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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 December 22
ENERGY CRISIS FUELS COAL COMEBACK IN GERMANY - REUTERS
Coal has made a comeback in Germany this year, as Europe’s largest economy turns to the dirty fuel to power it through an energy crisis.
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Thursday, 15 December 22
MARKET INSIGHT - INTERMODAL
While observing the ship repair market very close to the end of the year, we are confident that shipyards worldwide are entering a new era. The nex ...
Tuesday, 13 December 22
STRONG COAL PRICES SUPPORT ROBUST EARNINGS AT INDONESIAN COAL MINERS - FITCH RATINGS
Fitch Ratings expects cash flow generation at Indonesian coal miners to remain strong in 2023, based on its forecast for coal prices to remain high ...
Tuesday, 13 December 22
BIMCO CII CLAUSE FINALLY RELEASED: DOES IT MAKE ANY SENSE OF CCI? - WFW
WHAT IS CII?
The new International Maritime Organisation’s (“IMO’s”) Carbon Intensity Indicator (“CII”) cer ...
Tuesday, 13 December 22
COAL BASE RAMPS UP ENERGY SUPPLY FOR WINTER NEEDS - XINHUA
Inner Mongolia Autonomous Region, China’s leading coal production base, has kicked its production into high gear to meet heating needs as col ...
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- Bhushan Steel Limited - India
- GVK Power & Infra Limited - India
- Africa Commodities Group - South Africa
- Energy Link Ltd, New Zealand
- Maheswari Brothers Coal Limited - India
- Medco Energi Mining Internasional
- Leighton Contractors Pty Ltd - Australia
- Bulk Trading Sa - Switzerland
- Jindal Steel & Power Ltd - India
- PNOC Exploration Corporation - Philippines
- Gujarat Mineral Development Corp Ltd - India
- Chettinad Cement Corporation Ltd - India
- Dalmia Cement Bharat India
- Interocean Group of Companies - India
- Energy Development Corp, Philippines
- Billiton Holdings Pty Ltd - Australia
- Indo Tambangraya Megah - Indonesia
- Singapore Mercantile Exchange
- Gujarat Electricity Regulatory Commission - India
- Savvy Resources Ltd - HongKong
- SMG Consultants - Indonesia
- Directorate Of Revenue Intelligence - India
- Eastern Coal Council - USA
- Ministry of Transport, Egypt
- TNB Fuel Sdn Bhd - Malaysia
- Chamber of Mines of South Africa
- Indogreen Group - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Straits Asia Resources Limited - Singapore
- Goldman Sachs - Singapore
- Petrochimia International Co. Ltd.- Taiwan
- Lanco Infratech Ltd - India
- Videocon Industries ltd - India
- Port Waratah Coal Services - Australia
- VISA Power Limited - India
- Orica Australia Pty. Ltd.
- Toyota Tsusho Corporation, Japan
- Kideco Jaya Agung - Indonesia
- Timah Investasi Mineral - Indoneisa
- Krishnapatnam Port Company Ltd. - India
- Uttam Galva Steels Limited - India
- GMR Energy Limited - India
- Therma Luzon, Inc, Philippines
- TeaM Sual Corporation - Philippines
- Sical Logistics Limited - India
- Semirara Mining and Power Corporation, Philippines
- Power Finance Corporation Ltd., India
- IHS Mccloskey Coal Group - USA
- Posco Energy - South Korea
- Altura Mining Limited, Indonesia
- Kobexindo Tractors - Indoneisa
- Central Java Power - Indonesia
- Bukit Baiduri Energy - Indonesia
- The State Trading Corporation of India Ltd
- McConnell Dowell - Australia
- Parry Sugars Refinery, India
- LBH Netherlands Bv - Netherlands
- Deloitte Consulting - India
- The University of Queensland
- Cement Manufacturers Association - India
- CIMB Investment Bank - Malaysia
- Electricity Generating Authority of Thailand
- Kaltim Prima Coal - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Meenaskhi Energy Private Limited - India
- Ministry of Finance - Indonesia
- White Energy Company Limited
- Attock Cement Pakistan Limited
- Vizag Seaport Private Limited - India
- Petron Corporation, Philippines
- SMC Global Power, Philippines
- Parliament of New Zealand
- Samtan Co., Ltd - South Korea
- Star Paper Mills Limited - India
- Siam City Cement PLC, Thailand
- Indika Energy - Indonesia
- Salva Resources Pvt Ltd - India
- Tata Chemicals Ltd - India
- Mercuria Energy - Indonesia
- Australian Coal Association
- London Commodity Brokers - England
- Asmin Koalindo Tuhup - Indonesia
- Bharathi Cement Corporation - India
- Bayan Resources Tbk. - Indonesia
- Independent Power Producers Association of India
- Bahari Cakrawala Sebuku - Indonesia
- Marubeni Corporation - India
- Oldendorff Carriers - Singapore
- Kohat Cement Company Ltd. - Pakistan
- CNBM International Corporation - China
- IEA Clean Coal Centre - UK
