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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, 10 August 22
THE FUTURE OF COAL: EIGHT KEY THEMES FROM THE GLOBAL COAL FORUM - WOOD MACKENZIE
Coal investors face a multi-layered and unavoidable challenge: markets distorted by war, trade constraints and the existential threat of the energy ...
Saturday, 06 August 22
SUMITOMO Q1 PROFIT RISES 45% ON STRONGER PRICES OF COAL, NICKEL - REUTERS
Japanese trading house Sumitomo Corp 8053.T said on Wednesday its net profit for the April-June quarter rose 45% to a record thanks to higher price ...
Saturday, 06 August 22
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Berlin has realized it will never again import as much energy from Russia as before the Ukraine war. So the challenge is to wean Germany off its de ...
Saturday, 30 July 22
NUANCES OF FORCE MAJEURE CLAUSE - BALTIC EXCHANGE
Knowledge to Elevate
In NKD Maritime Limited v. Bart Maritime (No 2) Inc (Shagang Giant) [2022] EWHC 1615 (Comm), Bart Maritime (No 2) Inc (th ...
Saturday, 30 July 22
AEMO URGES QUICKER SHIFT TO RENEWABLES AMID COAL FAILURES AND SOARING FOSSIL FUEL COSTS
The Australian Energy Market Operator has called for an accelerated shift to wind and solar, backed up by batteries and other storage, as a devasta ...
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- CIMB Investment Bank - Malaysia
- Kapuas Tunggal Persada - Indonesia
- Heidelberg Cement - Germany
- The Treasury - Australian Government
- PNOC Exploration Corporation - Philippines
- Timah Investasi Mineral - Indoneisa
- Formosa Plastics Group - Taiwan
- Globalindo Alam Lestari - Indonesia
- Africa Commodities Group - South Africa
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Manunggal Multi Energi - Indonesia
- Ind-Barath Power Infra Limited - India
- Bhatia International Limited - India
- Ceylon Electricity Board - Sri Lanka
- San Jose City I Power Corp, Philippines
- Grasim Industreis Ltd - India
- Savvy Resources Ltd - HongKong
- Coastal Gujarat Power Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Goldman Sachs - Singapore
- Offshore Bulk Terminal Pte Ltd, Singapore
- AsiaOL BioFuels Corp., Philippines
- Xindia Steels Limited - India
- Aditya Birla Group - India
- Oldendorff Carriers - Singapore
- ASAPP Information Group - India
- TNB Fuel Sdn Bhd - Malaysia
- Ministry of Transport, Egypt
- Energy Link Ltd, New Zealand
- Sakthi Sugars Limited - India
- Malabar Cements Ltd - India
- Indogreen Group - Indonesia
- SMC Global Power, Philippines
- Parry Sugars Refinery, India
- Binh Thuan Hamico - Vietnam
- Interocean Group of Companies - India
- Larsen & Toubro Limited - India
- New Zealand Coal & Carbon
- Pipit Mutiara Jaya. PT, Indonesia
- Barasentosa Lestari - Indonesia
- PowerSource Philippines DevCo
- Maheswari Brothers Coal Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Australian Coal Association
- Holcim Trading Pte Ltd - Singapore
- Jaiprakash Power Ventures ltd
- GN Power Mariveles Coal Plant, Philippines
- Antam Resourcindo - Indonesia
- Renaissance Capital - South Africa
- Bulk Trading Sa - Switzerland
- Gujarat Sidhee Cement - India
- LBH Netherlands Bv - Netherlands
- Petrochimia International Co. Ltd.- Taiwan
- Alfred C Toepfer International GmbH - Germany
- Mercator Lines Limited - India
- Meenaskhi Energy Private Limited - India
- Sical Logistics Limited - India
- Kepco SPC Power Corporation, Philippines
- Borneo Indobara - Indonesia
- Cement Manufacturers Association - India
- Minerals Council of Australia
- Eastern Energy - Thailand
- Semirara Mining Corp, Philippines
- Intertek Mineral Services - Indonesia
- Sojitz Corporation - Japan
- GAC Shipping (India) Pvt Ltd
- Eastern Coal Council - USA
- ICICI Bank Limited - India
- Electricity Authority, New Zealand
- Bank of Tokyo Mitsubishi UFJ Ltd
- Merrill Lynch Commodities Europe
- Ambuja Cements Ltd - India
- Sarangani Energy Corporation, Philippines
- Semirara Mining and Power Corporation, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Sinarmas Energy and Mining - Indonesia
- Baramulti Group, Indonesia
- Indo Tambangraya Megah - Indonesia
- Orica Mining Services - Indonesia
- Rio Tinto Coal - Australia
- SMG Consultants - Indonesia
- India Bulls Power Limited - India
- Billiton Holdings Pty Ltd - Australia
- Madhucon Powers Ltd - India
- Salva Resources Pvt Ltd - India
- London Commodity Brokers - England
- Miang Besar Coal Terminal - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Tata Chemicals Ltd - India
- Riau Bara Harum - Indonesia
- Carbofer General Trading SA - India
- Petron Corporation, Philippines
