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