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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, 16 January 17
WHY THE SOLUTION TO INDIA'S ENERGY CHALLENGE LIES IN COAL POWER PLANTS - BENJAMIN SPORTON
India’s huge development and energy challenges mean there are economic and development arguments for investing in new coal power plants for t ...
Friday, 13 January 17
U.S. COAL PRICES TO INCREASE IN 2017 AND IN 2018 - EIA
Coal Supply
EIA estimates that U.S. coal production declined by 158 million short tons (MMst) (18%) in 2016, to 739 MMst, which would be the lowe ...
Friday, 13 January 17
U.S. COAL IMPORTS IN THIRD QUARTER 2016 TOTALED 2.7 MMST, SAYS EIA
COALspot.com – U.S., the world’s second largest coal producers have produced approximately totalled an estimated 13.8 million short ton ...
Thursday, 12 January 17
ASIA: COAL'S FUTURE - BENJAMIN SPORTON
As economies develop and the United Nations’ Sustainable Development Goals (SDGs) are realised, demand for energy will increase as more peopl ...
Wednesday, 11 January 17
MARKET INSIGHT - GEORGE DERMATIS
A new year has dawned upon us and it sure promises to be an exciting one which makes it practically impossible to resist the challenge of making a ...
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- Gujarat Electricity Regulatory Commission - India
- Ind-Barath Power Infra Limited - India
- Deloitte Consulting - India
- Coastal Gujarat Power Limited - India
- GAC Shipping (India) Pvt Ltd
- Bhatia International Limited - India
- Samtan Co., Ltd - South Korea
- Indogreen Group - Indonesia
- Lanco Infratech Ltd - India
- Chamber of Mines of South Africa
- Malabar Cements Ltd - India
- Economic Council, Georgia
- Kaltim Prima Coal - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Madhucon Powers Ltd - India
- MS Steel International - UAE
- ASAPP Information Group - India
- Rio Tinto Coal - Australia
- Eastern Coal Council - USA
- Interocean Group of Companies - India
- VISA Power Limited - India
- Indika Energy - Indonesia
- Sojitz Corporation - Japan
- ICICI Bank Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Renaissance Capital - South Africa
- Jorong Barutama Greston.PT - Indonesia
- Ministry of Transport, Egypt
- Bharathi Cement Corporation - India
- European Bulk Services B.V. - Netherlands
- Goldman Sachs - Singapore
- Electricity Generating Authority of Thailand
- Antam Resourcindo - Indonesia
- Simpson Spence & Young - Indonesia
- Attock Cement Pakistan Limited
- Borneo Indobara - Indonesia
- Kideco Jaya Agung - Indonesia
- Savvy Resources Ltd - HongKong
- Carbofer General Trading SA - India
- Global Business Power Corporation, Philippines
- Formosa Plastics Group - Taiwan
- Alfred C Toepfer International GmbH - Germany
- Agrawal Coal Company - India
- Edison Trading Spa - Italy
- Singapore Mercantile Exchange
- Cement Manufacturers Association - India
- Trasteel International SA, Italy
- Kepco SPC Power Corporation, Philippines
- Bukit Baiduri Energy - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Kohat Cement Company Ltd. - Pakistan
- GVK Power & Infra Limited - India
- Minerals Council of Australia
- CNBM International Corporation - China
- PNOC Exploration Corporation - Philippines
- Globalindo Alam Lestari - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Indian Oil Corporation Limited
- The State Trading Corporation of India Ltd
- Semirara Mining Corp, Philippines
- Orica Mining Services - Indonesia
- Kobexindo Tractors - Indoneisa
- Sical Logistics Limited - India
- Intertek Mineral Services - Indonesia
- Parry Sugars Refinery, India
- Manunggal Multi Energi - Indonesia
- Coal and Oil Company - UAE
- Commonwealth Bank - Australia
- International Coal Ventures Pvt Ltd - India
- Tata Chemicals Ltd - India
- Timah Investasi Mineral - Indoneisa
- Billiton Holdings Pty Ltd - Australia
- Africa Commodities Group - South Africa
- Kapuas Tunggal Persada - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sarangani Energy Corporation, Philippines
- Indonesian Coal Mining Association
- Oldendorff Carriers - Singapore
- Aboitiz Power Corporation - Philippines
- Vedanta Resources Plc - India
- Sindya Power Generating Company Private Ltd
- Planning Commission, India
- Iligan Light & Power Inc, Philippines
- Therma Luzon, Inc, Philippines
- Thiess Contractors Indonesia
- CIMB Investment Bank - Malaysia
- Marubeni Corporation - India
- Wilmar Investment Holdings
- Karbindo Abesyapradhi - Indoneisa
- GN Power Mariveles Coal Plant, Philippines
- Grasim Industreis Ltd - India
- Jaiprakash Power Ventures ltd
- Makarim & Taira - Indonesia
- Romanian Commodities Exchange
- Sakthi Sugars Limited - India
- Videocon Industries ltd - India
- Dalmia Cement Bharat India
- Central Java Power - Indonesia
- Posco Energy - South Korea
- PetroVietnam Power Coal Import and Supply Company
- Indo Tambangraya Megah - Indonesia
- PTC India Limited - India
- White Energy Company Limited
- Eastern Energy - Thailand
- New Zealand Coal & Carbon
- Price Waterhouse Coopers - Russia
- Aditya Birla Group - India
- Gujarat Sidhee Cement - India
- Karaikal Port Pvt Ltd - India
- Sree Jayajothi Cements Limited - India
- The Treasury - Australian Government
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Indian Energy Exchange, India
- Global Green Power PLC Corporation, Philippines
- Miang Besar Coal Terminal - Indonesia
- Uttam Galva Steels Limited - India
- Rashtriya Ispat Nigam Limited - India
- Heidelberg Cement - Germany
- Australian Coal Association
- Maharashtra Electricity Regulatory Commission - India
- OPG Power Generation Pvt Ltd - India
- Bhushan Steel Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Parliament of New Zealand
- Bukit Makmur.PT - Indonesia
- Ministry of Mines - Canada
- PowerSource Philippines DevCo
- Orica Australia Pty. Ltd.
