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