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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, 02 April 18
THIESS SECURES $240M SATUI EXTENSION
The successful implementation of an innovative mining plan by Thiess at the Satui coal mine in South Kalimantan, has resulted in a $240 million con ...
Friday, 30 March 18
SHIPPING INDUSTRY CONFIDENCE HITS FOUR-YEAR HIGH - MOORE STEPHENS
Shipping Confidence Survey
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Friday, 30 March 18
EXPLAINING POLAND'S COAL PARADOX - FORBES
In the U.S. coal is succumbing to market forces despite the Trump Administration’s push to support the industry. Abundant, cheap and cleaner ...
Friday, 30 March 18
THIESS SECURES $140M MT OWEN INCREASE
Thiess has secured a A$140 million increase to its contract with Glencore for coal mining services at Mt Owen in the Hunter Valley, Australia. Mt O ...
Wednesday, 28 March 18
THIESS WINS $280M WAHANA EXTENSION
Thiess has been awarded a three-year $280 million contract extension at the Wahana coal mine in South Kalimantan, Indonesia.
According to Thie ...
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- SMG Consultants - Indonesia
- Grasim Industreis Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Jorong Barutama Greston.PT - Indonesia
- PowerSource Philippines DevCo
- Kalimantan Lumbung Energi - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Vizag Seaport Private Limited - India
- Global Green Power PLC Corporation, Philippines
- Pendopo Energi Batubara - Indonesia
- Attock Cement Pakistan Limited
- Aboitiz Power Corporation - Philippines
- Cement Manufacturers Association - India
- Goldman Sachs - Singapore
- Indika Energy - Indonesia
- Ambuja Cements Ltd - India
- Power Finance Corporation Ltd., India
- White Energy Company Limited
- Intertek Mineral Services - Indonesia
- Coal and Oil Company - UAE
- GN Power Mariveles Coal Plant, Philippines
- Holcim Trading Pte Ltd - Singapore
- Coastal Gujarat Power Limited - India
- Kapuas Tunggal Persada - Indonesia
- Meralco Power Generation, Philippines
- Indonesian Coal Mining Association
- Bahari Cakrawala Sebuku - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Eastern Coal Council - USA
- Marubeni Corporation - India
- AsiaOL BioFuels Corp., Philippines
- Formosa Plastics Group - Taiwan
- Maheswari Brothers Coal Limited - India
- Sojitz Corporation - Japan
- Orica Australia Pty. Ltd.
- Baramulti Group, Indonesia
- Vedanta Resources Plc - India
- Carbofer General Trading SA - India
- Mercuria Energy - Indonesia
- Bhatia International Limited - India
- Billiton Holdings Pty Ltd - Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Siam City Cement - Thailand
- The Treasury - Australian Government
- Independent Power Producers Association of India
- Kaltim Prima Coal - Indonesia
- Renaissance Capital - South Africa
- Karbindo Abesyapradhi - Indoneisa
- South Luzon Thermal Energy Corporation
- Bhoruka Overseas - Indonesia
- Simpson Spence & Young - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Minerals Council of Australia
- Larsen & Toubro Limited - India
- SMC Global Power, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Price Waterhouse Coopers - Russia
- Energy Link Ltd, New Zealand
- Kideco Jaya Agung - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Edison Trading Spa - Italy
- IHS Mccloskey Coal Group - USA
- Neyveli Lignite Corporation Ltd, - India
- Lanco Infratech Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Indogreen Group - Indonesia
- Xindia Steels Limited - India
- Star Paper Mills Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Ceylon Electricity Board - Sri Lanka
- Heidelberg Cement - Germany
- Eastern Energy - Thailand
- Central Electricity Authority - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- India Bulls Power Limited - India
- Energy Development Corp, Philippines
- Electricity Generating Authority of Thailand
- Barasentosa Lestari - Indonesia
- Essar Steel Hazira Ltd - India
- Bukit Baiduri Energy - Indonesia
- MS Steel International - UAE
- Economic Council, Georgia
- McConnell Dowell - Australia
- Singapore Mercantile Exchange
- Chettinad Cement Corporation Ltd - India
- Sree Jayajothi Cements Limited - India
- Mjunction Services Limited - India
- ASAPP Information Group - India
- CIMB Investment Bank - Malaysia
- Maharashtra Electricity Regulatory Commission - India
- Semirara Mining and Power Corporation, Philippines
