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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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Saturday, 01 February 20
THERMAL COAL MARKETS: 5 TRENDS TO WATCH OUT FOR IN 2020 - MINING REVIEW
The seaborne thermal coal market entered the year challenged by low priced LNG in the Atlantic and rapidly increasing supply in the Pacific.
&n ...
Saturday, 01 February 20
COAL IS NOT GOING ANYWHERE - MINING REVIEW
The coal sector is living under the constant threat of being blamed by environmentalists as being responsible for a world disaster called global wa ...
Saturday, 01 February 20
CIL PRODUCTION TO NOT EXCEED 640 MILLION TON IN FY20: OFFICIAL - PTI
Hit by disruptions due to a prolonged monsoon, mining major Coal India Ltd’s production in the current fiscal will not exceed 640 million ton ...
Saturday, 01 February 20
WHO PAYS FOR IMO 2020? - FREIGHT WAVES
The United Nations’ International Maritime Organization (IMO) implemented its low-sulfur fuel mandate on January 1, 2020. Full enforcement be ...
Friday, 31 January 20
EIA EXPECTS U.S. ELECTRICITY GENERATION FROM RENEWABLES TO SOON SURPASS NUCLEAR AND COAL
In the latest long-term projections, the U.S Energy Information Administration (EIA) projects electricity generation from renewable sources such as ...
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- Energy Development Corp, Philippines
- Ceylon Electricity Board - Sri Lanka
- Australian Coal Association
- Interocean Group of Companies - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Aditya Birla Group - India
- Tata Chemicals Ltd - India
- Central Electricity Authority - India
- Thiess Contractors Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Deloitte Consulting - India
- Makarim & Taira - Indonesia
- Metalloyd Limited - United Kingdom
- Indian Energy Exchange, India
- Directorate Of Revenue Intelligence - India
- London Commodity Brokers - England
- Indian Oil Corporation Limited
- Savvy Resources Ltd - HongKong
- Indo Tambangraya Megah - Indonesia
- Eastern Energy - Thailand
- GVK Power & Infra Limited - India
- Malabar Cements Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Orica Australia Pty. Ltd.
- Mintek Dendrill Indonesia
- Kepco SPC Power Corporation, Philippines
- Anglo American - United Kingdom
- Posco Energy - South Korea
- Rio Tinto Coal - Australia
- Asmin Koalindo Tuhup - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Jaiprakash Power Ventures ltd
- Trasteel International SA, Italy
- Straits Asia Resources Limited - Singapore
- Kobexindo Tractors - Indoneisa
- Kartika Selabumi Mining - Indonesia
- Agrawal Coal Company - India
- Sical Logistics Limited - India
- The State Trading Corporation of India Ltd
- Bank of Tokyo Mitsubishi UFJ Ltd
- Sinarmas Energy and Mining - Indonesia
- ASAPP Information Group - India
- Central Java Power - Indonesia
- Mercator Lines Limited - India
- Kideco Jaya Agung - Indonesia
- Essar Steel Hazira Ltd - India
- San Jose City I Power Corp, Philippines
- Ministry of Transport, Egypt
- Bayan Resources Tbk. - Indonesia
- Manunggal Multi Energi - Indonesia
- South Luzon Thermal Energy Corporation
- Thai Mozambique Logistica
- Borneo Indobara - Indonesia
- Wood Mackenzie - Singapore
- Riau Bara Harum - Indonesia
- Meenaskhi Energy Private Limited - India
- Coal and Oil Company - UAE
- Port Waratah Coal Services - Australia
- The University of Queensland
- Kalimantan Lumbung Energi - Indonesia
- GAC Shipping (India) Pvt Ltd
- Formosa Plastics Group - Taiwan
- McConnell Dowell - Australia
- Kohat Cement Company Ltd. - Pakistan
- Vizag Seaport Private Limited - India
- Ambuja Cements Ltd - India
- Semirara Mining Corp, Philippines
- Sindya Power Generating Company Private Ltd
- Oldendorff Carriers - Singapore
- Aboitiz Power Corporation - Philippines
- Holcim Trading Pte Ltd - Singapore
- Bukit Baiduri Energy - Indonesia
- Siam City Cement PLC, Thailand
- Ministry of Finance - Indonesia
- Power Finance Corporation Ltd., India
- Cement Manufacturers Association - India
- Gujarat Electricity Regulatory Commission - India
- The Treasury - Australian Government
- Global Coal Blending Company Limited - Australia
- Medco Energi Mining Internasional
- Bharathi Cement Corporation - India
- OPG Power Generation Pvt Ltd - India
- Uttam Galva Steels Limited - India
- Simpson Spence & Young - Indonesia
- Barasentosa Lestari - Indonesia
- Iligan Light & Power Inc, Philippines
- Grasim Industreis Ltd - India
- Therma Luzon, Inc, Philippines
- Indogreen Group - Indonesia
