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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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- Chamber of Mines of South Africa
- Renaissance Capital - South Africa
- Anglo American - United Kingdom
- Kohat Cement Company Ltd. - Pakistan
- ASAPP Information Group - India
- Posco Energy - South Korea
- Kobexindo Tractors - Indoneisa
- The University of Queensland
- Bayan Resources Tbk. - Indonesia
- Kartika Selabumi Mining - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Medco Energi Mining Internasional
- Indo Tambangraya Megah - Indonesia
- PowerSource Philippines DevCo
- Sical Logistics Limited - India
- Minerals Council of Australia
- McConnell Dowell - Australia
- Vijayanagar Sugar Pvt Ltd - India
- Coalindo Energy - Indonesia
- GAC Shipping (India) Pvt Ltd
- Holcim Trading Pte Ltd - Singapore
- Straits Asia Resources Limited - Singapore
- Metalloyd Limited - United Kingdom
- Timah Investasi Mineral - Indoneisa
- GN Power Mariveles Coal Plant, Philippines
- IHS Mccloskey Coal Group - USA
- Indogreen Group - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Carbofer General Trading SA - India
- White Energy Company Limited
- Videocon Industries ltd - India
- Globalindo Alam Lestari - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Electricity Authority, New Zealand
- Global Green Power PLC Corporation, Philippines
- SMG Consultants - Indonesia
- Goldman Sachs - Singapore
- Price Waterhouse Coopers - Russia
- Kepco SPC Power Corporation, Philippines
- Bharathi Cement Corporation - India
- Formosa Plastics Group - Taiwan
- Australian Coal Association
- Cigading International Bulk Terminal - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kideco Jaya Agung - Indonesia
- Bhoruka Overseas - Indonesia
- Jaiprakash Power Ventures ltd
- Petrochimia International Co. Ltd.- Taiwan
- ICICI Bank Limited - India
- Coal and Oil Company - UAE
- Mjunction Services Limited - India
- Semirara Mining and Power Corporation, Philippines
- Deloitte Consulting - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Indian Energy Exchange, India
- Economic Council, Georgia
- Maharashtra Electricity Regulatory Commission - India
- CIMB Investment Bank - Malaysia
- Indika Energy - Indonesia
- South Luzon Thermal Energy Corporation
- Directorate Of Revenue Intelligence - India
- Central Electricity Authority - India
- Meenaskhi Energy Private Limited - India
- Billiton Holdings Pty Ltd - Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Edison Trading Spa - Italy
- Ministry of Transport, Egypt
- Petron Corporation, Philippines
- Latin American Coal - Colombia
- Makarim & Taira - Indonesia
- Energy Development Corp, Philippines
- Sarangani Energy Corporation, Philippines
- Energy Link Ltd, New Zealand
- Australian Commodity Traders Exchange
- Neyveli Lignite Corporation Ltd, - India
- The State Trading Corporation of India Ltd
- Singapore Mercantile Exchange
- Georgia Ports Authority, United States
- Indian Oil Corporation Limited
- Miang Besar Coal Terminal - Indonesia
- Kaltim Prima Coal - Indonesia
- Xindia Steels Limited - India
- London Commodity Brokers - England
- Sindya Power Generating Company Private Ltd
- Bahari Cakrawala Sebuku - Indonesia
- Samtan Co., Ltd - South Korea
- Eastern Energy - Thailand
- GMR Energy Limited - India
- International Coal Ventures Pvt Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Vizag Seaport Private Limited - India
- Global Coal Blending Company Limited - Australia
- Siam City Cement PLC, Thailand
- Mercuria Energy - Indonesia
- Bhushan Steel Limited - India
- Aditya Birla Group - India
- Sojitz Corporation - Japan
- Cement Manufacturers Association - India
- India Bulls Power Limited - India
- Semirara Mining Corp, Philippines
- Port Waratah Coal Services - Australia
- Aboitiz Power Corporation - Philippines
- Asmin Koalindo Tuhup - Indonesia
- Dalmia Cement Bharat India
- MS Steel International - UAE
