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