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