- Petron Corporation, Philippines
- Chamber of Mines of South Africa
- Kumho Petrochemical, South Korea
- Antam Resourcindo - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Gujarat Sidhee Cement - India
- MS Steel International - UAE
- Eastern Coal Council - USA
- Price Waterhouse Coopers - Russia
- Baramulti Group, Indonesia
- Intertek Mineral Services - Indonesia
- Bulk Trading Sa - Switzerland
- Commonwealth Bank - Australia
- Sojitz Corporation - Japan
- Kaltim Prima Coal - Indonesia
- Carbofer General Trading SA - India
- Bhoruka Overseas - Indonesia
- India Bulls Power Limited - India
- White Energy Company Limited
- Semirara Mining and Power Corporation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- SMG Consultants - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Indika Energy - Indonesia
- ICICI Bank Limited - India
- Miang Besar Coal Terminal - Indonesia
- Global Business Power Corporation, Philippines
- Chettinad Cement Corporation Ltd - India
- Pendopo Energi Batubara - Indonesia
- Heidelberg Cement - Germany
- Sarangani Energy Corporation, Philippines
- PTC India Limited - India
- Wilmar Investment Holdings
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- TeaM Sual Corporation - Philippines
- Merrill Lynch Commodities Europe
- Meralco Power Generation, Philippines
- AsiaOL BioFuels Corp., Philippines
- Bangladesh Power Developement Board
- Marubeni Corporation - India
- Australian Commodity Traders Exchange
- IEA Clean Coal Centre - UK
- Timah Investasi Mineral - Indoneisa
- Altura Mining Limited, Indonesia
- Kapuas Tunggal Persada - Indonesia
- Jindal Steel & Power Ltd - India
- Indonesian Coal Mining Association
- Parry Sugars Refinery, India
- Sree Jayajothi Cements Limited - India
- VISA Power Limited - India
- Economic Council, Georgia
- GN Power Mariveles Coal Plant, Philippines
- Dalmia Cement Bharat India
- Maheswari Brothers Coal Limited - India
- Binh Thuan Hamico - Vietnam
- Bhushan Steel Limited - India
- Leighton Contractors Pty Ltd - Australia
- Cigading International Bulk Terminal - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Videocon Industries ltd - India
- Globalindo Alam Lestari - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Renaissance Capital - South Africa
- Planning Commission, India
- Madhucon Powers Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- CNBM International Corporation - China
- Toyota Tsusho Corporation, Japan
- Bahari Cakrawala Sebuku - Indonesia
- GMR Energy Limited - India
- Coastal Gujarat Power Limited - India
- Karaikal Port Pvt Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Lanco Infratech Ltd - India
- Energy Link Ltd, New Zealand
- New Zealand Coal & Carbon
- Attock Cement Pakistan Limited
- Jorong Barutama Greston.PT - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Electricity Generating Authority of Thailand
- Siam City Cement - Thailand
- Salva Resources Pvt Ltd - India
- Ministry of Mines - Canada
- Global Green Power PLC Corporation, Philippines
- Billiton Holdings Pty Ltd - Australia
- Alfred C Toepfer International GmbH - Germany
- Singapore Mercantile Exchange
- Larsen & Toubro Limited - India
- Tamil Nadu electricity Board
- Mercuria Energy - Indonesia
- Georgia Ports Authority, United States
- LBH Netherlands Bv - Netherlands
- Africa Commodities Group - South Africa
- SMC Global Power, Philippines
- Independent Power Producers Association of India
- Goldman Sachs - Singapore
- International Coal Ventures Pvt Ltd - India
- PowerSource Philippines DevCo
- SN Aboitiz Power Inc, Philippines
- Mjunction Services Limited - India
- Electricity Authority, New Zealand
- Ind-Barath Power Infra Limited - India
- Minerals Council of Australia
- Karbindo Abesyapradhi - Indoneisa
- Standard Chartered Bank - UAE
- Coalindo Energy - Indonesia
- Edison Trading Spa - Italy
- Bukit Makmur.PT - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- CIMB Investment Bank - Malaysia
- European Bulk Services B.V. - Netherlands
- Banpu Public Company Limited - Thailand
- Bhatia International Limited - India
- Romanian Commodities Exchange
- Samtan Co., Ltd - South Korea
- Parliament of New Zealand
- Latin American Coal - Colombia
- Star Paper Mills Limited - India
- IHS Mccloskey Coal Group - USA
- Petrochimia International Co. Ltd.- Taiwan
- Xindia Steels Limited - India
- Orica Mining Services - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Sakthi Sugars Limited - India
- PNOC Exploration Corporation - Philippines
- Vedanta Resources Plc - India
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