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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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Friday, 23 September 22
CHINA DIGS DEEP TO RAISE COAL OUTPUT TO RECORD HIGH - REUTERS
China’s coal production has surged this year as the government seeks to improve energy security by reducing dependence on imports and amassin ...
Friday, 23 September 22
EUROPEAN STEEL BUYERS SEEK DIRECTION IN VOLATILE MARKET - MEPS INTERNATIONAL
Demand for steel is slow to recover, after the summer break. Mill production costs continue to increase. Steel purchasers are uncertain about the f ...
Friday, 23 September 22
BUOYANT COAL INDUSTRY SEEKS WAYS TO STAY IN THE LONG-TERM ENERGY MIX - REUTERS
There’s no doubt that the global coal industry has been a major beneficiary of Russia’s invasion of Ukraine and the subsequent energy c ...
Friday, 23 September 22
MARKET INSIGHT - INTERMODAL
In view of the forthcoming winter, Europe is trying to escape from its energy (oil & gas) dependency from Russia to ensure energy abundance eve ...
Tuesday, 20 September 22
CHINA'S DAILY COAL OUTPUT HITS 3-MONTH LOW IN AUGUST ON RAINS, COVID CURBS - REUTERS
China’s daily coal output in August slipped to a three-month low as some mines in its biggest coal mining regions reduced operations or even ...
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- Larsen & Toubro Limited - India
- Chettinad Cement Corporation Ltd - India
- Australian Coal Association
- CNBM International Corporation - China
- Standard Chartered Bank - UAE
- Iligan Light & Power Inc, Philippines
- Indian Oil Corporation Limited
- ICICI Bank Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Orica Australia Pty. Ltd.
- Simpson Spence & Young - Indonesia
- Barasentosa Lestari - Indonesia
- Coastal Gujarat Power Limited - India
- Global Business Power Corporation, Philippines
- Ministry of Mines - Canada
- Energy Development Corp, Philippines
- Africa Commodities Group - South Africa
- Aditya Birla Group - India
- Kalimantan Lumbung Energi - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Medco Energi Mining Internasional
- Mjunction Services Limited - India
- PowerSource Philippines DevCo
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Mintek Dendrill Indonesia
- Electricity Generating Authority of Thailand
- Global Green Power PLC Corporation, Philippines
- Commonwealth Bank - Australia
- Parry Sugars Refinery, India
- Star Paper Mills Limited - India
- Sarangani Energy Corporation, Philippines
- Gujarat Electricity Regulatory Commission - India
- Attock Cement Pakistan Limited
- Bangladesh Power Developement Board
- OPG Power Generation Pvt Ltd - India
- Coalindo Energy - Indonesia
- Borneo Indobara - Indonesia
- Madhucon Powers Ltd - India
- Port Waratah Coal Services - Australia
- Agrawal Coal Company - India
- Coal and Oil Company - UAE
- PetroVietnam Power Coal Import and Supply Company
- Pipit Mutiara Jaya. PT, Indonesia
- Globalindo Alam Lestari - Indonesia
- Bukit Makmur.PT - Indonesia
- Carbofer General Trading SA - India
- Karaikal Port Pvt Ltd - India
- IEA Clean Coal Centre - UK
- Therma Luzon, Inc, Philippines
- Tamil Nadu electricity Board
- Renaissance Capital - South Africa
- Maheswari Brothers Coal Limited - India
- The Treasury - Australian Government
- Riau Bara Harum - Indonesia
- Electricity Authority, New Zealand
- Makarim & Taira - Indonesia
- Banpu Public Company Limited - Thailand
- Bharathi Cement Corporation - India
- IHS Mccloskey Coal Group - USA
- Pendopo Energi Batubara - Indonesia
- Goldman Sachs - Singapore
- Siam City Cement PLC, Thailand
- Marubeni Corporation - India
- SMC Global Power, Philippines
- Ceylon Electricity Board - Sri Lanka
- Central Electricity Authority - India
- Timah Investasi Mineral - Indoneisa
- The University of Queensland
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Deloitte Consulting - India
- Billiton Holdings Pty Ltd - Australia
- Gujarat Mineral Development Corp Ltd - India
- Planning Commission, India
- McConnell Dowell - Australia
- Holcim Trading Pte Ltd - Singapore
- Xindia Steels Limited - India
- Manunggal Multi Energi - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Metalloyd Limited - United Kingdom
- Indo Tambangraya Megah - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Bhoruka Overseas - Indonesia
- Lanco Infratech Ltd - India
- White Energy Company Limited
- GVK Power & Infra Limited - India
- Thai Mozambique Logistica
- Salva Resources Pvt Ltd - India
- San Jose City I Power Corp, Philippines
