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