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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, 19 February 24
METALS INVESTMENT: THE DARKEST HOUR IS JUST BEFORE THE DAWN - WOOD MACKENZIE
Things often seem at their worst just before they get better. In terms of meeting our net zero 2050 scenario, we’ve reached a watershed momen ...
Tuesday, 13 February 24
WHAT IS THE OUTLOOK FOR THE NATURAL GAS SPOT PRICE IN 2024 AND 2025? EIA
We expect the U.S. benchmark Henry Hub natural gas spot price to average higher in 2024 and 2025 than in 2023, but to remain lower than $3.00 per m ...
Monday, 12 February 24
US THERMAL COAL EXPORTS HIT 5-YEAR HIGHS AND TOP $5 BLN IN 2023 - REUTERS
United States exporters of thermal coal earned more than $5 billion in 2023 as they shipped out more than 32.5 million metric tons of the high-poll ...
Tuesday, 06 February 24
NEW E-FUELS PROJECT TO MAKE INTERNATIONAL SHIPPING CLIMATE-NEUTRAL - RINA
Transport and trade on the ocean blue must be made much greener. This is the goal of the new €17 million European GAMMA project, where compani ...
Tuesday, 06 February 24
INDIA SEES ANNUAL COAL OUTPUT UP 10.9% IN 2024/25 - REUTERS
India expects domestic coal output to increase by 10.9% to 1.13 billion metric tons in the fiscal year ending March 2025, a senior government offic ...
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- White Energy Company Limited
- Xindia Steels Limited - India
- Energy Development Corp, Philippines
- Posco Energy - South Korea
- Merrill Lynch Commodities Europe
- VISA Power Limited - India
- Oldendorff Carriers - Singapore
- Aboitiz Power Corporation - Philippines
- Bukit Baiduri Energy - Indonesia
- The Treasury - Australian Government
- Essar Steel Hazira Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Straits Asia Resources Limited - Singapore
- Indo Tambangraya Megah - Indonesia
- Global Coal Blending Company Limited - Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Central Electricity Authority - India
- Globalindo Alam Lestari - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Gujarat Electricity Regulatory Commission - India
- Bukit Asam (Persero) Tbk - Indonesia
- Parliament of New Zealand
- CIMB Investment Bank - Malaysia
- Georgia Ports Authority, United States
- Madhucon Powers Ltd - India
- Energy Link Ltd, New Zealand
- Timah Investasi Mineral - Indoneisa
- Vizag Seaport Private Limited - India
- Ceylon Electricity Board - Sri Lanka
- Karaikal Port Pvt Ltd - India
- Alfred C Toepfer International GmbH - Germany
- The State Trading Corporation of India Ltd
- Kohat Cement Company Ltd. - Pakistan
- Karbindo Abesyapradhi - Indoneisa
- Binh Thuan Hamico - Vietnam
- Barasentosa Lestari - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Indogreen Group - Indonesia
- Siam City Cement PLC, Thailand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- GVK Power & Infra Limited - India
- Coal and Oil Company - UAE
- PowerSource Philippines DevCo
- Commonwealth Bank - Australia
- Indian Oil Corporation Limited
- GMR Energy Limited - India
- Salva Resources Pvt Ltd - India
- Anglo American - United Kingdom
- South Luzon Thermal Energy Corporation
- Coastal Gujarat Power Limited - India
- Gujarat Sidhee Cement - India
- Deloitte Consulting - India
- Bayan Resources Tbk. - Indonesia
- Bhoruka Overseas - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Vedanta Resources Plc - India
- Australian Commodity Traders Exchange
- Sojitz Corporation - Japan
- Billiton Holdings Pty Ltd - Australia
- Antam Resourcindo - Indonesia
- Pendopo Energi Batubara - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Sindya Power Generating Company Private Ltd
- Chamber of Mines of South Africa
- GAC Shipping (India) Pvt Ltd
- Altura Mining Limited, Indonesia
- Sree Jayajothi Cements Limited - India
- ICICI Bank Limited - India
- CNBM International Corporation - China
- Meenaskhi Energy Private Limited - India
- Power Finance Corporation Ltd., India
- Sarangani Energy Corporation, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Toyota Tsusho Corporation, Japan
- Rio Tinto Coal - Australia
- Samtan Co., Ltd - South Korea
- Dalmia Cement Bharat India
- Formosa Plastics Group - Taiwan
- Orica Australia Pty. Ltd.
