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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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Monday, 23 September 19
CHINA RECORDS SLOWER GROWTH IN COAL PRODUCTION - XINHUA
The growth of China’s raw coal production slowed down in August, data from the National Bureau of Statistics (NBS) showed.
Aro ...
Friday, 20 September 19
INDIA TO INVITE BIDS FOR COMMERCIAL COAL MINING IN DECEMBER - MINISTER FOR COAL
India aims to begin the process of holding the first round of commercial coal mining auctions December end, Minister for Coal, Mines and Parliament ...
Friday, 20 September 19
INDIA: ECONOMIC SLOWDOWN IMPACTS COAL IMPORT CARGO IN H1 FY20 - PTI
Economic slowdown has impacted coal import cargo in the first half of this fiscal, as overall cargo growth at major ports registered a marginal gro ...
Wednesday, 18 September 19
SHIPPING MARKET INSIGHT - INTERMODAL
During the first week of September, I had the privilege of attending the Donsö Shipping Meet 2019, in Donsö, a small island of around 1,& ...
Tuesday, 17 September 19
PANAMA SHIP REGISTRY MODERNIZES SHIP REGISTRATION
The Panama Ship Registry has announced it will integrate in a single platform “Electronic Ship Registration System (ESRS)” the present ...
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- Malabar Cements Ltd - India
- Electricity Authority, New Zealand
- Madhucon Powers Ltd - India
- Australian Commodity Traders Exchange
- The University of Queensland
- San Jose City I Power Corp, Philippines
- Central Electricity Authority - India
- MS Steel International - UAE
- Kepco SPC Power Corporation, Philippines
- Interocean Group of Companies - India
- Heidelberg Cement - Germany
- Kideco Jaya Agung - Indonesia
- Indogreen Group - Indonesia
- Dalmia Cement Bharat India
- Renaissance Capital - South Africa
- Chettinad Cement Corporation Ltd - India
- Standard Chartered Bank - UAE
- Timah Investasi Mineral - Indoneisa
- Mintek Dendrill Indonesia
- Ambuja Cements Ltd - India
- Global Business Power Corporation, Philippines
- Petron Corporation, Philippines
- PTC India Limited - India
- Aditya Birla Group - India
- Larsen & Toubro Limited - India
- IEA Clean Coal Centre - UK
- Kohat Cement Company Ltd. - Pakistan
- South Luzon Thermal Energy Corporation
- Ministry of Mines - Canada
- Baramulti Group, Indonesia
- Tamil Nadu electricity Board
- Indonesian Coal Mining Association
- Directorate Of Revenue Intelligence - India
- Ministry of Transport, Egypt
- Kapuas Tunggal Persada - Indonesia
- SMC Global Power, Philippines
- Kartika Selabumi Mining - Indonesia
- Meenaskhi Energy Private Limited - India
- Coastal Gujarat Power Limited - India
- Sindya Power Generating Company Private Ltd
- VISA Power Limited - India
- Mercator Lines Limited - India
- Carbofer General Trading SA - India
- Bangladesh Power Developement Board
- Sojitz Corporation - Japan
- Krishnapatnam Port Company Ltd. - India
- Straits Asia Resources Limited - Singapore
- Vedanta Resources Plc - India
- IHS Mccloskey Coal Group - USA
- Gujarat Mineral Development Corp Ltd - India
- Parliament of New Zealand
- Vizag Seaport Private Limited - India
- Coal and Oil Company - UAE
- Directorate General of MIneral and Coal - Indonesia
- Posco Energy - South Korea
- Semirara Mining and Power Corporation, Philippines
- New Zealand Coal & Carbon
- Vijayanagar Sugar Pvt Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Jaiprakash Power Ventures ltd
- Coalindo Energy - Indonesia
- Intertek Mineral Services - Indonesia
- Bhatia International Limited - India
- Lanco Infratech Ltd - India
- Meralco Power Generation, Philippines
- SMG Consultants - Indonesia
- Binh Thuan Hamico - Vietnam
- OPG Power Generation Pvt Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bukit Makmur.PT - Indonesia
- Trasteel International SA, Italy
- Eastern Energy - Thailand
- Mjunction Services Limited - India
- Kobexindo Tractors - Indoneisa
- Sakthi Sugars Limited - India
- Gujarat Electricity Regulatory Commission - India
- Kaltim Prima Coal - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- PNOC Exploration Corporation - Philippines
- Antam Resourcindo - Indonesia
- Power Finance Corporation Ltd., India
- Merrill Lynch Commodities Europe
- Mercuria Energy - Indonesia
- Toyota Tsusho Corporation, Japan
- Africa Commodities Group - South Africa
- Manunggal Multi Energi - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Thai Mozambique Logistica
- Pendopo Energi Batubara - Indonesia
- Energy Link Ltd, New Zealand
