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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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Saturday, 23 July 22
STABILITY OF RUSSIAN GAS FLOWS REMAIN UNCERTAIN, DESPITE THE REOPENING OF NORD STREAM - WOOD MACKENZIE
Gazprom confirmed today that regular annual maintenance of Nord Stream is officially over and gas flows restarted at 63 million cubic metres per da ...
Friday, 22 July 22
MARKET INSIGHT - INTERMODAL
Faced with uncertainty regarding the most cost-efficient alternative fuels and the future dominant method to reduce their greenhouse emissions, man ...
Friday, 22 July 22
YANCOAL AUSTRALIA CUTS 2022 COAL OUTPUT VIEW AS FLOODS, COVID BITE - REUTERS
Coal miner Yancoal Australia Ltd YAL.AX cut its 2022 output forecast on Wednesday, signalling a hit from higher-than-expected rainfall, COVID-19-le ...
Wednesday, 20 July 22
BOOST FOR BIOFUELS AS IMO REMOVES REGULATORY HURDLE - GARD
MARPOL Annex VI regulations were written for petroleum derived fuels but also apply to biofuels. It has been a challenge to meet the regulatory req ...
Wednesday, 20 July 22
INDONESIA’S COAL EXPORTS TO THE EU INCREASED SIGNIFICANTLY RECENTLY
European countries have increased coal imports from Indonesia due to the energy crisis that hit the region after Russia cuts gas exports to Europe. ...
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- Holcim Trading Pte Ltd - Singapore
- Australian Commodity Traders Exchange
- The Treasury - Australian Government
- Simpson Spence & Young - Indonesia
- Georgia Ports Authority, United States
- Port Waratah Coal Services - Australia
- Antam Resourcindo - Indonesia
- Orica Mining Services - Indonesia
- SN Aboitiz Power Inc, Philippines
- Semirara Mining Corp, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Agrawal Coal Company - India
- Medco Energi Mining Internasional
- Gujarat Mineral Development Corp Ltd - India
- Singapore Mercantile Exchange
- Bhushan Steel Limited - India
- ASAPP Information Group - India
- Central Electricity Authority - India
- Metalloyd Limited - United Kingdom
- Kumho Petrochemical, South Korea
- Heidelberg Cement - Germany
- Tata Chemicals Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Sarangani Energy Corporation, Philippines
- Semirara Mining and Power Corporation, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Barasentosa Lestari - Indonesia
- Petron Corporation, Philippines
- LBH Netherlands Bv - Netherlands
- Petrochimia International Co. Ltd.- Taiwan
- Independent Power Producers Association of India
- Meralco Power Generation, Philippines
- Ministry of Finance - Indonesia
- Orica Australia Pty. Ltd.
- Bangladesh Power Developement Board
- Vedanta Resources Plc - India
- Rio Tinto Coal - Australia
- Directorate Of Revenue Intelligence - India
- Bahari Cakrawala Sebuku - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Ceylon Electricity Board - Sri Lanka
- Vijayanagar Sugar Pvt Ltd - India
- Mintek Dendrill Indonesia
- Leighton Contractors Pty Ltd - Australia
- The University of Queensland
- Ind-Barath Power Infra Limited - India
- European Bulk Services B.V. - Netherlands
- Aboitiz Power Corporation - Philippines
- Global Coal Blending Company Limited - Australia
- GAC Shipping (India) Pvt Ltd
- Thai Mozambique Logistica
- Straits Asia Resources Limited - Singapore
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kapuas Tunggal Persada - Indonesia
- Power Finance Corporation Ltd., India
- Kepco SPC Power Corporation, Philippines
- Marubeni Corporation - India
- Africa Commodities Group - South Africa
- Pipit Mutiara Jaya. PT, Indonesia
- Sojitz Corporation - Japan
- Posco Energy - South Korea
- Price Waterhouse Coopers - Russia
- ICICI Bank Limited - India
- Global Business Power Corporation, Philippines
- Timah Investasi Mineral - Indoneisa
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Bukit Asam (Persero) Tbk - Indonesia
- IEA Clean Coal Centre - UK
- Vizag Seaport Private Limited - India
- Rashtriya Ispat Nigam Limited - India
- Cement Manufacturers Association - India
- Formosa Plastics Group - Taiwan
- Goldman Sachs - Singapore
- Coalindo Energy - Indonesia
- Oldendorff Carriers - Singapore
- Sical Logistics Limited - India
- Binh Thuan Hamico - Vietnam
- Ambuja Cements Ltd - India
- Videocon Industries ltd - India
- TeaM Sual Corporation - Philippines
- Australian Coal Association
- AsiaOL BioFuels Corp., Philippines
- Riau Bara Harum - Indonesia
- Xindia Steels Limited - India
- Essar Steel Hazira Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Gujarat Electricity Regulatory Commission - India
