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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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Sunday, 16 April 23
CHINA JUGGLES FOUR MAJOR ECONOMIC CHANGES IN 2023 - WOOD MACKENZIE
Change is afoot in China. Economic growth is slowing, while rising political tensions between China and the US, coupled with global supply chain re ...
Sunday, 16 April 23
CHINA'S MARCH COAL IMPORTS JUMP TO 3-YEAR HIGH - REUTERS
China’s coal imports surged in March to their highest in any month over the past three years as utilities increased purchases on expectations ...
Sunday, 16 April 23
OPEC KEEPS WORLD OIL DEMAND GROWTH OUTLOOK UNCHANGED
The OPEC Reference Basket (ORB) declined in March by $3.43, or 4.2%, m-o-m to average $78.45/b. The ICE Brent first-month contract fell by $4.33, o ...
Sunday, 16 April 23
CHEAPER SPOT LNG PRICES TEMPT SOME ASIAN BUYERS AMID SUPPLY GAINS - REUTERS
Cheaper spot prices for liquefied natural gas (LNG) are luring price-sensitive buyers back in Asia, with China and India recording rising imports i ...
Tuesday, 11 April 23
COAL USE CLIMBS WORLDWIDE DESPITE PROMISES TO SLASH IT - AAP
The burning of coal for electricity, cement, steel and other uses went up in 2022 despite global promises to phase down the fuel that is the bigges ...
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- Manunggal Multi Energi - Indonesia
- Grasim Industreis Ltd - India
- Siam City Cement - Thailand
- Therma Luzon, Inc, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Interocean Group of Companies - India
- Directorate Of Revenue Intelligence - India
- Planning Commission, India
- Pendopo Energi Batubara - Indonesia
- Rashtriya Ispat Nigam Limited - India
- San Jose City I Power Corp, Philippines
- VISA Power Limited - India
- Bayan Resources Tbk. - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kartika Selabumi Mining - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Aditya Birla Group - India
- Indonesian Coal Mining Association
- PTC India Limited - India
- Independent Power Producers Association of India
- Altura Mining Limited, Indonesia
- GVK Power & Infra Limited - India
- Mercuria Energy - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- European Bulk Services B.V. - Netherlands
- Ceylon Electricity Board - Sri Lanka
- Sical Logistics Limited - India
- Energy Development Corp, Philippines
- Banpu Public Company Limited - Thailand
- Ambuja Cements Ltd - India
- Wilmar Investment Holdings
- Global Business Power Corporation, Philippines
- Alfred C Toepfer International GmbH - Germany
- Sindya Power Generating Company Private Ltd
- Kobexindo Tractors - Indoneisa
- Cement Manufacturers Association - India
- Australian Coal Association
- Star Paper Mills Limited - India
- Indika Energy - Indonesia
- The University of Queensland
- Indian Oil Corporation Limited
- SMC Global Power, Philippines
- Semirara Mining Corp, Philippines
- India Bulls Power Limited - India
- The Treasury - Australian Government
- Dalmia Cement Bharat India
- Leighton Contractors Pty Ltd - Australia
- Timah Investasi Mineral - Indoneisa
- PNOC Exploration Corporation - Philippines
- London Commodity Brokers - England
- Binh Thuan Hamico - Vietnam
- GMR Energy Limited - India
- Global Coal Blending Company Limited - Australia
- IEA Clean Coal Centre - UK
- Coal and Oil Company - UAE
- Anglo American - United Kingdom
- Indogreen Group - Indonesia
- Energy Link Ltd, New Zealand
- Iligan Light & Power Inc, Philippines
- Essar Steel Hazira Ltd - India
- Kumho Petrochemical, South Korea
- Directorate General of MIneral and Coal - Indonesia
- Tamil Nadu electricity Board
- Maharashtra Electricity Regulatory Commission - India
- Gujarat Electricity Regulatory Commission - India
- SMG Consultants - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Barasentosa Lestari - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Videocon Industries ltd - India
- Tata Chemicals Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Commonwealth Bank - Australia
- Bhatia International Limited - India
- Jindal Steel & Power Ltd - India
- Standard Chartered Bank - UAE
- TeaM Sual Corporation - Philippines
- Kaltim Prima Coal - Indonesia
- Ministry of Finance - Indonesia
- Kideco Jaya Agung - Indonesia
- OPG Power Generation Pvt Ltd - India
- Malabar Cements Ltd - India
- SN Aboitiz Power Inc, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Madhucon Powers Ltd - India
- ICICI Bank Limited - India
- Vizag Seaport Private Limited - India
- Australian Commodity Traders Exchange