- Chamber of Mines of South Africa
- Siam City Cement PLC, Thailand
- Therma Luzon, Inc, Philippines
- Indian Energy Exchange, India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Ministry of Finance - Indonesia
- Bhushan Steel Limited - India
- GVK Power & Infra Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Indian Oil Corporation Limited
- Indo Tambangraya Megah - Indonesia
- Rio Tinto Coal - Australia
- GN Power Mariveles Coal Plant, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Medco Energi Mining Internasional
- Kalimantan Lumbung Energi - Indonesia
- Savvy Resources Ltd - HongKong
- Ind-Barath Power Infra Limited - India
- European Bulk Services B.V. - Netherlands
- Pipit Mutiara Jaya. PT, Indonesia
- GMR Energy Limited - India
- Barasentosa Lestari - Indonesia
- Bayan Resources Tbk. - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Alfred C Toepfer International GmbH - Germany
- Petrochimia International Co. Ltd.- Taiwan
- Videocon Industries ltd - India
- Goldman Sachs - Singapore
- Attock Cement Pakistan Limited
- Billiton Holdings Pty Ltd - Australia
- Eastern Coal Council - USA
- Price Waterhouse Coopers - Russia
- Electricity Generating Authority of Thailand
- Anglo American - United Kingdom
- Thiess Contractors Indonesia
- Cigading International Bulk Terminal - Indonesia
- Borneo Indobara - Indonesia
- Latin American Coal - Colombia
- Bukit Baiduri Energy - Indonesia
- International Coal Ventures Pvt Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Asmin Koalindo Tuhup - Indonesia
- Indika Energy - Indonesia
- Oldendorff Carriers - Singapore
- The State Trading Corporation of India Ltd
- Global Coal Blending Company Limited - Australia
- Wood Mackenzie - Singapore
- Sinarmas Energy and Mining - Indonesia
- Bhoruka Overseas - Indonesia
- ASAPP Information Group - India
- Leighton Contractors Pty Ltd - Australia
- Agrawal Coal Company - India
- The Treasury - Australian Government
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Orica Australia Pty. Ltd.
- Romanian Commodities Exchange
- Cement Manufacturers Association - India
- TNB Fuel Sdn Bhd - Malaysia
- GAC Shipping (India) Pvt Ltd
- Makarim & Taira - Indonesia
- ICICI Bank Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Banpu Public Company Limited - Thailand
- Riau Bara Harum - Indonesia
- Orica Mining Services - Indonesia
- Iligan Light & Power Inc, Philippines
- Formosa Plastics Group - Taiwan
- Kumho Petrochemical, South Korea
- Jindal Steel & Power Ltd - India
- Gujarat Sidhee Cement - India
- Miang Besar Coal Terminal - Indonesia
- CIMB Investment Bank - Malaysia
- Simpson Spence & Young - Indonesia
- Wilmar Investment Holdings
- Economic Council, Georgia
- Salva Resources Pvt Ltd - India
- Grasim Industreis Ltd - India
- Metalloyd Limited - United Kingdom
- Karaikal Port Pvt Ltd - India
- Australian Coal Association
- Essar Steel Hazira Ltd - India
- Deloitte Consulting - India
- Global Green Power PLC Corporation, Philippines
- Singapore Mercantile Exchange
- Bulk Trading Sa - Switzerland
- Tata Chemicals Ltd - India
- LBH Netherlands Bv - Netherlands
- PowerSource Philippines DevCo
- Siam City Cement - Thailand
- Maheswari Brothers Coal Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Uttam Galva Steels Limited - India
- Sical Logistics Limited - India
- Sarangani Energy Corporation, Philippines
- CNBM International Corporation - China
- White Energy Company Limited
- TeaM Sual Corporation - Philippines
- Semirara Mining Corp, Philippines
- Minerals Council of Australia
- Planning Commission, India
- Globalindo Alam Lestari - Indonesia
- Aboitiz Power Corporation - Philippines
- Edison Trading Spa - Italy
- London Commodity Brokers - England
- Energy Development Corp, Philippines
- Star Paper Mills Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Marubeni Corporation - India
- Ceylon Electricity Board - Sri Lanka
- AsiaOL BioFuels Corp., Philippines
- Sree Jayajothi Cements Limited - India
- Georgia Ports Authority, United States
- Bharathi Cement Corporation - India
- Parry Sugars Refinery, India
- Xindia Steels Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Port Waratah Coal Services - Australia
- Samtan Co., Ltd - South Korea
- Holcim Trading Pte Ltd - Singapore
- McConnell Dowell - Australia
- SN Aboitiz Power Inc, Philippines
- India Bulls Power Limited - India
- Altura Mining Limited, Indonesia
- Commonwealth Bank - Australia
- Independent Power Producers Association of India
- Central Java Power - Indonesia
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