- San Jose City I Power Corp, Philippines
- Toyota Tsusho Corporation, Japan
- Grasim Industreis Ltd - India
- Thai Mozambique Logistica
- Simpson Spence & Young - Indonesia
- LBH Netherlands Bv - Netherlands
- Tamil Nadu electricity Board
- Gujarat Electricity Regulatory Commission - India
- Ministry of Finance - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Essar Steel Hazira Ltd - India
- Maheswari Brothers Coal Limited - India
- Bukit Makmur.PT - Indonesia
- Eastern Coal Council - USA
- Bhatia International Limited - India
- Wood Mackenzie - Singapore
- Leighton Contractors Pty Ltd - Australia
- Sinarmas Energy and Mining - Indonesia
- Barasentosa Lestari - Indonesia
- VISA Power Limited - India
- Chettinad Cement Corporation Ltd - India
- PTC India Limited - India
- Gujarat Sidhee Cement - India
- New Zealand Coal & Carbon
- Krishnapatnam Port Company Ltd. - India
- Standard Chartered Bank - UAE
- Thiess Contractors Indonesia
- Planning Commission, India
- Global Business Power Corporation, Philippines
- Interocean Group of Companies - India
- Heidelberg Cement - Germany
- Siam City Cement - Thailand
- Orica Mining Services - Indonesia
- Larsen & Toubro Limited - India
- Binh Thuan Hamico - Vietnam
- The Treasury - Australian Government
- Africa Commodities Group - South Africa
- Karaikal Port Pvt Ltd - India
- Wilmar Investment Holdings
- CNBM International Corporation - China
- Pipit Mutiara Jaya. PT, Indonesia
- Madhucon Powers Ltd - India
- PNOC Exploration Corporation - Philippines
- Savvy Resources Ltd - HongKong
- Meralco Power Generation, Philippines
- Electricity Generating Authority of Thailand
- Indonesian Coal Mining Association
- Commonwealth Bank - Australia
- Oldendorff Carriers - Singapore
- Altura Mining Limited, Indonesia
- Mercator Lines Limited - India
- SN Aboitiz Power Inc, Philippines
- Attock Cement Pakistan Limited
- Bangladesh Power Developement Board
- Vedanta Resources Plc - India
- Trasteel International SA, Italy
- TNB Fuel Sdn Bhd - Malaysia
- Bukit Asam (Persero) Tbk - Indonesia
- Mintek Dendrill Indonesia
- Sakthi Sugars Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Ind-Barath Power Infra Limited - India
- Coastal Gujarat Power Limited - India
- Alfred C Toepfer International GmbH - Germany
- Jindal Steel & Power Ltd - India
- Star Paper Mills Limited - India
- Parry Sugars Refinery, India
- Gujarat Mineral Development Corp Ltd - India
- Baramulti Group, Indonesia
- Ceylon Electricity Board - Sri Lanka
- Power Finance Corporation Ltd., India
- Intertek Mineral Services - Indonesia
- Kumho Petrochemical, South Korea
- Iligan Light & Power Inc, Philippines
- OPG Power Generation Pvt Ltd - India
- European Bulk Services B.V. - Netherlands
- Bukit Baiduri Energy - Indonesia
- Marubeni Corporation - India
- Uttam Galva Steels Limited - India
- Central Java Power - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Rio Tinto Coal - Australia
- Antam Resourcindo - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- IEA Clean Coal Centre - UK
- Malabar Cements Ltd - India
- Pendopo Energi Batubara - Indonesia
- Ambuja Cements Ltd - India
- Lanco Infratech Ltd - India
- Salva Resources Pvt Ltd - India
- Tata Chemicals Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Merrill Lynch Commodities Europe
- Borneo Indobara - Indonesia
- Bulk Trading Sa - Switzerland
- Therma Luzon, Inc, Philippines
- Banpu Public Company Limited - Thailand
- Kapuas Tunggal Persada - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- GVK Power & Infra Limited - India
- SMC Global Power, Philippines
- Manunggal Multi Energi - Indonesia
- Romanian Commodities Exchange
- Parliament of New Zealand
- Agrawal Coal Company - India
- Ministry of Mines - Canada
- Riau Bara Harum - Indonesia
- Sree Jayajothi Cements Limited - India
- Independent Power Producers Association of India
- Orica Australia Pty. Ltd.
- TeaM Sual Corporation - Philippines
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