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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, 06 March 20
COLOMBIAN COAL OUTPUT FELL 2% IN 2019 - REUTERS
Coal production in Colombia, the fifth-largest coal exporter in the world, fell 2% to 82.2 million tonnes in 2019 after output at one of the princi ...
Friday, 06 March 20
SOLID BACKING FOR LNG AS A MARINE FUEL - BALTIC EXCHANGE
When it comes to choosing the best fuel on the near horizon to help the international shipping industry shrink its carbon intensity by 2050, DNV GL ...
Friday, 06 March 20
INDONESIA COAL PRICE REFERENCE UP AGAIN THIS MONTH
COALspot.com: The Ministry of Energy and Mineral Resources of the Republic of Indonesia has revised up the benchmark price of Indonesian thermal co ...
Thursday, 05 March 20
PANAMAX: SHIP-OWNERS HAVE MOSTLY BEEN GETTING HIGHER RATES THAN THE LAST DONE - FEARNLEYS
Cape
There is still limited amount of positive news around, with the effects of Corona virus hurting world economy. However, overall average in ...
Thursday, 05 March 20
COAL IMPORTS DOWN IN MAJOR ASIAN MARKETS, AND CORONAVIRUS NOT THE DRIVING FORCE - CLYDE RUSSELL
Asia’s seaborne coal markets stumbled in February and it appears the coronavirus outbreak in China may dodge most of the blame, with the weak ...
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- Madhucon Powers Ltd - India
- ASAPP Information Group - India
- Tamil Nadu electricity Board
- Singapore Mercantile Exchange
- Manunggal Multi Energi - Indonesia
- Posco Energy - South Korea
- VISA Power Limited - India
- Altura Mining Limited, Indonesia
- OPG Power Generation Pvt Ltd - India
- Price Waterhouse Coopers - Russia
- Global Green Power PLC Corporation, Philippines
- Attock Cement Pakistan Limited
- Holcim Trading Pte Ltd - Singapore
- Dalmia Cement Bharat India
- The University of Queensland
- Rashtriya Ispat Nigam Limited - India
- Bharathi Cement Corporation - India
- Tata Chemicals Ltd - India
- PNOC Exploration Corporation - Philippines
- Central Electricity Authority - India
- Kobexindo Tractors - Indoneisa
- Bulk Trading Sa - Switzerland
- Electricity Authority, New Zealand
- Kumho Petrochemical, South Korea
- IHS Mccloskey Coal Group - USA
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Vizag Seaport Private Limited - India
- Siam City Cement PLC, Thailand
- Sinarmas Energy and Mining - Indonesia
- Meralco Power Generation, Philippines
- Simpson Spence & Young - Indonesia
- Indonesian Coal Mining Association
- Antam Resourcindo - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Anglo American - United Kingdom
- Sakthi Sugars Limited - India
- Riau Bara Harum - Indonesia
- Bhatia International Limited - India
- Australian Coal Association
- ICICI Bank Limited - India
- Ceylon Electricity Board - Sri Lanka
- The Treasury - Australian Government
- European Bulk Services B.V. - Netherlands
- Trasteel International SA, Italy
- Merrill Lynch Commodities Europe
- GAC Shipping (India) Pvt Ltd
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Samtan Co., Ltd - South Korea
- Karbindo Abesyapradhi - Indoneisa
- Bank of Tokyo Mitsubishi UFJ Ltd
- PetroVietnam Power Coal Import and Supply Company
- Ministry of Transport, Egypt
- Sindya Power Generating Company Private Ltd
- Eastern Coal Council - USA
- Vijayanagar Sugar Pvt Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- McConnell Dowell - Australia
- AsiaOL BioFuels Corp., Philippines
- Energy Link Ltd, New Zealand
- Xindia Steels Limited - India
- Essar Steel Hazira Ltd - India
- SN Aboitiz Power Inc, Philippines
- Bayan Resources Tbk. - Indonesia
- Formosa Plastics Group - Taiwan
- Gujarat Sidhee Cement - India
- Indo Tambangraya Megah - Indonesia
- Mintek Dendrill Indonesia
- Economic Council, Georgia
- Coal and Oil Company - UAE
- Uttam Galva Steels Limited - India
- Mjunction Services Limited - India
- Krishnapatnam Port Company Ltd. - India
- Siam City Cement - Thailand
- Maharashtra Electricity Regulatory Commission - India
- Toyota Tsusho Corporation, Japan
- Central Java Power - Indonesia
- Semirara Mining Corp, Philippines
- Borneo Indobara - Indonesia
- Bhushan Steel Limited - India
- Independent Power Producers Association of India
- Cement Manufacturers Association - India
- GN Power Mariveles Coal Plant, Philippines
- Georgia Ports Authority, United States
- Petron Corporation, Philippines
- Sree Jayajothi Cements Limited - India
- Globalindo Alam Lestari - Indonesia
- Edison Trading Spa - Italy
- GMR Energy Limited - India
- Ind-Barath Power Infra Limited - India
- Alfred C Toepfer International GmbH - Germany
- Chamber of Mines of South Africa
- Banpu Public Company Limited - Thailand
- White Energy Company Limited
- SMC Global Power, Philippines
- Orica Mining Services - Indonesia
- Port Waratah Coal Services - Australia
- Maheswari Brothers Coal Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Savvy Resources Ltd - HongKong
- Thiess Contractors Indonesia
- Jaiprakash Power Ventures ltd
- Medco Energi Mining Internasional
- Cigading International Bulk Terminal - Indonesia
- Metalloyd Limited - United Kingdom
- Renaissance Capital - South Africa
- Goldman Sachs - Singapore
- San Jose City I Power Corp, Philippines
- Planning Commission, India
- Coastal Gujarat Power Limited - India
- Meenaskhi Energy Private Limited - India
- Intertek Mineral Services - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Africa Commodities Group - South Africa
- Orica Australia Pty. Ltd.
