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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, 14 August 17
THE FREIGHT MARKET CONTINUES ON AN UPWARD PATH
COALspot.com: The freight market was continued to rose this past week compared to the previous week, as BDI, Cape and Panamax indexes show a positi ...
Monday, 14 August 17
IN A PARIS AGREEMENT WORLD, COAL WILL MEET GROWING ASIAN ENERGY NEEDS - BENJAMIN SPORTON
When providing 41% of the world’s electricity, 85% of global cement, 74% of the world’s steel and 60% of the world’s aluminum, co ...
Friday, 11 August 17
KOMIPO INVITES COAL BIDS FOR BORYEONG POWER PLANT
COALspot.com: South Korea state-owned utility Korea Midland Power (KOMIPO) issued an another new tender for total 1,280,000 Metric Tons of Bitumino ...
Friday, 11 August 17
U.S WEEKLY COAL OUTPUT ALMOST FLAT WEEK OVER WEEK, EIA SAYS
COALspot.com – U.S., the world’s second largest coal producers have produced approximately totaled an estimated 16.1 million short tonn ...
Thursday, 10 August 17
GLOBAL COAL PRODUCTION FELL SIGNIFICANTLY IN 2016 - IEA
COALspot.com: Global coal production fell significantly in 2016, while global trade in natural gas was up. These are two of the key messages in Wor ...
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- Kumho Petrochemical, South Korea
- Merrill Lynch Commodities Europe
- Central Electricity Authority - India
- Bangladesh Power Developement Board
- Videocon Industries ltd - India
- Rio Tinto Coal - Australia
- Jaiprakash Power Ventures ltd
- Sree Jayajothi Cements Limited - India
- Sindya Power Generating Company Private Ltd
- Romanian Commodities Exchange
- Sinarmas Energy and Mining - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Deloitte Consulting - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Energy Development Corp, Philippines
- Posco Energy - South Korea
- Directorate Of Revenue Intelligence - India
- Port Waratah Coal Services - Australia
- Bhoruka Overseas - Indonesia
- Commonwealth Bank - Australia
- Baramulti Group, Indonesia
- Indo Tambangraya Megah - Indonesia
- Renaissance Capital - South Africa
- AsiaOL BioFuels Corp., Philippines
- PowerSource Philippines DevCo
- Wood Mackenzie - Singapore
- Thai Mozambique Logistica
- Krishnapatnam Port Company Ltd. - India
- The University of Queensland
- Sarangani Energy Corporation, Philippines
- Neyveli Lignite Corporation Ltd, - India
- ICICI Bank Limited - India
- Grasim Industreis Ltd - India
- Anglo American - United Kingdom
- Mercuria Energy - Indonesia
- Globalindo Alam Lestari - Indonesia
- Kepco SPC Power Corporation, Philippines
- Interocean Group of Companies - India
- Therma Luzon, Inc, Philippines
- Bhushan Steel Limited - India
- OPG Power Generation Pvt Ltd - India
- McConnell Dowell - Australia
- Gujarat Mineral Development Corp Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Simpson Spence & Young - Indonesia
- PTC India Limited - India
- Global Coal Blending Company Limited - Australia
- Asmin Koalindo Tuhup - Indonesia
- GVK Power & Infra Limited - India
- PNOC Exploration Corporation - Philippines
- Altura Mining Limited, Indonesia
- Ministry of Transport, Egypt
- Makarim & Taira - Indonesia
- India Bulls Power Limited - India
- Vedanta Resources Plc - India
- Madhucon Powers Ltd - India
- Chettinad Cement Corporation Ltd - India
- Binh Thuan Hamico - Vietnam
- Banpu Public Company Limited - Thailand
- Mercator Lines Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Mjunction Services Limited - India
- Aditya Birla Group - India
- Semirara Mining and Power Corporation, Philippines
- Sakthi Sugars Limited - India
- Xindia Steels Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Sojitz Corporation - Japan
- Bahari Cakrawala Sebuku - Indonesia
- Indonesian Coal Mining Association
- Bayan Resources Tbk. - Indonesia
- Singapore Mercantile Exchange
- Marubeni Corporation - India
- Tata Chemicals Ltd - India
- MS Steel International - UAE
- Antam Resourcindo - Indonesia
- Mintek Dendrill Indonesia
- Standard Chartered Bank - UAE
- Samtan Co., Ltd - South Korea
- Rashtriya Ispat Nigam Limited - India
- SMG Consultants - Indonesia
- GMR Energy Limited - India
- Kapuas Tunggal Persada - Indonesia
- Trasteel International SA, Italy
- Kaltim Prima Coal - Indonesia
- Leighton Contractors Pty Ltd - Australia
- IHS Mccloskey Coal Group - USA
- Gujarat Sidhee Cement - India
- Vijayanagar Sugar Pvt Ltd - India
- VISA Power Limited - India
- Uttam Galva Steels Limited - India
- Maheswari Brothers Coal Limited - India
- Thiess Contractors Indonesia
- Barasentosa Lestari - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Indian Oil Corporation Limited
- London Commodity Brokers - England
- Meralco Power Generation, Philippines
- Heidelberg Cement - Germany
- San Jose City I Power Corp, Philippines
- Energy Link Ltd, New Zealand
- Pipit Mutiara Jaya. PT, Indonesia
- Oldendorff Carriers - Singapore
- TNB Fuel Sdn Bhd - Malaysia
- Iligan Light & Power Inc, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Meenaskhi Energy Private Limited - India
- ASAPP Information Group - India
- Attock Cement Pakistan Limited
- Orica Australia Pty. Ltd.
