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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, 29 July 22
GLENCORE TO SUPPLY COAL TO NIPPON STEEL AT $375 PER TON - BLOOMBERG
Glencore Plc, agreed to supply coal to Nippon Steel at one of the highest prices ever paid by the Japan Bloomberg reported on July 27.
...
Friday, 29 July 22
GLOBAL COAL DEMAND IS SET TO RETURN TO ITS ALL-TIME HIGH IN 2022 - IEA
The world’s consumption of coal is set to rise slightly in 2022, taking it back to the record level it reached nearly a decade ago, according ...
Thursday, 28 July 22
CREW FAMILIARISATION IS CRITICAL WHEN TAKING OVER A VESSEL - WEST P&I CLUB
Knowledge to Elevate
When a vessel changes ownership and/or manager, it can take some considerable time before the new crew and mana ...
Thursday, 28 July 22
RETURN OF COAL A THREAT TO EUROPEAN COMPANIES' ESG RATINGS - REUTERS
European companies turning to coal as an alternative to Russian gas face a hit to their environmental, social and governance ratings, leaving them ...
Wednesday, 27 July 22
MARKET INSIGHT - INTERMODAL
Amid the upcoming ban on Russian coal from the EU, which will be in full effect on August 10th, EU nations have been accelerating their coal import ...
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- SMC Global Power, Philippines
- Globalindo Alam Lestari - Indonesia
- GAC Shipping (India) Pvt Ltd
- Mercuria Energy - Indonesia
- Posco Energy - South Korea
- Coalindo Energy - Indonesia
- Tata Chemicals Ltd - India
- Xindia Steels Limited - India
- IEA Clean Coal Centre - UK
- Jaiprakash Power Ventures ltd
- Indika Energy - Indonesia
- Renaissance Capital - South Africa
- PTC India Limited - India
- Thiess Contractors Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Cigading International Bulk Terminal - Indonesia
- Toyota Tsusho Corporation, Japan
- Borneo Indobara - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Meralco Power Generation, Philippines
- Indo Tambangraya Megah - Indonesia
- Lanco Infratech Ltd - India
- Ministry of Transport, Egypt
- Goldman Sachs - Singapore
- Formosa Plastics Group - Taiwan
- Bharathi Cement Corporation - India
- TNB Fuel Sdn Bhd - Malaysia
- Savvy Resources Ltd - HongKong
- Maheswari Brothers Coal Limited - India
- New Zealand Coal & Carbon
- Ministry of Finance - Indonesia
- Parliament of New Zealand
- Star Paper Mills Limited - India
- Madhucon Powers Ltd - India
- Kobexindo Tractors - Indoneisa
- Independent Power Producers Association of India
- Tamil Nadu electricity Board
- Kohat Cement Company Ltd. - Pakistan
- Deloitte Consulting - India
- GVK Power & Infra Limited - India
- Bukit Makmur.PT - Indonesia
- Eastern Energy - Thailand
- Sree Jayajothi Cements Limited - India
- South Luzon Thermal Energy Corporation
- Pendopo Energi Batubara - Indonesia
- Cement Manufacturers Association - India
- Bahari Cakrawala Sebuku - Indonesia
- Kepco SPC Power Corporation, Philippines
- SMG Consultants - Indonesia
- Semirara Mining Corp, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Gujarat Electricity Regulatory Commission - India
- Aditya Birla Group - India
- Simpson Spence & Young - Indonesia
- Electricity Authority, New Zealand
- Planning Commission, India
- Sarangani Energy Corporation, Philippines
- Metalloyd Limited - United Kingdom
- Standard Chartered Bank - UAE
- Mjunction Services Limited - India
- Kumho Petrochemical, South Korea
- Electricity Generating Authority of Thailand
- The State Trading Corporation of India Ltd
- VISA Power Limited - India
- Indonesian Coal Mining Association
- Binh Thuan Hamico - Vietnam
- Singapore Mercantile Exchange
- Romanian Commodities Exchange
- Aboitiz Power Corporation - Philippines
- Central Electricity Authority - India
- Orica Australia Pty. Ltd.
