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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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- Mintek Dendrill Indonesia
- Larsen & Toubro Limited - India
- Jorong Barutama Greston.PT - Indonesia
- LBH Netherlands Bv - Netherlands
- Minerals Council of Australia
- Dalmia Cement Bharat India
- The University of Queensland
- GN Power Mariveles Coal Plant, Philippines
- Metalloyd Limited - United Kingdom
- Leighton Contractors Pty Ltd - Australia
- Kumho Petrochemical, South Korea
- Madhucon Powers Ltd - India
- Africa Commodities Group - South Africa
- Straits Asia Resources Limited - Singapore
- Australian Coal Association
- Neyveli Lignite Corporation Ltd, - India
- Bangladesh Power Developement Board
- GMR Energy Limited - India
- CIMB Investment Bank - Malaysia
- Heidelberg Cement - Germany
- Maharashtra Electricity Regulatory Commission - India
- Semirara Mining Corp, Philippines
- Orica Mining Services - Indonesia
- Kaltim Prima Coal - Indonesia
- Kobexindo Tractors - Indoneisa
- Directorate Of Revenue Intelligence - India
- Edison Trading Spa - Italy
- ASAPP Information Group - India
- Indonesian Coal Mining Association
- IHS Mccloskey Coal Group - USA
- Jaiprakash Power Ventures ltd
- Pendopo Energi Batubara - Indonesia
- Timah Investasi Mineral - Indoneisa
- Malabar Cements Ltd - India
- Iligan Light & Power Inc, Philippines
- SMG Consultants - Indonesia
- PNOC Exploration Corporation - Philippines
- Semirara Mining and Power Corporation, Philippines
- Xindia Steels Limited - India
- New Zealand Coal & Carbon
- London Commodity Brokers - England
- Independent Power Producers Association of India
- Interocean Group of Companies - India
- Meenaskhi Energy Private Limited - India
- Maheswari Brothers Coal Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Power Finance Corporation Ltd., India
- Borneo Indobara - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- San Jose City I Power Corp, Philippines
- Asmin Koalindo Tuhup - Indonesia
- VISA Power Limited - India
- Standard Chartered Bank - UAE
- Parliament of New Zealand
- Goldman Sachs - Singapore
- Sakthi Sugars Limited - India
- GAC Shipping (India) Pvt Ltd
- MS Steel International - UAE
- ICICI Bank Limited - India
- The State Trading Corporation of India Ltd
- Ministry of Finance - Indonesia
- International Coal Ventures Pvt Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Wood Mackenzie - Singapore
- Global Coal Blending Company Limited - Australia
- IEA Clean Coal Centre - UK
- Posco Energy - South Korea
- OPG Power Generation Pvt Ltd - India
- Electricity Authority, New Zealand
- Petron Corporation, Philippines
- PTC India Limited - India
- Eastern Energy - Thailand
- Commonwealth Bank - Australia
- Bhoruka Overseas - Indonesia
- TeaM Sual Corporation - Philippines
- Energy Development Corp, Philippines
- Gujarat Sidhee Cement - India
- Jindal Steel & Power Ltd - India
- Anglo American - United Kingdom
- Lanco Infratech Ltd - India
- Sindya Power Generating Company Private Ltd
- Bukit Baiduri Energy - Indonesia
- Star Paper Mills Limited - India
- Kartika Selabumi Mining - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Australian Commodity Traders Exchange
- Krishnapatnam Port Company Ltd. - India
- Romanian Commodities Exchange
- Mjunction Services Limited - India
- Thiess Contractors Indonesia
- Coal and Oil Company - UAE
- Ambuja Cements Ltd - India
- Energy Link Ltd, New Zealand
- Attock Cement Pakistan Limited
- Price Waterhouse Coopers - Russia
- Intertek Mineral Services - Indonesia
- Kideco Jaya Agung - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Wilmar Investment Holdings
- Indo Tambangraya Megah - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Mercuria Energy - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Rashtriya Ispat Nigam Limited - India
- Ministry of Mines - Canada
- Indian Oil Corporation Limited
- Essar Steel Hazira Ltd - India
