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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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Thursday, 22 December 22
RUSSIAN OIL EXPORTS CRATER BY 54% IN THE FIRST FULL WEEK OF THE EU'S EMBARGO AMID A SHORTAGE OF TANKERS WILLING TO CARRY CARGOES - BUSINESS INSIDER
Since the European Union imposed its seaborne crude sanctions, Russian oil exports have tumbled by more than half, according to data compiled by Bl ...
Thursday, 22 December 22
CHINA TIGHTENS VERIFICATION OF SHIPS’ ENERGY CONSUMPTION DATA - GARD
From 22 December 2022, ships trading to Chinese ports must record their energy consumption data in accordance with the requirements of their Ship E ...
Thursday, 22 December 22
AN OVERVIEW OF THE LNG MARKET - VESSELSVALUE
LNG values have continued to strengthen, spurred by skyrocketing earnings that have surpassed last year’s record breaking peaks. In November, ...
Thursday, 22 December 22
COKING COAL SLUMPS AS TALKS ON AUSTRALIA-CHINA TRADE RIFT LOOM - REUTERS
Chinese coking coal futures dropped more than 3 per cent on Tuesday (Dec 20), extending losses, as supply of the steelmaking input might increase i ...
Thursday, 22 December 22
COAL AND GAS PRICE CAPS MAY COMPOUND POLITICAL RISK FOR AUSTRALIAN CORPORATES - FITCH RATINGS
Australia’s introduction of temporary price caps on domestic sales of gas and coal used for electricity generation will probably have limited ...
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- Samtan Co., Ltd - South Korea
- Eastern Energy - Thailand
- Agrawal Coal Company - India
- Global Business Power Corporation, Philippines
- Binh Thuan Hamico - Vietnam
- Coal and Oil Company - UAE
- Interocean Group of Companies - India
- Sree Jayajothi Cements Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- CIMB Investment Bank - Malaysia
- Straits Asia Resources Limited - Singapore
- Larsen & Toubro Limited - India
- Leighton Contractors Pty Ltd - Australia
- Banpu Public Company Limited - Thailand
- Malabar Cements Ltd - India
- Bhushan Steel Limited - India
- Port Waratah Coal Services - Australia
- Tamil Nadu electricity Board
- Altura Mining Limited, Indonesia
- Mercator Lines Limited - India
- Vedanta Resources Plc - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Ministry of Transport, Egypt
- Sojitz Corporation - Japan
- Indian Energy Exchange, India
- Miang Besar Coal Terminal - Indonesia
- Energy Development Corp, Philippines
- Directorate General of MIneral and Coal - Indonesia
- IHS Mccloskey Coal Group - USA
- Metalloyd Limited - United Kingdom
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- New Zealand Coal & Carbon
- Orica Australia Pty. Ltd.
- Wilmar Investment Holdings
- Heidelberg Cement - Germany
- Aboitiz Power Corporation - Philippines
- Ministry of Finance - Indonesia
- Indonesian Coal Mining Association
- Sarangani Energy Corporation, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Romanian Commodities Exchange
- Indika Energy - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Chettinad Cement Corporation Ltd - India
- Antam Resourcindo - Indonesia
- Rashtriya Ispat Nigam Limited - India
- LBH Netherlands Bv - Netherlands
- Independent Power Producers Association of India
- Sakthi Sugars Limited - India
- AsiaOL BioFuels Corp., Philippines
- Australian Commodity Traders Exchange
- Global Coal Blending Company Limited - Australia
- Edison Trading Spa - Italy
- Essar Steel Hazira Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Kumho Petrochemical, South Korea
- SMC Global Power, Philippines
- Sical Logistics Limited - India
- Sindya Power Generating Company Private Ltd
- White Energy Company Limited
- Bangladesh Power Developement Board
- Economic Council, Georgia
- ASAPP Information Group - India
- South Luzon Thermal Energy Corporation
- McConnell Dowell - Australia
- Energy Link Ltd, New Zealand
- Therma Luzon, Inc, Philippines
- Directorate Of Revenue Intelligence - India
- Billiton Holdings Pty Ltd - Australia
- Lanco Infratech Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Cigading International Bulk Terminal - Indonesia
- Krishnapatnam Port Company Ltd. - India
- GMR Energy Limited - India
- Baramulti Group, Indonesia
- Rio Tinto Coal - Australia
- Indogreen Group - Indonesia
- Bhatia International Limited - India
- Timah Investasi Mineral - Indoneisa
- Wood Mackenzie - Singapore
- Price Waterhouse Coopers - Russia
- Power Finance Corporation Ltd., India
- GN Power Mariveles Coal Plant, Philippines
- Chamber of Mines of South Africa
- Deloitte Consulting - India
- Standard Chartered Bank - UAE
- Mjunction Services Limited - India