- Jaiprakash Power Ventures ltd
- London Commodity Brokers - England
- VISA Power Limited - India
- Bulk Trading Sa - Switzerland
- ASAPP Information Group - India
- Semirara Mining and Power Corporation, Philippines
- PNOC Exploration Corporation - Philippines
- Ind-Barath Power Infra Limited - India
- SN Aboitiz Power Inc, Philippines
- CIMB Investment Bank - Malaysia
- Price Waterhouse Coopers - Russia
- Siam City Cement - Thailand
- Heidelberg Cement - Germany
- Kapuas Tunggal Persada - Indonesia
- The State Trading Corporation of India Ltd
- Wilmar Investment Holdings
- Bhushan Steel Limited - India
- Rio Tinto Coal - Australia
- TNB Fuel Sdn Bhd - Malaysia
- Intertek Mineral Services - Indonesia
- TeaM Sual Corporation - Philippines
- Savvy Resources Ltd - HongKong
- Central Java Power - Indonesia
- Trasteel International SA, Italy
- Meenaskhi Energy Private Limited - India
- Sree Jayajothi Cements Limited - India
- Kideco Jaya Agung - Indonesia
- Power Finance Corporation Ltd., India
- Krishnapatnam Port Company Ltd. - India
- Indonesian Coal Mining Association
- Kartika Selabumi Mining - Indonesia
- Malabar Cements Ltd - India
- Oldendorff Carriers - Singapore
- Romanian Commodities Exchange
- India Bulls Power Limited - India
- Indian Energy Exchange, India
- Maharashtra Electricity Regulatory Commission - India
- Jindal Steel & Power Ltd - India
- Straits Asia Resources Limited - Singapore
- Indogreen Group - Indonesia
- Posco Energy - South Korea
- Baramulti Group, Indonesia
- Aboitiz Power Corporation - Philippines
- Bayan Resources Tbk. - Indonesia
- GAC Shipping (India) Pvt Ltd
- Grasim Industreis Ltd - India
- Sindya Power Generating Company Private Ltd
- International Coal Ventures Pvt Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Gujarat Sidhee Cement - India
- SMG Consultants - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Ambuja Cements Ltd - India
- Essar Steel Hazira Ltd - India
- Eastern Coal Council - USA
- Dalmia Cement Bharat India
- Mercator Lines Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Georgia Ports Authority, United States
- Bukit Baiduri Energy - Indonesia
- Indika Energy - Indonesia
- Semirara Mining Corp, Philippines
- Australian Commodity Traders Exchange
- Cigading International Bulk Terminal - Indonesia
- South Luzon Thermal Energy Corporation
- Formosa Plastics Group - Taiwan
- Minerals Council of Australia
- Edison Trading Spa - Italy
- Vijayanagar Sugar Pvt Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Kumho Petrochemical, South Korea
- Latin American Coal - Colombia
- Kaltim Prima Coal - Indonesia
- Uttam Galva Steels Limited - India
- Orica Mining Services - Indonesia
- Wood Mackenzie - Singapore
- Videocon Industries ltd - India
- Tata Chemicals Ltd - India
- AsiaOL BioFuels Corp., Philippines
- LBH Netherlands Bv - Netherlands
- Sakthi Sugars Limited - India
- Kobexindo Tractors - Indoneisa
- Parliament of New Zealand
- Cement Manufacturers Association - India
- Vedanta Resources Plc - India
- Binh Thuan Hamico - Vietnam
- Independent Power Producers Association of India
- MS Steel International - UAE
- Alfred C Toepfer International GmbH - Germany
- Bhatia International Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Altura Mining Limited, Indonesia
- Chamber of Mines of South Africa
- New Zealand Coal & Carbon
- Meralco Power Generation, Philippines
- Economic Council, Georgia
- Directorate General of MIneral and Coal - Indonesia
- Interocean Group of Companies - India
- Petrochimia International Co. Ltd.- Taiwan
- PTC India Limited - India
- Vizag Seaport Private Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Miang Besar Coal Terminal - Indonesia
- Samtan Co., Ltd - South Korea
- Antam Resourcindo - Indonesia
- Anglo American - United Kingdom
- Kepco SPC Power Corporation, Philippines
- Sical Logistics Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Energy Link Ltd, New Zealand
- Toyota Tsusho Corporation, Japan
- Eastern Energy - Thailand
- Ministry of Transport, Egypt
- Singapore Mercantile Exchange
- Thiess Contractors Indonesia
- Leighton Contractors Pty Ltd - Australia
- Neyveli Lignite Corporation Ltd, - India
- Merrill Lynch Commodities Europe
- European Bulk Services B.V. - Netherlands
- Ministry of Finance - Indonesia
- GMR Energy Limited - India
- Petron Corporation, Philippines
- Global Coal Blending Company Limited - Australia
- Directorate Of Revenue Intelligence - India
- Mercuria Energy - Indonesia
- Sojitz Corporation - Japan
- Asmin Koalindo Tuhup - Indonesia
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