- Commonwealth Bank - Australia
- Sarangani Energy Corporation, Philippines
- Sindya Power Generating Company Private Ltd
- Bank of Tokyo Mitsubishi UFJ Ltd
- ICICI Bank Limited - India
- Eastern Energy - Thailand
- Australian Commodity Traders Exchange
- Rashtriya Ispat Nigam Limited - India
- New Zealand Coal & Carbon
- Aditya Birla Group - India
- Cigading International Bulk Terminal - Indonesia
- Georgia Ports Authority, United States
- Jorong Barutama Greston.PT - Indonesia
- Bukit Makmur.PT - Indonesia
- Renaissance Capital - South Africa
- Carbofer General Trading SA - India
- Indian Energy Exchange, India
- Mjunction Services Limited - India
- Pendopo Energi Batubara - Indonesia
- Vedanta Resources Plc - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Antam Resourcindo - Indonesia
- Binh Thuan Hamico - Vietnam
- Standard Chartered Bank - UAE
- Kapuas Tunggal Persada - Indonesia
- Coal and Oil Company - UAE
- Kartika Selabumi Mining - Indonesia
- Banpu Public Company Limited - Thailand
- Thiess Contractors Indonesia
- Tamil Nadu electricity Board
- Directorate General of MIneral and Coal - Indonesia
- Bhatia International Limited - India
- Gujarat Sidhee Cement - India
- Agrawal Coal Company - India
- Makarim & Taira - Indonesia
- Manunggal Multi Energi - Indonesia
- PowerSource Philippines DevCo
- Maharashtra Electricity Regulatory Commission - India
- San Jose City I Power Corp, Philippines
- Barasentosa Lestari - Indonesia
- Price Waterhouse Coopers - Russia
- Semirara Mining Corp, Philippines
- Baramulti Group, Indonesia
- PTC India Limited - India
- Alfred C Toepfer International GmbH - Germany
- Global Business Power Corporation, Philippines
- Minerals Council of Australia
- SN Aboitiz Power Inc, Philippines
- Globalindo Alam Lestari - Indonesia
- Ind-Barath Power Infra Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Orica Mining Services - Indonesia
- Anglo American - United Kingdom
- Siam City Cement - Thailand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- International Coal Ventures Pvt Ltd - India
- GAC Shipping (India) Pvt Ltd
- Electricity Authority, New Zealand
- Kumho Petrochemical, South Korea
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- India Bulls Power Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Riau Bara Harum - Indonesia
- Latin American Coal - Colombia
- Mercator Lines Limited - India
- Mintek Dendrill Indonesia
- Ministry of Mines - Canada
- Pipit Mutiara Jaya. PT, Indonesia
- Wilmar Investment Holdings
- Global Green Power PLC Corporation, Philippines
- Bangladesh Power Developement Board
- Central Electricity Authority - India
- Formosa Plastics Group - Taiwan
- Xindia Steels Limited - India
- Indonesian Coal Mining Association
- Larsen & Toubro Limited - India
- Sinarmas Energy and Mining - Indonesia
- Meralco Power Generation, Philippines
- Bhoruka Overseas - Indonesia
- Aboitiz Power Corporation - Philippines
- Metalloyd Limited - United Kingdom
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Sojitz Corporation - Japan
- Holcim Trading Pte Ltd - Singapore
- Merrill Lynch Commodities Europe
- Madhucon Powers Ltd - India
- MS Steel International - UAE
- Vijayanagar Sugar Pvt Ltd - India
- Intertek Mineral Services - Indonesia
- Kepco SPC Power Corporation, Philippines
- Iligan Light & Power Inc, Philippines
- Wood Mackenzie - Singapore
- Coalindo Energy - Indonesia
- Global Coal Blending Company Limited - Australia
- Indian Oil Corporation Limited
- Coastal Gujarat Power Limited - India
- Thai Mozambique Logistica
- Ceylon Electricity Board - Sri Lanka
- Miang Besar Coal Terminal - Indonesia
- Romanian Commodities Exchange
- Karbindo Abesyapradhi - Indoneisa
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- The Treasury - Australian Government
- Economic Council, Georgia
- Trasteel International SA, Italy
- GN Power Mariveles Coal Plant, Philippines
- ASAPP Information Group - India
- Planning Commission, India
- OPG Power Generation Pvt Ltd - India
- Borneo Indobara - Indonesia
- Malabar Cements Ltd - India
- Sakthi Sugars Limited - India
- Ambuja Cements Ltd - India
- European Bulk Services B.V. - Netherlands
- Grasim Industreis Ltd - India
- Karaikal Port Pvt Ltd - India
- South Luzon Thermal Energy Corporation
- Rio Tinto Coal - Australia
- Essar Steel Hazira Ltd - India
- Simpson Spence & Young - Indonesia
- Sree Jayajothi Cements Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Heidelberg Cement - Germany
- Jaiprakash Power Ventures ltd
- Edison Trading Spa - Italy
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