- Ind-Barath Power Infra Limited - India
- Uttam Galva Steels Limited - India
- SN Aboitiz Power Inc, Philippines
- Indo Tambangraya Megah - Indonesia
- Trasteel International SA, Italy
- Sindya Power Generating Company Private Ltd
- Ministry of Transport, Egypt
- Manunggal Multi Energi - Indonesia
- PTC India Limited - India
- Sarangani Energy Corporation, Philippines
- International Coal Ventures Pvt Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Tamil Nadu electricity Board
- LBH Netherlands Bv - Netherlands
- Merrill Lynch Commodities Europe
- Oldendorff Carriers - Singapore
- Kartika Selabumi Mining - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Coalindo Energy - Indonesia
- Deloitte Consulting - India
- Toyota Tsusho Corporation, Japan
- OPG Power Generation Pvt Ltd - India
- Jaiprakash Power Ventures ltd
- Georgia Ports Authority, United States
- Asmin Koalindo Tuhup - Indonesia
- TeaM Sual Corporation - Philippines
- Bukit Makmur.PT - Indonesia
- IEA Clean Coal Centre - UK
- Iligan Light & Power Inc, Philippines
- Sinarmas Energy and Mining - Indonesia
- Posco Energy - South Korea
- Romanian Commodities Exchange
- Mintek Dendrill Indonesia
- Antam Resourcindo - Indonesia
- Global Business Power Corporation, Philippines
- Leighton Contractors Pty Ltd - Australia
- Thai Mozambique Logistica
- Indian Energy Exchange, India
- Global Coal Blending Company Limited - Australia
- Indian Oil Corporation Limited
- Chamber of Mines of South Africa
- European Bulk Services B.V. - Netherlands
- GMR Energy Limited - India
- Jindal Steel & Power Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Port Waratah Coal Services - Australia
- CNBM International Corporation - China
- Pipit Mutiara Jaya. PT, Indonesia
- London Commodity Brokers - England
- Makarim & Taira - Indonesia
- Metalloyd Limited - United Kingdom
- Australian Commodity Traders Exchange
- PNOC Exploration Corporation - Philippines
- Planning Commission, India
- Bhushan Steel Limited - India
- Bayan Resources Tbk. - Indonesia
- Dalmia Cement Bharat India
- Wilmar Investment Holdings
- Videocon Industries ltd - India
- Riau Bara Harum - Indonesia
- Rio Tinto Coal - Australia
- Semirara Mining Corp, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- The University of Queensland
- Siam City Cement PLC, Thailand
- Straits Asia Resources Limited - Singapore
- Thiess Contractors Indonesia
- Parry Sugars Refinery, India
- Ministry of Mines - Canada
- Samtan Co., Ltd - South Korea
- Tata Chemicals Ltd - India
- Latin American Coal - Colombia
- Kepco SPC Power Corporation, Philippines
- Medco Energi Mining Internasional
- Interocean Group of Companies - India
- Malabar Cements Ltd - India
- New Zealand Coal & Carbon
- Salva Resources Pvt Ltd - India
- Banpu Public Company Limited - Thailand
- Vijayanagar Sugar Pvt Ltd - India
- Kumho Petrochemical, South Korea
- Sakthi Sugars Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Borneo Indobara - Indonesia
- Parliament of New Zealand
- Meenaskhi Energy Private Limited - India
- Wood Mackenzie - Singapore
- Sical Logistics Limited - India
- Bangladesh Power Developement Board
- Kobexindo Tractors - Indoneisa
- Savvy Resources Ltd - HongKong
- Globalindo Alam Lestari - Indonesia
- GVK Power & Infra Limited - India
- Miang Besar Coal Terminal - Indonesia
- VISA Power Limited - India
- GAC Shipping (India) Pvt Ltd
- Commonwealth Bank - Australia
- Madhucon Powers Ltd - India
- Central Java Power - Indonesia
- Therma Luzon, Inc, Philippines
- Binh Thuan Hamico - Vietnam
- The State Trading Corporation of India Ltd
- Ministry of Finance - Indonesia
- Mercator Lines Limited - India
- Bulk Trading Sa - Switzerland
- Petron Corporation, Philippines
- Aditya Birla Group - India
- Directorate Of Revenue Intelligence - India
- Electricity Authority, New Zealand
- Australian Coal Association
- San Jose City I Power Corp, Philippines
- Orica Mining Services - Indonesia
- Karaikal Port Pvt Ltd - India
- Africa Commodities Group - South Africa
- Gujarat Sidhee Cement - India
- Krishnapatnam Port Company Ltd. - India
- Anglo American - United Kingdom
- ICICI Bank Limited - India
- Cigading International Bulk Terminal - Indonesia
- Timah Investasi Mineral - Indoneisa
- Bharathi Cement Corporation - India
- Agrawal Coal Company - India
- Standard Chartered Bank - UAE
- Altura Mining Limited, Indonesia
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