- Electricity Generating Authority of Thailand
- Iligan Light & Power Inc, Philippines
- Indian Oil Corporation Limited
- Kobexindo Tractors - Indoneisa
- Kohat Cement Company Ltd. - Pakistan
- Central Java Power - Indonesia
- Coastal Gujarat Power Limited - India
- Semirara Mining and Power Corporation, Philippines
- Holcim Trading Pte Ltd - Singapore
- Formosa Plastics Group - Taiwan
- SN Aboitiz Power Inc, Philippines
- Aditya Birla Group - India
- Karbindo Abesyapradhi - Indoneisa
- Tata Chemicals Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Pendopo Energi Batubara - Indonesia
- Africa Commodities Group - South Africa
- Minerals Council of Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Gujarat Sidhee Cement - India
- Makarim & Taira - Indonesia
- Merrill Lynch Commodities Europe
- Attock Cement Pakistan Limited
- Toyota Tsusho Corporation, Japan
- Simpson Spence & Young - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Dalmia Cement Bharat India
- Uttam Galva Steels Limited - India
- Meralco Power Generation, Philippines
- London Commodity Brokers - England
- Anglo American - United Kingdom
- Neyveli Lignite Corporation Ltd, - India
- Sinarmas Energy and Mining - Indonesia
- Indo Tambangraya Megah - Indonesia
- The University of Queensland
- The Treasury - Australian Government
- Meenaskhi Energy Private Limited - India
- Bulk Trading Sa - Switzerland
- Kartika Selabumi Mining - Indonesia
- Central Electricity Authority - India
- VISA Power Limited - India
- Petron Corporation, Philippines
- Xindia Steels Limited - India
- Intertek Mineral Services - Indonesia
- Karaikal Port Pvt Ltd - India
- Bukit Makmur.PT - Indonesia
- International Coal Ventures Pvt Ltd - India
- Parry Sugars Refinery, India
- Marubeni Corporation - India
- Semirara Mining Corp, Philippines
- Kideco Jaya Agung - Indonesia
- IEA Clean Coal Centre - UK
- Trasteel International SA, Italy
- Grasim Industreis Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Mintek Dendrill Indonesia
- Ceylon Electricity Board - Sri Lanka
- Riau Bara Harum - Indonesia
- TeaM Sual Corporation - Philippines
- Kepco SPC Power Corporation, Philippines
- Alfred C Toepfer International GmbH - Germany
- Jaiprakash Power Ventures ltd
- Ind-Barath Power Infra Limited - India
- PNOC Exploration Corporation - Philippines
- European Bulk Services B.V. - Netherlands
- Star Paper Mills Limited - India
- GVK Power & Infra Limited - India
- Ambuja Cements Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- MS Steel International - UAE
- GAC Shipping (India) Pvt Ltd
- OPG Power Generation Pvt Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Orica Mining Services - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Posco Energy - South Korea
- Coalindo Energy - Indonesia
- SMG Consultants - Indonesia
- India Bulls Power Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Georgia Ports Authority, United States
- Madhucon Powers Ltd - India
- Salva Resources Pvt Ltd - India
- Parliament of New Zealand
- Australian Coal Association
- Bahari Cakrawala Sebuku - Indonesia
- Mercuria Energy - Indonesia
- Bayan Resources Tbk. - Indonesia
- PTC India Limited - India
- Oldendorff Carriers - Singapore
- Maheswari Brothers Coal Limited - India
- Global Green Power PLC Corporation, Philippines
- Siam City Cement PLC, Thailand
- Electricity Authority, New Zealand
- Gujarat Electricity Regulatory Commission - India
- Bhoruka Overseas - Indonesia
- Thiess Contractors Indonesia
- Planning Commission, India
- Borneo Indobara - Indonesia
- PowerSource Philippines DevCo
- Savvy Resources Ltd - HongKong
- Ministry of Mines - Canada
- Vizag Seaport Private Limited - India
- San Jose City I Power Corp, Philippines
- Jindal Steel & Power Ltd - India
- Cement Manufacturers Association - India
- ICICI Bank Limited - India
- Globalindo Alam Lestari - Indonesia
- Renaissance Capital - South Africa
- Goldman Sachs - Singapore
- Latin American Coal - Colombia
- Kaltim Prima Coal - Indonesia
- Commonwealth Bank - Australia
- Medco Energi Mining Internasional
- Singapore Mercantile Exchange
- Bukit Baiduri Energy - Indonesia
- CNBM International Corporation - China
- The State Trading Corporation of India Ltd
- Siam City Cement - Thailand
- Thai Mozambique Logistica
- Eastern Coal Council - USA
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Carbofer General Trading SA - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Videocon Industries ltd - India
- Bharathi Cement Corporation - India
- Barasentosa Lestari - Indonesia
- Manunggal Multi Energi - Indonesia
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