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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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Wednesday, 17 August 22
CHINA'S COAL-RICH SHANXI MAKES STRIDES IN HIGH-QUALITY DEVELOPMENT - XINHUA
Shanxi, a major coal-producing province in north China, has made continuous advances in high-quality development over the past decade, according to ...
Wednesday, 17 August 22
PAXOCEAN, HONG LAM MARINE AND BUREAU VERITAS SIGN MOU TO DEVELOP AMMONIA BUNKER VESSEL DESIGN - BUREAU VERITAS
PaxOcean Engineering Pte. Ltd. has signed a Memorandum of Understanding (MOU) with Singapore-based bunker vessel operator Hong Lam Marine and class ...
Wednesday, 17 August 22
GOODFUELSS ASIA-PACIFIC BRANCH KICKSTARTS SUSTAINABLE BIOFUEL DELIVERIES WITH NYK AS FIRST CLIENT - GOOD FUELS
GoodFuels, the leading biofuels pioneer for the global transport industry, has today announced that it has successfully supplied sustainable marine ...
Tuesday, 16 August 22
EU BAN ON RUSSIAN COAL IMPORTS COMES INTO FORCE - DEUTSCHE WELLE
The European Union banned Russian coal imports in response to the invasion of Ukraine as part of sanctions in April. Since then, it’s been sc ...
Thursday, 11 August 22
MARKET INSIGHT - INTERMODAL
On July 22nd, Ukraine signed a deal with Russia to release 22mn tons of grain from Ukraine’s 3 major ports (Yuzhny, Chornomorsk, Odesa). Such ...
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- MS Steel International - UAE
- Singapore Mercantile Exchange
- Directorate Of Revenue Intelligence - India
- Carbofer General Trading SA - India
- Bangladesh Power Developement Board
- Vizag Seaport Private Limited - India
- Georgia Ports Authority, United States
- Lanco Infratech Ltd - India
- The University of Queensland
- European Bulk Services B.V. - Netherlands
- Miang Besar Coal Terminal - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Port Waratah Coal Services - Australia
- Energy Link Ltd, New Zealand
- Renaissance Capital - South Africa
- Eastern Energy - Thailand
- Tamil Nadu electricity Board
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Sree Jayajothi Cements Limited - India
- Electricity Authority, New Zealand
- Banpu Public Company Limited - Thailand
- IEA Clean Coal Centre - UK
- Indian Oil Corporation Limited
- Heidelberg Cement - Germany
- Madhucon Powers Ltd - India
- Meralco Power Generation, Philippines
- Petron Corporation, Philippines
- Kideco Jaya Agung - Indonesia
- Jindal Steel & Power Ltd - India
- Bayan Resources Tbk. - Indonesia
- Medco Energi Mining Internasional
- Bank of Tokyo Mitsubishi UFJ Ltd
- SN Aboitiz Power Inc, Philippines
- Indogreen Group - Indonesia
- Wilmar Investment Holdings
- Makarim & Taira - Indonesia
- Cigading International Bulk Terminal - Indonesia
- London Commodity Brokers - England
- Videocon Industries ltd - India
- Merrill Lynch Commodities Europe
- San Jose City I Power Corp, Philippines
- Orica Mining Services - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Indian Energy Exchange, India
- GAC Shipping (India) Pvt Ltd
- Coastal Gujarat Power Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Baramulti Group, Indonesia
- Kapuas Tunggal Persada - Indonesia
- Pendopo Energi Batubara - Indonesia
- Marubeni Corporation - India
- Australian Coal Association
- Kaltim Prima Coal - Indonesia
- Coalindo Energy - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Oldendorff Carriers - Singapore
- Savvy Resources Ltd - HongKong
- GMR Energy Limited - India
- Manunggal Multi Energi - Indonesia
- Coal and Oil Company - UAE
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Metalloyd Limited - United Kingdom
- Indo Tambangraya Megah - Indonesia
- Mintek Dendrill Indonesia
- Global Coal Blending Company Limited - Australia
- Agrawal Coal Company - India
- CIMB Investment Bank - Malaysia
- Ceylon Electricity Board - Sri Lanka
- Globalindo Alam Lestari - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Intertek Mineral Services - Indonesia
- Africa Commodities Group - South Africa
- Ministry of Finance - Indonesia
- Eastern Coal Council - USA
- Posco Energy - South Korea
- Economic Council, Georgia
- Edison Trading Spa - Italy
- Binh Thuan Hamico - Vietnam
- Karaikal Port Pvt Ltd - India
- Timah Investasi Mineral - Indoneisa
- Energy Development Corp, Philippines
- Rio Tinto Coal - Australia
- LBH Netherlands Bv - Netherlands
- Malabar Cements Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Salva Resources Pvt Ltd - India
- GVK Power & Infra Limited - India
- Therma Luzon, Inc, Philippines
- AsiaOL BioFuels Corp., Philippines