- Heidelberg Cement - Germany
- Riau Bara Harum - Indonesia
- Chettinad Cement Corporation Ltd - India
- Commonwealth Bank - Australia
- Siam City Cement PLC, Thailand
- International Coal Ventures Pvt Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Antam Resourcindo - Indonesia
- CIMB Investment Bank - Malaysia
- Alfred C Toepfer International GmbH - Germany
- European Bulk Services B.V. - Netherlands
- Indian Energy Exchange, India
- Kaltim Prima Coal - Indonesia
- Edison Trading Spa - Italy
- Sojitz Corporation - Japan
- MS Steel International - UAE
- Makarim & Taira - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Orica Mining Services - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Bhatia International Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Global Coal Blending Company Limited - Australia
- Rio Tinto Coal - Australia
- Mintek Dendrill Indonesia
- ASAPP Information Group - India
- Chamber of Mines of South Africa
- TeaM Sual Corporation - Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Energy Link Ltd, New Zealand
- Georgia Ports Authority, United States
- Port Waratah Coal Services - Australia
- Holcim Trading Pte Ltd - Singapore
- Medco Energi Mining Internasional
- PNOC Exploration Corporation - Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Timah Investasi Mineral - Indoneisa
- Essar Steel Hazira Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- White Energy Company Limited
- Agrawal Coal Company - India
- Oldendorff Carriers - Singapore
- Ambuja Cements Ltd - India
- Merrill Lynch Commodities Europe
- IHS Mccloskey Coal Group - USA
- Parry Sugars Refinery, India
- Ind-Barath Power Infra Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Power Finance Corporation Ltd., India
- Jorong Barutama Greston.PT - Indonesia
- Sakthi Sugars Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Sindya Power Generating Company Private Ltd
- Eastern Coal Council - USA
- Gujarat Sidhee Cement - India
- Ministry of Mines - Canada
- Barasentosa Lestari - Indonesia
- London Commodity Brokers - England
- Kartika Selabumi Mining - Indonesia
- Wood Mackenzie - Singapore
- Marubeni Corporation - India
- Meenaskhi Energy Private Limited - India
- OPG Power Generation Pvt Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Economic Council, Georgia
- Anglo American - United Kingdom
- Petron Corporation, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Uttam Galva Steels Limited - India
- Jindal Steel & Power Ltd - India
- Energy Development Corp, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Attock Cement Pakistan Limited
- Larsen & Toubro Limited - India
- Kideco Jaya Agung - Indonesia
- SN Aboitiz Power Inc, Philippines
- Thai Mozambique Logistica
- Banpu Public Company Limited - Thailand
- Africa Commodities Group - South Africa
- Kalimantan Lumbung Energi - Indonesia
- GMR Energy Limited - India
- Wilmar Investment Holdings
- Vijayanagar Sugar Pvt Ltd - India
- Central Java Power - Indonesia
- San Jose City I Power Corp, Philippines
- Samtan Co., Ltd - South Korea
- Malabar Cements Ltd - India
- Karaikal Port Pvt Ltd - India
- Bhushan Steel Limited - India
- Trasteel International SA, Italy
- Therma Luzon, Inc, Philippines
- Carbofer General Trading SA - India
- Bangladesh Power Developement Board
- Vizag Seaport Private Limited - India
- Coastal Gujarat Power Limited - India
- Krishnapatnam Port Company Ltd. - India
- Indian Oil Corporation Limited
- Ceylon Electricity Board - Sri Lanka
- Manunggal Multi Energi - Indonesia
- Bayan Resources Tbk. - Indonesia
- McConnell Dowell - Australia
- Vedanta Resources Plc - India
- Intertek Mineral Services - Indonesia
- The Treasury - Australian Government
- LBH Netherlands Bv - Netherlands
- Directorate Of Revenue Intelligence - India
- The University of Queensland
- Salva Resources Pvt Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Billiton Holdings Pty Ltd - Australia
- Bhoruka Overseas - Indonesia
- ICICI Bank Limited - India
- Iligan Light & Power Inc, Philippines
- Australian Commodity Traders Exchange
- AsiaOL BioFuels Corp., Philippines
- Global Business Power Corporation, Philippines
- Interocean Group of Companies - India
- Latin American Coal - Colombia
- Dalmia Cement Bharat India
- Coal and Oil Company - UAE
- Neyveli Lignite Corporation Ltd, - India
- Baramulti Group, Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Mercator Lines Limited - India
- Price Waterhouse Coopers - Russia
- Global Green Power PLC Corporation, Philippines
- Videocon Industries ltd - India
- Altura Mining Limited, Indonesia
- Indogreen Group - Indonesia
- Bulk Trading Sa - Switzerland
- Siam City Cement - Thailand
- PowerSource Philippines DevCo
- Minerals Council of Australia
- Straits Asia Resources Limited - Singapore
- CNBM International Corporation - China
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bukit Baiduri Energy - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Sinarmas Energy and Mining - Indonesia
- Grasim Industreis Ltd - India
- India Bulls Power Limited - India
- Australian Coal Association
- Sical Logistics Limited - India
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