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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, 14 November 23
CHINA'S BELT AND ROAD INITIATIVE TURNS AWAY FROM COAL - WOOD MACKENZIE
Ambitious, contentious and big spending, China’s Belt and Road Initiative (BRI) is 10 years old. In that time, China has splashed more than U ...
Friday, 10 November 23
THE COMMODITIES FEED: OIL UNDER PRESSURE - ING
Energy – Brent plummets
The oil market came under significant pressure yesterday. ICE Brent settled 4.19% lower on the day and ...
Friday, 10 November 23
COAL USE AT U.S. POWER PLANTS CONTINUES DOWNWARD SPIRAL; FULL IMPACT ON MINES TO BE FELT IN 2024 - IEEFA
This year, the use of coal by the U.S.’s power producers has been so anemic that the fuel has not achieved a 20% market share in any month so ...
Friday, 10 November 23
INDIA: NATIONAL COAL INDEX RISES 3.83 POINTS IN SEPTEMBER AMID HIGHER DEMAND - LIVEMINT
The National Coal Index (NCI) rose 3.83 points to 143.91 in September amid growing demand for coal.
The union coal ministry on Tuesd ...
Thursday, 09 November 23
WE'RE PRODUCING TOO MUCH COAL, OIL AND GAS, REPORT SAYS - WSJ
World leaders pledged in 2015 to reduce emissions in a combined effort to limit climate change.
Now they are stepping up production ...
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- Chettinad Cement Corporation Ltd - India
- Coalindo Energy - Indonesia
- Agrawal Coal Company - India
- Bhatia International Limited - India
- Central Electricity Authority - India
- Chamber of Mines of South Africa
- Essar Steel Hazira Ltd - India
- Banpu Public Company Limited - Thailand
- Singapore Mercantile Exchange
- India Bulls Power Limited - India
- Makarim & Taira - Indonesia
- Jindal Steel & Power Ltd - India
- Altura Mining Limited, Indonesia
- IHS Mccloskey Coal Group - USA
- Africa Commodities Group - South Africa
- SN Aboitiz Power Inc, Philippines
- Salva Resources Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- San Jose City I Power Corp, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Ceylon Electricity Board - Sri Lanka
- Indika Energy - Indonesia
- Standard Chartered Bank - UAE
- Sakthi Sugars Limited - India
- Vedanta Resources Plc - India
- Tamil Nadu electricity Board
- Uttam Galva Steels Limited - India
- South Luzon Thermal Energy Corporation
- ICICI Bank Limited - India
- Straits Asia Resources Limited - Singapore
- Jorong Barutama Greston.PT - Indonesia
- LBH Netherlands Bv - Netherlands
- Dalmia Cement Bharat India
- Parry Sugars Refinery, India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Planning Commission, India
- Marubeni Corporation - India
- Bukit Baiduri Energy - Indonesia
- Simpson Spence & Young - Indonesia
- Australian Coal Association
- OPG Power Generation Pvt Ltd - India
- Maheswari Brothers Coal Limited - India
- Videocon Industries ltd - India
- Madhucon Powers Ltd - India
- Indo Tambangraya Megah - Indonesia
- Central Java Power - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Thai Mozambique Logistica
- Leighton Contractors Pty Ltd - Australia
- Mintek Dendrill Indonesia
- Intertek Mineral Services - Indonesia
- Rio Tinto Coal - Australia
- Savvy Resources Ltd - HongKong
- Latin American Coal - Colombia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Aboitiz Power Corporation - Philippines
- GMR Energy Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Manunggal Multi Energi - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- The Treasury - Australian Government
- PowerSource Philippines DevCo
- Iligan Light & Power Inc, Philippines
- Star Paper Mills Limited - India
- Port Waratah Coal Services - Australia
- Posco Energy - South Korea
- Attock Cement Pakistan Limited
- PNOC Exploration Corporation - Philippines
- Baramulti Group, Indonesia
- Wilmar Investment Holdings
- Sical Logistics Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Bukit Makmur.PT - Indonesia
- Deloitte Consulting - India
- CIMB Investment Bank - Malaysia
- Kohat Cement Company Ltd. - Pakistan
- Petron Corporation, Philippines
- Alfred C Toepfer International GmbH - Germany
- Energy Link Ltd, New Zealand
- Mercator Lines Limited - India
- Eastern Energy - Thailand
- Kaltim Prima Coal - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Interocean Group of Companies - India
- Semirara Mining Corp, Philippines
- Bhoruka Overseas - Indonesia
- McConnell Dowell - Australia
- Coastal Gujarat Power Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Formosa Plastics Group - Taiwan
- Xindia Steels Limited - India
- Kumho Petrochemical, South Korea
- Ministry of Mines - Canada
- International Coal Ventures Pvt Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Indian Energy Exchange, India
- Directorate Of Revenue Intelligence - India
- Siam City Cement - Thailand
- Cigading International Bulk Terminal - Indonesia
- Timah Investasi Mineral - Indoneisa
- AsiaOL BioFuels Corp., Philippines
- Renaissance Capital - South Africa
- Anglo American - United Kingdom
- Orica Australia Pty. Ltd.
