawal Coal Company - India
- Jaiprakash Power Ventures ltd
- Kepco SPC Power Corporation, Philippines
- Ambuja Cements Ltd - India
- Ministry of Transport, Egypt
- Electricity Authority, New Zealand
- Leighton Contractors Pty Ltd - Australia
- Toyota Tsusho Corporation, Japan
- London Commodity Brokers - England
- Alfred C Toepfer International GmbH - Germany
- Chettinad Cement Corporation Ltd - India
- Independent Power Producers Association of India
- Marubeni Corporation - India
- Semirara Mining Corp, Philippines
- Indika Energy - Indonesia
- ICICI Bank Limited - India
- Ind-Barath Power Infra Limited - India
- San Jose City I Power Corp, Philippines
- Savvy Resources Ltd - HongKong
- Kapuas Tunggal Persada - Indonesia
- Orica Mining Services - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Energy Link Ltd, New Zealand
- Mintek Dendrill Indonesia
- Intertek Mineral Services - Indonesia
- IEA Clean Coal Centre - UK
- Bukit Makmur.PT - Indonesia
- Madhucon Powers Ltd - India
- McConnell Dowell - Australia
- Latin American Coal - Colombia
- The University of Queensland
- Directorate Of Revenue Intelligence - India
- Kobexindo Tractors - Indoneisa
- CIMB Investment Bank - Malaysia
- GAC Shipping (India) Pvt Ltd
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- The State Trading Corporation of India Ltd
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- Neyveli Lignite Corporation Ltd, - India
- Thai Mozambique Logistica
- Barasentosa Lestari - Indonesia
- Eastern Energy - Thailand
- Sakthi Sugars Limited - India
- Mercator Lines Limited - India
- Cigading International Bulk Terminal - Indonesia
- Standard Chartered Bank - UAE
- AsiaOL BioFuels Corp., Philippines
- Georgia Ports Authority, United States
- Heidelberg Cement - Germany
- Simpson Spence & Young - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Meenaskhi Energy Private Limited - India
- Iligan Light & Power Inc, Philippines
- Electricity Generating Authority of Thailand
- Kaltim Prima Coal - Indonesia
- Siam City Cement - Thailand
- Sojitz Corporation - Japan
- Power Finance Corporation Ltd., India
- Africa Commodities Group - South Africa
- Jindal Steel & Power Ltd - India
- Bhatia International Limited - India
- Indian Oil Corporation Limited
- Essar Steel Hazira Ltd - India
- Siam City Cement PLC, Thailand
- Rashtriya Ispat Nigam Limited - India
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- Anglo American - United Kingdom
- Therma Luzon, Inc, Philippines
- Bukit Baiduri Energy - Indonesia
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- Riau Bara Harum - Indonesia
- Gujarat Sidhee Cement - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bangladesh Power Developement Board
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- Mjunction Services Limited - India
- Ministry of Finance - Indonesia
- Semirara Mining and Power Corporation, Philippines
- ASAPP Information Group - India
- Cement Manufacturers Association - India
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- Coal and Oil Company - UAE
- Vijayanagar Sugar Pvt Ltd - India
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- Larsen & Toubro Limited - India
- Timah Investasi Mineral - Indoneisa
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Dalmia Cement Bharat India
- SMG Consultants - Indonesia
- Salva Resources Pvt Ltd - India
- Altura Mining Limited, Indonesia
- GMR Energy Limited - India
- IHS Mccloskey Coal Group - USA
- Rio Tinto Coal - Australia
- South Luzon Thermal Energy Corporation
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