- Vijayanagar Sugar Pvt Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Wood Mackenzie - Singapore
- Ministry of Finance - Indonesia
- Energy Development Corp, Philippines
- Jindal Steel & Power Ltd - India
- IEA Clean Coal Centre - UK
- Bayan Resources Tbk. - Indonesia
- Global Coal Blending Company Limited - Australia
- Central Electricity Authority - India
- Port Waratah Coal Services - Australia
- TeaM Sual Corporation - Philippines
- Metalloyd Limited - United Kingdom
- London Commodity Brokers - England
- Star Paper Mills Limited - India
- Sinarmas Energy and Mining - Indonesia
- SN Aboitiz Power Inc, Philippines
- Anglo American - United Kingdom
- Mercuria Energy - Indonesia
- Directorate Of Revenue Intelligence - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Australian Commodity Traders Exchange
- Pendopo Energi Batubara - Indonesia
- Bangladesh Power Developement Board
- Asmin Koalindo Tuhup - Indonesia
- Merrill Lynch Commodities Europe
- Mintek Dendrill Indonesia
- Kartika Selabumi Mining - Indonesia
- Altura Mining Limited, Indonesia
- Bhoruka Overseas - Indonesia
- IHS Mccloskey Coal Group - USA
- Meenaskhi Energy Private Limited - India
- Maheswari Brothers Coal Limited - India
- SMC Global Power, Philippines
- Thai Mozambique Logistica
- Siam City Cement - Thailand
- Gujarat Mineral Development Corp Ltd - India
- Toyota Tsusho Corporation, Japan
- Chettinad Cement Corporation Ltd - India
- Bulk Trading Sa - Switzerland
- Holcim Trading Pte Ltd - Singapore
- Coalindo Energy - Indonesia
- GMR Energy Limited - India
- Banpu Public Company Limited - Thailand
- Larsen & Toubro Limited - India
- Standard Chartered Bank - UAE
- Power Finance Corporation Ltd., India
- South Luzon Thermal Energy Corporation
- Independent Power Producers Association of India
- Leighton Contractors Pty Ltd - Australia
- LBH Netherlands Bv - Netherlands
- India Bulls Power Limited - India
- Tamil Nadu electricity Board
- Salva Resources Pvt Ltd - India
- The University of Queensland
- Electricity Authority, New Zealand
- San Jose City I Power Corp, Philippines
- Straits Asia Resources Limited - Singapore
- Krishnapatnam Port Company Ltd. - India
- Pipit Mutiara Jaya. PT, Indonesia
- Petron Corporation, Philippines
- Mercator Lines Limited - India
- Riau Bara Harum - Indonesia
- Kumho Petrochemical, South Korea
- Xindia Steels Limited - India
- Siam City Cement PLC, Thailand
- SMG Consultants - Indonesia
- Energy Link Ltd, New Zealand
- Medco Energi Mining Internasional
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Baramulti Group, Indonesia
- Binh Thuan Hamico - Vietnam
- Essar Steel Hazira Ltd - India
- Mjunction Services Limited - India
- Cigading International Bulk Terminal - Indonesia
- Ambuja Cements Ltd - India
- Georgia Ports Authority, United States
- Bahari Cakrawala Sebuku - Indonesia
- Ceylon Electricity Board - Sri Lanka
- McConnell Dowell - Australia
- Meralco Power Generation, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Latin American Coal - Colombia
- Neyveli Lignite Corporation Ltd, - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Barasentosa Lestari - Indonesia
- Vizag Seaport Private Limited - India
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