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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, 18 February 23
PAKISTAN PLANS TO QUADRUPLE DOMESTIC COAL-FIRED POWER, MOVE AWAY FROM GAS - REUTERS
Pakistan plans to quadruple its domestic coal-fired capacity to reduce power generation costs and will not build new gas-fired plants in the coming ...
Saturday, 18 February 23
2023 MARINE FUEL MARKET PREDICTIONS - JOHN BERGMAN, AURAMARINE
The drive for decarbonisation we witnessed in 2022 has continued into 2023, demonstrating the shipping’s industry positive strides in the fas ...
Saturday, 28 January 23
COAL GROWTH BLIP NOT TO BE REPEATED - BALTIC EXCHANGE
As 2022 drew to a close, global coal demand looked set to end the year just 1.2% up on the previous year. But that small increase was enough to pus ...
Thursday, 26 January 23
CHINA'S COAL OUTPUT INCREASES IN DECEMBER 2022 - XINHUA
China’s raw coal output posted stable expansion in December 2022, official data showed.
The country produced 400 million tonne ...
Thursday, 26 January 23
COKING COAL NARROWS THE GAP ON THERMAL AS CHINA REOPENS - REUTERS
The premium of high-grade thermal coal over coking coal in Asia is shrinking as China’s re-opening and ending of a ban on imports from Austra ...
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- Deloitte Consulting - India
- Malabar Cements Ltd - India
- Bhoruka Overseas - Indonesia
- Indika Energy - Indonesia
- Petron Corporation, Philippines
- Australian Commodity Traders Exchange
- The State Trading Corporation of India Ltd
- Altura Mining Limited, Indonesia
- Chettinad Cement Corporation Ltd - India
- Ministry of Transport, Egypt
- PTC India Limited - India
- Bulk Trading Sa - Switzerland
- Indian Oil Corporation Limited
- International Coal Ventures Pvt Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Posco Energy - South Korea
- Kapuas Tunggal Persada - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- PetroVietnam Power Coal Import and Supply Company
- Binh Thuan Hamico - Vietnam
- Georgia Ports Authority, United States
- Star Paper Mills Limited - India
- Mintek Dendrill Indonesia
- Pendopo Energi Batubara - Indonesia
- IHS Mccloskey Coal Group - USA
- GVK Power & Infra Limited - India
- GAC Shipping (India) Pvt Ltd
- Cement Manufacturers Association - India
- Mercuria Energy - Indonesia
- Kaltim Prima Coal - Indonesia
- Antam Resourcindo - Indonesia
- Attock Cement Pakistan Limited
- Barasentosa Lestari - Indonesia
- India Bulls Power Limited - India
- Dalmia Cement Bharat India
- LBH Netherlands Bv - Netherlands
- Holcim Trading Pte Ltd - Singapore
- Agrawal Coal Company - India
- Maheswari Brothers Coal Limited - India
- Semirara Mining and Power Corporation, Philippines
- Africa Commodities Group - South Africa
- Independent Power Producers Association of India
- South Luzon Thermal Energy Corporation
- Energy Link Ltd, New Zealand
- Tata Chemicals Ltd - India
- Bangladesh Power Developement Board
- Sakthi Sugars Limited - India
- Aditya Birla Group - India
- Pipit Mutiara Jaya. PT, Indonesia
- Kartika Selabumi Mining - Indonesia
- Anglo American - United Kingdom
- Bukit Asam (Persero) Tbk - Indonesia
- Sical Logistics Limited - India
- Ambuja Cements Ltd - India
- Bukit Makmur.PT - Indonesia
- Sree Jayajothi Cements Limited - India
- ASAPP Information Group - India
- Intertek Mineral Services - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- The University of Queensland
- Xindia Steels Limited - India
- Gujarat Sidhee Cement - India
- Sinarmas Energy and Mining - Indonesia
- Samtan Co., Ltd - South Korea
- Goldman Sachs - Singapore
- Commonwealth Bank - Australia
- IEA Clean Coal Centre - UK
- Latin American Coal - Colombia
- Straits Asia Resources Limited - Singapore
- Minerals Council of Australia
- Marubeni Corporation - India
- Cigading International Bulk Terminal - Indonesia
- New Zealand Coal & Carbon
- Bayan Resources Tbk. - Indonesia
- Wood Mackenzie - Singapore
- Trasteel International SA, Italy
- Tamil Nadu electricity Board
- Grasim Industreis Ltd - India
- Ceylon Electricity Board - Sri Lanka
- TNB Fuel Sdn Bhd - Malaysia
- Kideco Jaya Agung - Indonesia
- TeaM Sual Corporation - Philippines
- Baramulti Group, Indonesia
- Borneo Indobara - Indonesia
- Rio Tinto Coal - Australia
- Karbindo Abesyapradhi - Indoneisa
- Indonesian Coal Mining Association
- GMR Energy Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Global Coal Blending Company Limited - Australia