- Cigading International Bulk Terminal - Indonesia
- Formosa Plastics Group - Taiwan
- International Coal Ventures Pvt Ltd - India
- Bharathi Cement Corporation - India
- Kalimantan Lumbung Energi - Indonesia
- LBH Netherlands Bv - Netherlands
- Eastern Energy - Thailand
- Siam City Cement PLC, Thailand
- Petron Corporation, Philippines
- Kobexindo Tractors - Indoneisa
- Orica Mining Services - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Economic Council, Georgia
- Indogreen Group - Indonesia
- Electricity Authority, New Zealand
- Indika Energy - Indonesia
- Edison Trading Spa - Italy
- Karbindo Abesyapradhi - Indoneisa
- Metalloyd Limited - United Kingdom
- Salva Resources Pvt Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Intertek Mineral Services - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Straits Asia Resources Limited - Singapore
- Coastal Gujarat Power Limited - India
- Miang Besar Coal Terminal - Indonesia
- Manunggal Multi Energi - Indonesia
- The Treasury - Australian Government
- CIMB Investment Bank - Malaysia
- IEA Clean Coal Centre - UK
- Holcim Trading Pte Ltd - Singapore
- Ambuja Cements Ltd - India
- GAC Shipping (India) Pvt Ltd
- Planning Commission, India
- PetroVietnam Power Coal Import and Supply Company
- Kartika Selabumi Mining - Indonesia
- Indian Energy Exchange, India
- Aboitiz Power Corporation - Philippines
- Riau Bara Harum - Indonesia
- Price Waterhouse Coopers - Russia
- Savvy Resources Ltd - HongKong
- Latin American Coal - Colombia
- Eastern Coal Council - USA
- Ind-Barath Power Infra Limited - India
- Siam City Cement - Thailand
- Wilmar Investment Holdings
- Directorate General of MIneral and Coal - Indonesia
- Coal and Oil Company - UAE
- Alfred C Toepfer International GmbH - Germany
- SN Aboitiz Power Inc, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Medco Energi Mining Internasional
- Lanco Infratech Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Billiton Holdings Pty Ltd - Australia
- Bhatia International Limited - India
- White Energy Company Limited
- Coalindo Energy - Indonesia
- Larsen & Toubro Limited - India
- Jindal Steel & Power Ltd - India
- Timah Investasi Mineral - Indoneisa
- Karaikal Port Pvt Ltd - India
- Australian Commodity Traders Exchange
- Africa Commodities Group - South Africa
- Cement Manufacturers Association - India
- Electricity Generating Authority of Thailand
- Minerals Council of Australia
- Essar Steel Hazira Ltd - India
- Global Business Power Corporation, Philippines
- The State Trading Corporation of India Ltd
- CNBM International Corporation - China
- Borneo Indobara - Indonesia
- South Luzon Thermal Energy Corporation
- Bukit Makmur.PT - Indonesia
- TeaM Sual Corporation - Philippines
- Semirara Mining Corp, Philippines
- Sical Logistics Limited - India
- Kideco Jaya Agung - Indonesia
- Goldman Sachs - Singapore
- Independent Power Producers Association of India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Parry Sugars Refinery, India
- Carbofer General Trading SA - India
- Tamil Nadu electricity Board
- Ministry of Finance - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- New Zealand Coal & Carbon
- Parliament of New Zealand
- Global Green Power PLC Corporation, Philippines
- Power Finance Corporation Ltd., India
- Ministry of Mines - Canada
- Central Java Power - Indonesia
- Vizag Seaport Private Limited - India
- Dalmia Cement Bharat India
- Bukit Baiduri Energy - Indonesia
- Toyota Tsusho Corporation, Japan
- Star Paper Mills Limited - India
- Bulk Trading Sa - Switzerland
- Australian Coal Association
- GN Power Mariveles Coal Plant, Philippines
- European Bulk Services B.V. - Netherlands
- Georgia Ports Authority, United States
- Malabar Cements Ltd - India
- SMC Global Power, Philippines
- Chamber of Mines of South Africa
- Agrawal Coal Company - India
- Pendopo Energi Batubara - Indonesia
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