- Price Waterhouse Coopers - Russia
- Rashtriya Ispat Nigam Limited - India
- Indonesian Coal Mining Association
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Energy Development Corp, Philippines
- Borneo Indobara - Indonesia
- Gujarat Sidhee Cement - India
- Coal and Oil Company - UAE
- TeaM Sual Corporation - Philippines
- Georgia Ports Authority, United States
- Indian Oil Corporation Limited
- Binh Thuan Hamico - Vietnam
- Orica Mining Services - Indonesia
- Trasteel International SA, Italy
- Bukit Asam (Persero) Tbk - Indonesia
- Romanian Commodities Exchange
- Barasentosa Lestari - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- ASAPP Information Group - India
- Wood Mackenzie - Singapore
- Vizag Seaport Private Limited - India
- Thiess Contractors Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Mercuria Energy - Indonesia
- VISA Power Limited - India
- Global Coal Blending Company Limited - Australia
- Eastern Coal Council - USA
- London Commodity Brokers - England
- Parliament of New Zealand
- Karbindo Abesyapradhi - Indoneisa
- Ministry of Transport, Egypt
- GAC Shipping (India) Pvt Ltd
- Malabar Cements Ltd - India
- PTC India Limited - India
- Kobexindo Tractors - Indoneisa
- European Bulk Services B.V. - Netherlands
- Sree Jayajothi Cements Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Sojitz Corporation - Japan
- Meralco Power Generation, Philippines
- CNBM International Corporation - China
- Bank of Tokyo Mitsubishi UFJ Ltd
- Australian Commodity Traders Exchange
- New Zealand Coal & Carbon
- Riau Bara Harum - Indonesia
- Kartika Selabumi Mining - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Siam City Cement PLC, Thailand
- Meenaskhi Energy Private Limited - India
- White Energy Company Limited
- Medco Energi Mining Internasional
- Aditya Birla Group - India
- IEA Clean Coal Centre - UK
- Pendopo Energi Batubara - Indonesia
- Kideco Jaya Agung - Indonesia
- Kepco SPC Power Corporation, Philippines
- Heidelberg Cement - Germany
- Oldendorff Carriers - Singapore
- Bangladesh Power Developement Board
- Gujarat Electricity Regulatory Commission - India
- Larsen & Toubro Limited - India
- GVK Power & Infra Limited - India
- Electricity Generating Authority of Thailand
- Tata Chemicals Ltd - India
- Grasim Industreis Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Goldman Sachs - Singapore
- Electricity Authority, New Zealand
- Therma Luzon, Inc, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Antam Resourcindo - Indonesia
- SMG Consultants - Indonesia
- Ind-Barath Power Infra Limited - India
- Sindya Power Generating Company Private Ltd
- Bahari Cakrawala Sebuku - Indonesia
- Bayan Resources Tbk. - Indonesia
- The State Trading Corporation of India Ltd
- Karaikal Port Pvt Ltd - India
- Sarangani Energy Corporation, Philippines
- The University of Queensland
- Ministry of Finance - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Economic Council, Georgia
- Independent Power Producers Association of India
- Miang Besar Coal Terminal - Indonesia
- Global Green Power PLC Corporation, Philippines
- Commonwealth Bank - Australia
- Bharathi Cement Corporation - India
- Ambuja Cements Ltd - India
- Indogreen Group - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Global Business Power Corporation, Philippines
- Carbofer General Trading SA - India
- PetroVietnam Power Coal Import and Supply Company
- Bhushan Steel Limited - India
- MS Steel International - UAE
- Minerals Council of Australia
- Merrill Lynch Commodities Europe
- Samtan Co., Ltd - South Korea
- Vijayanagar Sugar Pvt Ltd - India
- Lanco Infratech Ltd - India
- SMC Global Power, Philippines
- Cement Manufacturers Association - India
- Billiton Holdings Pty Ltd - Australia
- Mjunction Services Limited - India
- Power Finance Corporation Ltd., India
- Toyota Tsusho Corporation, Japan
- Edison Trading Spa - Italy
- Jaiprakash Power Ventures ltd
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Metalloyd Limited - United Kingdom
- Globalindo Alam Lestari - Indonesia
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