- Toyota Tsusho Corporation, Japan
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Parliament of New Zealand
- Formosa Plastics Group - Taiwan
- Power Finance Corporation Ltd., India
- Sarangani Energy Corporation, Philippines
- Videocon Industries ltd - India
- Globalindo Alam Lestari - Indonesia
- Banpu Public Company Limited - Thailand
- Bank of Tokyo Mitsubishi UFJ Ltd
- Billiton Holdings Pty Ltd - Australia
- SMG Consultants - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Directorate Of Revenue Intelligence - India
- Bharathi Cement Corporation - India
- Salva Resources Pvt Ltd - India
- Bhatia International Limited - India
- Coastal Gujarat Power Limited - India
- Wilmar Investment Holdings
- Chamber of Mines of South Africa
- Riau Bara Harum - Indonesia
- Therma Luzon, Inc, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Vedanta Resources Plc - India
- Meenaskhi Energy Private Limited - India
- Mjunction Services Limited - India
- CIMB Investment Bank - Malaysia
- Petrochimia International Co. Ltd.- Taiwan
- Asmin Koalindo Tuhup - Indonesia
- OPG Power Generation Pvt Ltd - India
- Coalindo Energy - Indonesia
- Central Java Power - Indonesia
- Bhushan Steel Limited - India
- Electricity Generating Authority of Thailand
- Heidelberg Cement - Germany
- Madhucon Powers Ltd - India
- Siam City Cement PLC, Thailand
- Price Waterhouse Coopers - Russia
- Electricity Authority, New Zealand
- The Treasury - Australian Government
- McConnell Dowell - Australia
- Timah Investasi Mineral - Indoneisa
- VISA Power Limited - India
- Global Business Power Corporation, Philippines
- Planning Commission, India
- AsiaOL BioFuels Corp., Philippines
- SN Aboitiz Power Inc, Philippines
- European Bulk Services B.V. - Netherlands
- Coal and Oil Company - UAE
- Meralco Power Generation, Philippines
- Interocean Group of Companies - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Aboitiz Power Corporation - Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Kepco SPC Power Corporation, Philippines
- Standard Chartered Bank - UAE
- Renaissance Capital - South Africa
- Uttam Galva Steels Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Ministry of Finance - Indonesia
- PowerSource Philippines DevCo
- Bukit Baiduri Energy - Indonesia
- Indo Tambangraya Megah - Indonesia
- London Commodity Brokers - England
- Semirara Mining Corp, Philippines
- Savvy Resources Ltd - HongKong
- Manunggal Multi Energi - Indonesia
- Central Electricity Authority - India
- Jaiprakash Power Ventures ltd
- Rashtriya Ispat Nigam Limited - India
- Siam City Cement - Thailand
- PNOC Exploration Corporation - Philippines
- Indian Energy Exchange, India
- SMC Global Power, Philippines
- Sindya Power Generating Company Private Ltd
- Ministry of Mines - Canada
- Sojitz Corporation - Japan
- Medco Energi Mining Internasional
- Australian Coal Association
- Jindal Steel & Power Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Simpson Spence & Young - Indonesia
- Eastern Coal Council - USA
- Krishnapatnam Port Company Ltd. - India
- Economic Council, Georgia
- Vizag Seaport Private Limited - India
- Indogreen Group - Indonesia
- Singapore Mercantile Exchange
- Merrill Lynch Commodities Europe
- Orica Australia Pty. Ltd.
- Parry Sugars Refinery, India
- Iligan Light & Power Inc, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Energy Development Corp, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Directorate General of MIneral and Coal - Indonesia
- Lanco Infratech Ltd - India
- Ind-Barath Power Infra Limited - India
- Eastern Energy - Thailand
- Makarim & Taira - Indonesia
- Essar Steel Hazira Ltd - India
- Orica Mining Services - Indonesia
- White Energy Company Limited
- Miang Besar Coal Terminal - Indonesia
- Karaikal Port Pvt Ltd - India
- Kumho Petrochemical, South Korea
- Edison Trading Spa - Italy
- Mercator Lines Limited - India
- Thai Mozambique Logistica
- Thiess Contractors Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Kobexindo Tractors - Indoneisa
- Vijayanagar Sugar Pvt Ltd - India
- Carbofer General Trading SA - India
- Oldendorff Carriers - Singapore
- Metalloyd Limited - United Kingdom
- Larsen & Toubro Limited - India
- San Jose City I Power Corp, Philippines
- Romanian Commodities Exchange
- Global Green Power PLC Corporation, Philippines
- CNBM International Corporation - China
- ICICI Bank Limited - India
- MS Steel International - UAE
- Port Waratah Coal Services - Australia
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