- Meralco Power Generation, Philippines
- Eastern Coal Council - USA
- Indika Energy - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Aditya Birla Group - India
- PowerSource Philippines DevCo
- Mercator Lines Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Global Green Power PLC Corporation, Philippines
- Trasteel International SA, Italy
- Bahari Cakrawala Sebuku - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Riau Bara Harum - Indonesia
- Carbofer General Trading SA - India
- Georgia Ports Authority, United States
- Toyota Tsusho Corporation, Japan
- Deloitte Consulting - India
- Sree Jayajothi Cements Limited - India
- SMC Global Power, Philippines
- Port Waratah Coal Services - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Cigading International Bulk Terminal - Indonesia
- The Treasury - Australian Government
- Vedanta Resources Plc - India
- Merrill Lynch Commodities Europe
- Central Java Power - Indonesia
- Ministry of Transport, Egypt
- GVK Power & Infra Limited - India
- Chettinad Cement Corporation Ltd - India
- Singapore Mercantile Exchange
- Vijayanagar Sugar Pvt Ltd - India
- European Bulk Services B.V. - Netherlands
- Ind-Barath Power Infra Limited - India
- Miang Besar Coal Terminal - Indonesia
- Rio Tinto Coal - Australia
- Marubeni Corporation - India
- Tata Chemicals Ltd - India
- Salva Resources Pvt Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Electricity Generating Authority of Thailand
- Banpu Public Company Limited - Thailand
- Orica Australia Pty. Ltd.
- Central Electricity Authority - India
- Alfred C Toepfer International GmbH - Germany
- Cement Manufacturers Association - India
- Ceylon Electricity Board - Sri Lanka
- Uttam Galva Steels Limited - India
- Renaissance Capital - South Africa
- Parry Sugars Refinery, India
- Agrawal Coal Company - India
- Bulk Trading Sa - Switzerland
- Grasim Industreis Ltd - India
- Aboitiz Power Corporation - Philippines
- Kepco SPC Power Corporation, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Siam City Cement - Thailand
- Pipit Mutiara Jaya. PT, Indonesia
- Medco Energi Mining Internasional
- Directorate General of MIneral and Coal - Indonesia
- Vizag Seaport Private Limited - India
- Makarim & Taira - Indonesia
- South Luzon Thermal Energy Corporation
- Bharathi Cement Corporation - India
- Savvy Resources Ltd - HongKong
- India Bulls Power Limited - India
- Barasentosa Lestari - Indonesia
- White Energy Company Limited
- Indian Energy Exchange, India
- Formosa Plastics Group - Taiwan
- Bukit Makmur.PT - Indonesia
- Bayan Resources Tbk. - Indonesia
- Indogreen Group - Indonesia
- Videocon Industries ltd - India
- Manunggal Multi Energi - Indonesia
- Karaikal Port Pvt Ltd - India
- Global Business Power Corporation, Philippines
- Kapuas Tunggal Persada - Indonesia
- Bhushan Steel Limited - India
- Sical Logistics Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Altura Mining Limited, Indonesia
- CNBM International Corporation - China
- Chamber of Mines of South Africa
- AsiaOL BioFuels Corp., Philippines
- Coastal Gujarat Power Limited - India
- Siam City Cement PLC, Thailand
- Sinarmas Energy and Mining - Indonesia
- Latin American Coal - Colombia
- Samtan Co., Ltd - South Korea
- Therma Luzon, Inc, Philippines
- Thai Mozambique Logistica
- Gujarat Mineral Development Corp Ltd - India
- SN Aboitiz Power Inc, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Coalindo Energy - Indonesia
- Bhatia International Limited - India
- Simpson Spence & Young - Indonesia
- Oldendorff Carriers - Singapore
- Sarangani Energy Corporation, Philippines
- Sojitz Corporation - Japan
- Antam Resourcindo - Indonesia
- Economic Council, Georgia
- McConnell Dowell - Australia
- Globalindo Alam Lestari - Indonesia
- Planning Commission, India
- Binh Thuan Hamico - Vietnam
- Baramulti Group, Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Tamil Nadu electricity Board
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