- Sindya Power Generating Company Private Ltd
- Central Java Power - Indonesia
- McConnell Dowell - Australia
- Uttam Galva Steels Limited - India
- Aditya Birla Group - India
- IHS Mccloskey Coal Group - USA
- Semirara Mining and Power Corporation, Philippines
- Maheswari Brothers Coal Limited - India
- ASAPP Information Group - India
- Siam City Cement - Thailand
- Leighton Contractors Pty Ltd - Australia
- Jorong Barutama Greston.PT - Indonesia
- Kobexindo Tractors - Indoneisa
- Chamber of Mines of South Africa
- Mjunction Services Limited - India
- Chettinad Cement Corporation Ltd - India
- Thai Mozambique Logistica
- Straits Asia Resources Limited - Singapore
- Larsen & Toubro Limited - India
- Sakthi Sugars Limited - India
- Grasim Industreis Ltd - India
- CNBM International Corporation - China
- Holcim Trading Pte Ltd - Singapore
- International Coal Ventures Pvt Ltd - India
- Simpson Spence & Young - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Gujarat Sidhee Cement - India
- Bahari Cakrawala Sebuku - Indonesia
- Wood Mackenzie - Singapore
- Altura Mining Limited, Indonesia
- Indika Energy - Indonesia
- Iligan Light & Power Inc, Philippines
- Commonwealth Bank - Australia
- New Zealand Coal & Carbon
- Trasteel International SA, Italy
- Ambuja Cements Ltd - India
- Bulk Trading Sa - Switzerland
- Billiton Holdings Pty Ltd - Australia
- Formosa Plastics Group - Taiwan
- Ministry of Mines - Canada
- Cement Manufacturers Association - India
- Kepco SPC Power Corporation, Philippines
- Parliament of New Zealand
- Alfred C Toepfer International GmbH - Germany
- Vijayanagar Sugar Pvt Ltd - India
- Bukit Makmur.PT - Indonesia
- Sical Logistics Limited - India
- Electricity Generating Authority of Thailand
- Ministry of Transport, Egypt
- Mercuria Energy - Indonesia
- Mercator Lines Limited - India
- Dalmia Cement Bharat India
- Antam Resourcindo - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Bhatia International Limited - India
- Ind-Barath Power Infra Limited - India
- ICICI Bank Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Samtan Co., Ltd - South Korea
- Interocean Group of Companies - India
- Power Finance Corporation Ltd., India
- Sojitz Corporation - Japan
- Petrochimia International Co. Ltd.- Taiwan
- Bukit Asam (Persero) Tbk - Indonesia
- Orica Australia Pty. Ltd.
- Deloitte Consulting - India
- Romanian Commodities Exchange
- Borneo Indobara - Indonesia
- OPG Power Generation Pvt Ltd - India
- Sarangani Energy Corporation, Philippines
- Toyota Tsusho Corporation, Japan
- Vedanta Resources Plc - India
- VISA Power Limited - India
- Bhushan Steel Limited - India
- Independent Power Producers Association of India
- Rashtriya Ispat Nigam Limited - India
- Riau Bara Harum - Indonesia
- TeaM Sual Corporation - Philippines
- Planning Commission, India
- Standard Chartered Bank - UAE
- Star Paper Mills Limited - India
- Essar Steel Hazira Ltd - India
- Bharathi Cement Corporation - India
- Thiess Contractors Indonesia
- PNOC Exploration Corporation - Philippines
- South Luzon Thermal Energy Corporation
- Asia Pacific Energy Resources Ventures Inc, Philippines
- PTC India Limited - India
- The State Trading Corporation of India Ltd
- Anglo American - United Kingdom
- Krishnapatnam Port Company Ltd. - India
- White Energy Company Limited
- Kartika Selabumi Mining - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- India Bulls Power Limited - India
- The Treasury - Australian Government
- Jaiprakash Power Ventures ltd
- Kumho Petrochemical, South Korea
- PetroVietnam Power Coal Import and Supply Company
- SMG Consultants - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Australian Commodity Traders Exchange
- Aboitiz Power Corporation - Philippines
- Latin American Coal - Colombia
- Minerals Council of Australia
- Xindia Steels Limited - India
- Barasentosa Lestari - Indonesia
- SMC Global Power, Philippines
- Asmin Koalindo Tuhup - Indonesia
- PowerSource Philippines DevCo
- Goldman Sachs - Singapore
- Global Green Power PLC Corporation, Philippines
- Attock Cement Pakistan Limited
- Bukit Baiduri Energy - Indonesia
- Bhoruka Overseas - Indonesia
- Tata Chemicals Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Parry Sugars Refinery, India
- Indonesian Coal Mining Association
- Central Electricity Authority - India
- Global Business Power Corporation, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Semirara Mining Corp, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Meenaskhi Energy Private Limited - India
- Price Waterhouse Coopers - Russia
- Siam City Cement PLC, Thailand
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