- Petrochimia International Co. Ltd.- Taiwan
- Bhushan Steel Limited - India
- Port Waratah Coal Services - Australia
- Globalindo Alam Lestari - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Posco Energy - South Korea
- Singapore Mercantile Exchange
- Jorong Barutama Greston.PT - Indonesia
- CNBM International Corporation - China
- Jaiprakash Power Ventures ltd
- Electricity Generating Authority of Thailand
- Krishnapatnam Port Company Ltd. - India
- AsiaOL BioFuels Corp., Philippines
- Antam Resourcindo - Indonesia
- Formosa Plastics Group - Taiwan
- Power Finance Corporation Ltd., India
- Bahari Cakrawala Sebuku - Indonesia
- Bangladesh Power Developement Board
- Kalimantan Lumbung Energi - Indonesia
- Price Waterhouse Coopers - Russia
- MS Steel International - UAE
- Bukit Baiduri Energy - Indonesia
- Marubeni Corporation - India
- Savvy Resources Ltd - HongKong
- Attock Cement Pakistan Limited
- Goldman Sachs - Singapore
- Bukit Asam (Persero) Tbk - Indonesia
- ASAPP Information Group - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Central Electricity Authority - India
- Merrill Lynch Commodities Europe
- Simpson Spence & Young - Indonesia
- Eastern Energy - Thailand
- Karaikal Port Pvt Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Petron Corporation, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- White Energy Company Limited
- Kohat Cement Company Ltd. - Pakistan
- Trasteel International SA, Italy
- Gujarat Mineral Development Corp Ltd - India
- Samtan Co., Ltd - South Korea
- Larsen & Toubro Limited - India
- Uttam Galva Steels Limited - India
- South Luzon Thermal Energy Corporation
- LBH Netherlands Bv - Netherlands
- Salva Resources Pvt Ltd - India
- Edison Trading Spa - Italy
- Mintek Dendrill Indonesia
- Meralco Power Generation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Ind-Barath Power Infra Limited - India
- Billiton Holdings Pty Ltd - Australia
- Pipit Mutiara Jaya. PT, Indonesia
- Medco Energi Mining Internasional
- Heidelberg Cement - Germany
- Baramulti Group, Indonesia
- Maheswari Brothers Coal Limited - India
- Intertek Mineral Services - Indonesia
- GAC Shipping (India) Pvt Ltd
- Electricity Authority, New Zealand
- New Zealand Coal & Carbon
- Eastern Coal Council - USA
- Minerals Council of Australia
- Agrawal Coal Company - India
- CIMB Investment Bank - Malaysia
- Economic Council, Georgia
- Karbindo Abesyapradhi - Indoneisa
- Sakthi Sugars Limited - India
- Gujarat Sidhee Cement - India
- Siam City Cement PLC, Thailand
- Parry Sugars Refinery, India
- Riau Bara Harum - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Indo Tambangraya Megah - Indonesia
- Lanco Infratech Ltd - India
- Africa Commodities Group - South Africa
- Straits Asia Resources Limited - Singapore
- Latin American Coal - Colombia
- Xindia Steels Limited - India
- Coalindo Energy - Indonesia
- Chettinad Cement Corporation Ltd - India
- Orica Mining Services - Indonesia
- Meenaskhi Energy Private Limited - India
- Metalloyd Limited - United Kingdom
- PetroVietnam Power Coal Import and Supply Company
- Vedanta Resources Plc - India
- Deloitte Consulting - India
- Thiess Contractors Indonesia
- Central Java Power - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Rio Tinto Coal - Australia
- PowerSource Philippines DevCo
- Sarangani Energy Corporation, Philippines
- Sojitz Corporation - Japan
- Georgia Ports Authority, United States
- Aboitiz Power Corporation - Philippines
- Borneo Indobara - Indonesia
- Parliament of New Zealand
- Makarim & Taira - Indonesia
- Sree Jayajothi Cements Limited - India
- Coastal Gujarat Power Limited - India
- Bhoruka Overseas - Indonesia
- Bulk Trading Sa - Switzerland
- Bukit Makmur.PT - Indonesia
- Ministry of Transport, Egypt
- Romanian Commodities Exchange
- Ministry of Mines - Canada
- Mjunction Services Limited - India
- Global Green Power PLC Corporation, Philippines
- Indian Energy Exchange, India
- International Coal Ventures Pvt Ltd - India
- Bharathi Cement Corporation - India
- Oldendorff Carriers - Singapore
- Chamber of Mines of South Africa
- Wood Mackenzie - Singapore
- Thai Mozambique Logistica
- Sinarmas Energy and Mining - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Toyota Tsusho Corporation, Japan
- The State Trading Corporation of India Ltd
- Carbofer General Trading SA - India
- Kepco SPC Power Corporation, Philippines
- IHS Mccloskey Coal Group - USA
- Orica Australia Pty. Ltd.
- Renaissance Capital - South Africa
- McConnell Dowell - Australia
- Mercator Lines Limited - India
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