- Power Finance Corporation Ltd., India
- Kapuas Tunggal Persada - Indonesia
- Malabar Cements Ltd - India
- Salva Resources Pvt Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Straits Asia Resources Limited - Singapore
- Rio Tinto Coal - Australia
- Asmin Koalindo Tuhup - Indonesia
- PowerSource Philippines DevCo
- Kalimantan Lumbung Energi - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- International Coal Ventures Pvt Ltd - India
- Parry Sugars Refinery, India
- Australian Commodity Traders Exchange
- Pendopo Energi Batubara - Indonesia
- Thai Mozambique Logistica
- Commonwealth Bank - Australia
- Global Business Power Corporation, Philippines
- Bangladesh Power Developement Board
- Grasim Industreis Ltd - India
- Latin American Coal - Colombia
- Indian Oil Corporation Limited
- Lanco Infratech Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- GVK Power & Infra Limited - India
- Kaltim Prima Coal - Indonesia
- TeaM Sual Corporation - Philippines
- Global Coal Blending Company Limited - Australia
- Videocon Industries ltd - India
- Sical Logistics Limited - India
- CIMB Investment Bank - Malaysia
- Eastern Energy - Thailand
- Minerals Council of Australia
- Indika Energy - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- South Luzon Thermal Energy Corporation
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Mercator Lines Limited - India
- Deloitte Consulting - India
- IEA Clean Coal Centre - UK
- Romanian Commodities Exchange
- Miang Besar Coal Terminal - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Therma Luzon, Inc, Philippines
- Energy Development Corp, Philippines
- Ambuja Cements Ltd - India
- Jindal Steel & Power Ltd - India
- Barasentosa Lestari - Indonesia
- Indogreen Group - Indonesia
- Vedanta Resources Plc - India
- Ministry of Mines - Canada
- Baramulti Group, Indonesia
- India Bulls Power Limited - India
- Kepco SPC Power Corporation, Philippines
- Iligan Light & Power Inc, Philippines
- PTC India Limited - India
- Karaikal Port Pvt Ltd - India
- MS Steel International - UAE
- Aboitiz Power Corporation - Philippines
- Directorate Of Revenue Intelligence - India
- Bukit Makmur.PT - Indonesia
- Parliament of New Zealand
- Makarim & Taira - Indonesia
- Timah Investasi Mineral - Indoneisa
- Billiton Holdings Pty Ltd - Australia
- Bhoruka Overseas - Indonesia
- Marubeni Corporation - India
- Bukit Asam (Persero) Tbk - Indonesia
- Coalindo Energy - Indonesia
- Binh Thuan Hamico - Vietnam
- New Zealand Coal & Carbon
- Electricity Generating Authority of Thailand
- Sarangani Energy Corporation, Philippines
- Mercuria Energy - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Star Paper Mills Limited - India
- Oldendorff Carriers - Singapore
- Agrawal Coal Company - India
- Ministry of Finance - Indonesia
- Interocean Group of Companies - India
- Gujarat Electricity Regulatory Commission - India
- Carbofer General Trading SA - India
- SMG Consultants - Indonesia
- The State Trading Corporation of India Ltd
- Sojitz Corporation - Japan
- Semirara Mining and Power Corporation, Philippines
- Bukit Baiduri Energy - Indonesia
- Indian Energy Exchange, India
- Standard Chartered Bank - UAE
- Wilmar Investment Holdings
- Kideco Jaya Agung - Indonesia
- Wood Mackenzie - Singapore
- Aditya Birla Group - India
- CNBM International Corporation - China
- Chettinad Cement Corporation Ltd - India
- Heidelberg Cement - Germany
- London Commodity Brokers - England
- Kartika Selabumi Mining - Indonesia
- Larsen & Toubro Limited - India
- Leighton Contractors Pty Ltd - Australia
- LBH Netherlands Bv - Netherlands
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