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