- Mercuria Energy - Indonesia
- Commonwealth Bank - Australia
- Bukit Makmur.PT - Indonesia
- Wilmar Investment Holdings
- Star Paper Mills Limited - India
- Global Coal Blending Company Limited - Australia
- Asmin Koalindo Tuhup - Indonesia
- Posco Energy - South Korea
- Kaltim Prima Coal - Indonesia
- Chettinad Cement Corporation Ltd - India
- Standard Chartered Bank - UAE
- GVK Power & Infra Limited - India
- Jindal Steel & Power Ltd - India
- International Coal Ventures Pvt Ltd - India
- Independent Power Producers Association of India
- Toyota Tsusho Corporation, Japan
- Thai Mozambique Logistica
- Indian Energy Exchange, India
- SN Aboitiz Power Inc, Philippines
- Power Finance Corporation Ltd., India
- Australian Commodity Traders Exchange
- Neyveli Lignite Corporation Ltd, - India
- Kumho Petrochemical, South Korea
- Lanco Infratech Ltd - India
- Ministry of Mines - Canada
- Siam City Cement PLC, Thailand
- Makarim & Taira - Indonesia
- Vedanta Resources Plc - India
- Edison Trading Spa - Italy
- Central Java Power - Indonesia
- Dalmia Cement Bharat India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Energy Development Corp, Philippines
- Bharathi Cement Corporation - India
- Attock Cement Pakistan Limited
- Orica Australia Pty. Ltd.
- South Luzon Thermal Energy Corporation
- Gujarat Electricity Regulatory Commission - India
- OPG Power Generation Pvt Ltd - India
- Directorate Of Revenue Intelligence - India
- Wood Mackenzie - Singapore
- Planning Commission, India
- Marubeni Corporation - India
- Economic Council, Georgia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kobexindo Tractors - Indoneisa
- Bhoruka Overseas - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Central Electricity Authority - India
- IHS Mccloskey Coal Group - USA
- Electricity Generating Authority of Thailand
- PetroVietnam Power Coal Import and Supply Company
- The University of Queensland
- Medco Energi Mining Internasional
- Essar Steel Hazira Ltd - India
- IEA Clean Coal Centre - UK
- Kideco Jaya Agung - Indonesia
- Trasteel International SA, Italy
- Uttam Galva Steels Limited - India
- Karaikal Port Pvt Ltd - India
- Thiess Contractors Indonesia
- Cigading International Bulk Terminal - Indonesia
- Samtan Co., Ltd - South Korea
- Bayan Resources Tbk. - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- European Bulk Services B.V. - Netherlands
- Videocon Industries ltd - India
- Global Business Power Corporation, Philippines
- Kartika Selabumi Mining - Indonesia
- MS Steel International - UAE
- Aboitiz Power Corporation - Philippines
- PTC India Limited - India
- Banpu Public Company Limited - Thailand
- Mintek Dendrill Indonesia
- TeaM Sual Corporation - Philippines
- Latin American Coal - Colombia
- Vizag Seaport Private Limited - India
- Anglo American - United Kingdom
- Meralco Power Generation, Philippines
- Port Waratah Coal Services - Australia
- Kalimantan Lumbung Energi - Indonesia
- Indika Energy - Indonesia
- The State Trading Corporation of India Ltd
- McConnell Dowell - Australia
- Maharashtra Electricity Regulatory Commission - India
- Iligan Light & Power Inc, Philippines
- Therma Luzon, Inc, Philippines
- Price Waterhouse Coopers - Russia
- Singapore Mercantile Exchange
- Straits Asia Resources Limited - Singapore
- Coal and Oil Company - UAE
- Indian Oil Corporation Limited
- Mjunction Services Limited - India
- Leighton Contractors Pty Ltd - Australia
- Pendopo Energi Batubara - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Simpson Spence & Young - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- White Energy Company Limited
- Deloitte Consulting - India
- Sree Jayajothi Cements Limited - India
- Bangladesh Power Developement Board
- Siam City Cement - Thailand
- Krishnapatnam Port Company Ltd. - India
- Kohat Cement Company Ltd. - Pakistan
- Rashtriya Ispat Nigam Limited - India
- Metalloyd Limited - United Kingdom
- Agrawal Coal Company - India
- Ministry of Finance - Indonesia
- Georgia Ports Authority, United States
- Indonesian Coal Mining Association
- Coalindo Energy - Indonesia
- Chamber of Mines of South Africa
- Sindya Power Generating Company Private Ltd
- Bhushan Steel Limited - India
- Parliament of New Zealand
- CNBM International Corporation - China
- Tamil Nadu electricity Board
- Global Green Power PLC Corporation, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bukit Baiduri Energy - Indonesia
- Altura Mining Limited, Indonesia
- GMR Energy Limited - India
- VISA Power Limited - India
- Romanian Commodities Exchange
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