- CIMB Investment Bank - Malaysia
- Alfred C Toepfer International GmbH - Germany
- Karbindo Abesyapradhi - Indoneisa
- Latin American Coal - Colombia
- Deloitte Consulting - India
- Bukit Makmur.PT - Indonesia
- Baramulti Group, Indonesia
- SMC Global Power, Philippines
- Wilmar Investment Holdings
- Wood Mackenzie - Singapore
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- India Bulls Power Limited - India
- Neyveli Lignite Corporation Ltd, - India
- PTC India Limited - India
- Altura Mining Limited, Indonesia
- Sree Jayajothi Cements Limited - India
- VISA Power Limited - India
- Dalmia Cement Bharat India
- Eastern Coal Council - USA
- Trasteel International SA, Italy
- Pendopo Energi Batubara - Indonesia
- Iligan Light & Power Inc, Philippines
- Maheswari Brothers Coal Limited - India
- Meenaskhi Energy Private Limited - India
- Bukit Baiduri Energy - Indonesia
- PowerSource Philippines DevCo
- Borneo Indobara - Indonesia
- IHS Mccloskey Coal Group - USA
- Larsen & Toubro Limited - India
- Chettinad Cement Corporation Ltd - India
- Therma Luzon, Inc, Philippines
- Romanian Commodities Exchange
- Tamil Nadu electricity Board
- Parliament of New Zealand
- Asmin Koalindo Tuhup - Indonesia
- London Commodity Brokers - England
- Sindya Power Generating Company Private Ltd
- Star Paper Mills Limited - India
- GMR Energy Limited - India
- PNOC Exploration Corporation - Philippines
- New Zealand Coal & Carbon
- Toyota Tsusho Corporation, Japan
- Intertek Mineral Services - Indonesia
- Indogreen Group - Indonesia
- Indika Energy - Indonesia
- Mercator Lines Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Coal and Oil Company - UAE
- Globalindo Alam Lestari - Indonesia
- Edison Trading Spa - Italy
- GN Power Mariveles Coal Plant, Philippines
- Indian Energy Exchange, India
- Ministry of Transport, Egypt
- Bulk Trading Sa - Switzerland
- MS Steel International - UAE
- OPG Power Generation Pvt Ltd - India
- Renaissance Capital - South Africa
- McConnell Dowell - Australia
- Electricity Authority, New Zealand
- Ministry of Mines - Canada
- Minerals Council of Australia
- White Energy Company Limited
- Indian Oil Corporation Limited
- Carbofer General Trading SA - India
- Kobexindo Tractors - Indoneisa
- TNB Fuel Sdn Bhd - Malaysia
- South Luzon Thermal Energy Corporation
- Indonesian Coal Mining Association
- Madhucon Powers Ltd - India
- Indo Tambangraya Megah - Indonesia
- Interocean Group of Companies - India
- Samtan Co., Ltd - South Korea
- Manunggal Multi Energi - Indonesia
- Bharathi Cement Corporation - India
- Jindal Steel & Power Ltd - India
- San Jose City I Power Corp, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Aditya Birla Group - India
- Krishnapatnam Port Company Ltd. - India
- Energy Development Corp, Philippines
- Global Green Power PLC Corporation, Philippines
- Salva Resources Pvt Ltd - India
- Coastal Gujarat Power Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Cigading International Bulk Terminal - Indonesia
- Kaltim Prima Coal - Indonesia
- Commonwealth Bank - Australia
- CNBM International Corporation - China
- Kartika Selabumi Mining - Indonesia
- Uttam Galva Steels Limited - India
- Jaiprakash Power Ventures ltd
- Eastern Energy - Thailand
- Bhatia International Limited - India
- Grasim Industreis Ltd - India
- Energy Link Ltd, New Zealand
- The State Trading Corporation of India Ltd
- GVK Power & Infra Limited - India
- Lanco Infratech Ltd - India
- Karaikal Port Pvt Ltd - India
- International Coal Ventures Pvt Ltd - India
- Electricity Generating Authority of Thailand
- SMG Consultants - Indonesia
- Gujarat Sidhee Cement - India
- Sinarmas Energy and Mining - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Savvy Resources Ltd - HongKong
- Standard Chartered Bank - UAE
- Parry Sugars Refinery, India
- Central Java Power - Indonesia
- Planning Commission, India
- Maharashtra Electricity Regulatory Commission - India
- Makarim & Taira - Indonesia
- Mjunction Services Limited - India
- Sakthi Sugars Limited - India
- Bhoruka Overseas - Indonesia
- Banpu Public Company Limited - Thailand
- Attock Cement Pakistan Limited
- Merrill Lynch Commodities Europe
- Chamber of Mines of South Africa
- Bayan Resources Tbk. - Indonesia
- Mercuria Energy - Indonesia
- Kideco Jaya Agung - Indonesia
- Malabar Cements Ltd - India
- Thiess Contractors Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Economic Council, Georgia
- Siam City Cement - Thailand
- Siam City Cement PLC, Thailand
- Anglo American - United Kingdom
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