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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, 02 August 24
COAL MARKET DEVELOPMENTS: FALLING PRICES AMID RECORD-HIGH OUTPUT - WORLD BANK
Coal prices inched up in May (m/m) following an 8 percent decline in 2024Q1. The Australian and South African benchmarks have plummeted more ...
Friday, 26 July 24
FUELEU MARITME IS COMING. IS YOUR CHARTERPARTY READY? - GARD
With less than six months to implementation of FuelEU Maritime in EU and EEA trades, there has been little published advice regarding how to alloca ...
Thursday, 04 July 24
INDIA'S COAL PRODUCTION RISES 14% IN JUNE - PTI
The country’s coal production rose by 14.49% to 84.63 million tonne (MT) in June. The country’s coal output was 73.92 MT in June last f ...
Tuesday, 02 July 24
NTPC CAPTIVE COAL OUTPUT GROWS 15% IN Q1; DESPATCH RISES 17%
State-owned NTPC on Monday reported a 15 per cent year-on-year increase in the production of coal from captives mines to 9.862 metric million tonne ...
Friday, 28 June 24
KOSPO INVITED BIDS FOR 400,000 MT OF MINIMUM 4000 NCV COAL FOR FIVE YEARS
Korea Southern Power Co., Ltd. (KOSPO), is inviting bids for total 400,000 MT of Low Calorific Value Coal for 5 years starting from July 2024 until ...
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- Bharathi Cement Corporation - India
- Petron Corporation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Medco Energi Mining Internasional
- London Commodity Brokers - England
- The State Trading Corporation of India Ltd
- Oldendorff Carriers - Singapore
- Tata Chemicals Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Electricity Authority, New Zealand
- Bukit Makmur.PT - Indonesia
- Indian Energy Exchange, India
- Edison Trading Spa - Italy
- Port Waratah Coal Services - Australia
- Directorate General of MIneral and Coal - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Wood Mackenzie - Singapore
- Straits Asia Resources Limited - Singapore
- Toyota Tsusho Corporation, Japan
- Australian Commodity Traders Exchange
- Mercator Lines Limited - India
- Renaissance Capital - South Africa
- Directorate Of Revenue Intelligence - India
- The University of Queensland
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Sinarmas Energy and Mining - Indonesia
- Indogreen Group - Indonesia
- Indian Oil Corporation Limited
- Lanco Infratech Ltd - India
- Indonesian Coal Mining Association
- Coal and Oil Company - UAE
- CNBM International Corporation - China
- Rashtriya Ispat Nigam Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Billiton Holdings Pty Ltd - Australia
- Asmin Koalindo Tuhup - Indonesia
- Ambuja Cements Ltd - India
- Altura Mining Limited, Indonesia
- Salva Resources Pvt Ltd - India
- Deloitte Consulting - India
- Anglo American - United Kingdom
- Kalimantan Lumbung Energi - Indonesia
- PowerSource Philippines DevCo
- Sree Jayajothi Cements Limited - India
- Cement Manufacturers Association - India
- Heidelberg Cement - Germany
- Makarim & Taira - Indonesia
- PNOC Exploration Corporation - Philippines
- Holcim Trading Pte Ltd - Singapore
- PetroVietnam Power Coal Import and Supply Company
- Metalloyd Limited - United Kingdom
- Larsen & Toubro Limited - India
- Sindya Power Generating Company Private Ltd
- IEA Clean Coal Centre - UK
- Power Finance Corporation Ltd., India
- Planning Commission, India
- Tamil Nadu electricity Board
- Miang Besar Coal Terminal - Indonesia
- Siam City Cement - Thailand
- Siam City Cement PLC, Thailand
- VISA Power Limited - India
- Cigading International Bulk Terminal - Indonesia
- Simpson Spence & Young - Indonesia
- Jaiprakash Power Ventures ltd
- Leighton Contractors Pty Ltd - Australia
- Semirara Mining Corp, Philippines
- Central Electricity Authority - India
- Vedanta Resources Plc - India
- Economic Council, Georgia
- Bukit Baiduri Energy - Indonesia
- CIMB Investment Bank - Malaysia
- Bahari Cakrawala Sebuku - Indonesia
- New Zealand Coal & Carbon
- Borneo Indobara - Indonesia
- Bayan Resources Tbk. - Indonesia
- Parliament of New Zealand
- Pendopo Energi Batubara - Indonesia
- Mercuria Energy - Indonesia
- Bangladesh Power Developement Board
- Electricity Generating Authority of Thailand
- Antam Resourcindo - Indonesia
- SMC Global Power, Philippines
- Star Paper Mills Limited - India
- Kartika Selabumi Mining - Indonesia
- Riau Bara Harum - Indonesia
- Banpu Public Company Limited - Thailand
- Madhucon Powers Ltd - India
- Meenaskhi Energy Private Limited - India
- Kepco SPC Power Corporation, Philippines
- Indo Tambangraya Megah - Indonesia
- Energy Link Ltd, New Zealand
- GMR Energy Limited - India
- Trasteel International SA, Italy
- ICICI Bank Limited - India
- Maheswari Brothers Coal Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Videocon Industries ltd - India
- The Treasury - Australian Government
- Agrawal Coal Company - India
- Kobexindo Tractors - Indoneisa
- Merrill Lynch Commodities Europe
- Orica Australia Pty. Ltd.