- Malabar Cements Ltd - India
- Kumho Petrochemical, South Korea
- Kartika Selabumi Mining - Indonesia
- Ministry of Finance - Indonesia
- The University of Queensland
- Directorate General of MIneral and Coal - Indonesia
- Jindal Steel & Power Ltd - India
- Wood Mackenzie - Singapore
- Tata Chemicals Ltd - India
- OPG Power Generation Pvt Ltd - India
- London Commodity Brokers - England
- Simpson Spence & Young - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Price Waterhouse Coopers - Russia
- Bhushan Steel Limited - India
- AsiaOL BioFuels Corp., Philippines
- Uttam Galva Steels Limited - India
- Minerals Council of Australia
- Heidelberg Cement - Germany
- Medco Energi Mining Internasional
- LBH Netherlands Bv - Netherlands
- Cement Manufacturers Association - India
- Semirara Mining Corp, Philippines
- New Zealand Coal & Carbon
- Mjunction Services Limited - India
- Romanian Commodities Exchange
- Eastern Coal Council - USA
- Wilmar Investment Holdings
- Star Paper Mills Limited - India
- Baramulti Group, Indonesia
- Trasteel International SA, Italy
- Global Green Power PLC Corporation, Philippines
- SMG Consultants - Indonesia
- Orica Mining Services - Indonesia
- IHS Mccloskey Coal Group - USA
- Carbofer General Trading SA - India
- Sinarmas Energy and Mining - Indonesia
- Port Waratah Coal Services - Australia
- European Bulk Services B.V. - Netherlands
- Grasim Industreis Ltd - India
- McConnell Dowell - Australia
- Parry Sugars Refinery, India
- Gujarat Mineral Development Corp Ltd - India
- Singapore Mercantile Exchange
- Leighton Contractors Pty Ltd - Australia
- Latin American Coal - Colombia
- Therma Luzon, Inc, Philippines
- Tamil Nadu electricity Board
- Makarim & Taira - Indonesia
- Sical Logistics Limited - India
- Bhatia International Limited - India
- Cigading International Bulk Terminal - Indonesia
- Bharathi Cement Corporation - India
- Eastern Energy - Thailand
- Larsen & Toubro Limited - India
- India Bulls Power Limited - India
- Australian Coal Association
- Coalindo Energy - Indonesia
- Planning Commission, India
- SMC Global Power, Philippines
- SN Aboitiz Power Inc, Philippines
- Aditya Birla Group - India
- Mercuria Energy - Indonesia
- Bukit Makmur.PT - Indonesia
- Independent Power Producers Association of India
- Jaiprakash Power Ventures ltd
- Indika Energy - Indonesia
- Economic Council, Georgia
- Ambuja Cements Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Chettinad Cement Corporation Ltd - India
- Metalloyd Limited - United Kingdom
- Pipit Mutiara Jaya. PT, Indonesia
- Iligan Light & Power Inc, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Ministry of Mines - Canada
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Edison Trading Spa - Italy
- Manunggal Multi Energi - Indonesia
- Renaissance Capital - South Africa
- Asmin Koalindo Tuhup - Indonesia
- Goldman Sachs - Singapore
- Africa Commodities Group - South Africa
- GN Power Mariveles Coal Plant, Philippines
- Global Business Power Corporation, Philippines
- PNOC Exploration Corporation - Philippines
- Agrawal Coal Company - India
- Kaltim Prima Coal - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Kepco SPC Power Corporation, Philippines
- MS Steel International - UAE
- San Jose City I Power Corp, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- PTC India Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Marubeni Corporation - India
- IEA Clean Coal Centre - UK
- Indonesian Coal Mining Association
- ASAPP Information Group - India
- Mercator Lines Limited - India
- International Coal Ventures Pvt Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Directorate Of Revenue Intelligence - India
- Sakthi Sugars Limited - India
- Krishnapatnam Port Company Ltd. - India
- Indian Energy Exchange, India
- Ind-Barath Power Infra Limited - India
- Savvy Resources Ltd - HongKong
- Thai Mozambique Logistica
- Banpu Public Company Limited - Thailand
- Kideco Jaya Agung - Indonesia
- Standard Chartered Bank - UAE
- Intertek Mineral Services - Indonesia
- Electricity Authority, New Zealand
- Ministry of Transport, Egypt
- Central Java Power - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Electricity Generating Authority of Thailand
- Thiess Contractors Indonesia
- Kobexindo Tractors - Indoneisa
- Attock Cement Pakistan Limited
- Bulk Trading Sa - Switzerland
- Siam City Cement - Thailand
- Maheswari Brothers Coal Limited - India
- Riau Bara Harum - Indonesia
- Bangladesh Power Developement Board
- Meralco Power Generation, Philippines
- Lanco Infratech Ltd - India
- Interocean Group of Companies - India
- Mintek Dendrill Indonesia
- TeaM Sual Corporation - Philippines
- Borneo Indobara - Indonesia
- Petron Corporation, Philippines
- Videocon Industries ltd - India
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