- Singapore Mercantile Exchange
- Karbindo Abesyapradhi - Indoneisa
- Coastal Gujarat Power Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Kapuas Tunggal Persada - Indonesia
- TeaM Sual Corporation - Philippines
- Sakthi Sugars Limited - India
- Thai Mozambique Logistica
- Energy Development Corp, Philippines
- Goldman Sachs - Singapore
- Globalindo Alam Lestari - Indonesia
- ASAPP Information Group - India
- Georgia Ports Authority, United States
- Savvy Resources Ltd - HongKong
- Meralco Power Generation, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Mintek Dendrill Indonesia
- Formosa Plastics Group - Taiwan
- Orica Mining Services - Indonesia
- Global Green Power PLC Corporation, Philippines
- GAC Shipping (India) Pvt Ltd
- McConnell Dowell - Australia
- Maharashtra Electricity Regulatory Commission - India
- Gujarat Electricity Regulatory Commission - India
- AsiaOL BioFuels Corp., Philippines
- Rio Tinto Coal - Australia
- Wilmar Investment Holdings
- Timah Investasi Mineral - Indoneisa
- San Jose City I Power Corp, Philippines
- International Coal Ventures Pvt Ltd - India
- Interocean Group of Companies - India
- Intertek Mineral Services - Indonesia
- Global Coal Blending Company Limited - Australia
- India Bulls Power Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Sarangani Energy Corporation, Philippines
- Chettinad Cement Corporation Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Dalmia Cement Bharat India
- PTC India Limited - India
- Jindal Steel & Power Ltd - India
- Malabar Cements Ltd - India
- White Energy Company Limited
- Africa Commodities Group - South Africa
- Central Java Power - Indonesia
- Uttam Galva Steels Limited - India
- Attock Cement Pakistan Limited
- Eastern Energy - Thailand
- Ministry of Finance - Indonesia
- Parry Sugars Refinery, India
- Sojitz Corporation - Japan
- Ministry of Mines - Canada
- Xindia Steels Limited - India
- Marubeni Corporation - India
- Thiess Contractors Indonesia
- Independent Power Producers Association of India
- Indika Energy - Indonesia
- IHS Mccloskey Coal Group - USA
- Gujarat Sidhee Cement - India
- Coalindo Energy - Indonesia
- Iligan Light & Power Inc, Philippines
- Kideco Jaya Agung - Indonesia
- Price Waterhouse Coopers - Russia
- LBH Netherlands Bv - Netherlands
- Neyveli Lignite Corporation Ltd, - India
- Latin American Coal - Colombia
- Kaltim Prima Coal - Indonesia
- Krishnapatnam Port Company Ltd. - India
- TNB Fuel Sdn Bhd - Malaysia
- Sical Logistics Limited - India
- Kumho Petrochemical, South Korea
- Eastern Coal Council - USA
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Grasim Industreis Ltd - India
- Ministry of Transport, Egypt
- Commonwealth Bank - Australia
- Australian Coal Association
- South Luzon Thermal Energy Corporation
- Mjunction Services Limited - India
- Carbofer General Trading SA - India
- Romanian Commodities Exchange
- Therma Luzon, Inc, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Baramulti Group, Indonesia
- Posco Energy - South Korea
- Alfred C Toepfer International GmbH - Germany
- Semirara Mining and Power Corporation, Philippines
- Barasentosa Lestari - Indonesia
- Chamber of Mines of South Africa
- SMG Consultants - Indonesia
- Standard Chartered Bank - UAE
- GN Power Mariveles Coal Plant, Philippines
- Binh Thuan Hamico - Vietnam
- OPG Power Generation Pvt Ltd - India
- Minerals Council of Australia
- SN Aboitiz Power Inc, Philippines
- Essar Steel Hazira Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Aboitiz Power Corporation - Philippines
- GVK Power & Infra Limited - India
- Bulk Trading Sa - Switzerland
- Bhushan Steel Limited - India
- Samtan Co., Ltd - South Korea
- Karaikal Port Pvt Ltd - India
- MS Steel International - UAE
- Vizag Seaport Private Limited - India
- European Bulk Services B.V. - Netherlands
- Manunggal Multi Energi - Indonesia
- Ind-Barath Power Infra Limited - India
- Global Business Power Corporation, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bhoruka Overseas - Indonesia
- Aditya Birla Group - India
- Bhatia International Limited - India
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