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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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Tuesday, 19 July 22
SEEING RED? - WOOD MACKENZIE
What a Republican mid-term victory could mean for US energy and climate policy
According to current polling the Republican Party has ...
Thursday, 14 July 22
INDIA'S COAL IMPORTS HIT RECORD HIGH IN JUNE - REUTERS
India's coal imports hit a record high in June despite high global prices, data from three trade sources and Refinitiv ship tracking showed, as ...
Thursday, 14 July 22
CHINA'S JUNE COAL IMPORTS SLUMP AS TRADERS SHUN EXPENSIVE OVERSEAS CARGOES - REUTERS
China’s coal imports fell 33% in June from a year ago, with traders turning down expensive overseas cargoes in favor of domestic ones with ca ...
Wednesday, 13 July 22
KOWEPO TO IMPORT 2.79 MILLION TONS OF LOW TO MEDIUM COAL
COALspot.com: Korea Western Power Co., Ltd. (KOWEPO) has issued an International tender for Total 1360k MT of Min.4400 kcal/kg NCV coal and Total 1 ...
Wednesday, 13 July 22
HAVE MINERS MISSED THE BOAT TO INVEST AND GET AHEAD OF THE ENERGY TRANSITION? - WOOD MACKENZIE
Miners are in rude health, benefiting from economic stimuli, the post-pandemic recovery and associated supply constraints. Initially the Ukraine wa ...
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- MS Steel International - UAE
- Kepco SPC Power Corporation, Philippines
- Antam Resourcindo - Indonesia
- Indo Tambangraya Megah - Indonesia
- SMG Consultants - Indonesia
- Sree Jayajothi Cements Limited - India
- Global Coal Blending Company Limited - Australia
- Bukit Asam (Persero) Tbk - Indonesia
- Parry Sugars Refinery, India
- Bharathi Cement Corporation - India
- Xindia Steels Limited - India
- Asmin Koalindo Tuhup - Indonesia
- McConnell Dowell - Australia
- Dalmia Cement Bharat India
- Carbofer General Trading SA - India
- Bangladesh Power Developement Board
- Neyveli Lignite Corporation Ltd, - India
- OPG Power Generation Pvt Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Karaikal Port Pvt Ltd - India
- Petron Corporation, Philippines
- Anglo American - United Kingdom
- Rio Tinto Coal - Australia
- Metalloyd Limited - United Kingdom
- Manunggal Multi Energi - Indonesia
- Tamil Nadu electricity Board
- Offshore Bulk Terminal Pte Ltd, Singapore
- Pendopo Energi Batubara - Indonesia
- Banpu Public Company Limited - Thailand
- Therma Luzon, Inc, Philippines
- Essar Steel Hazira Ltd - India
- Straits Asia Resources Limited - Singapore
- Jorong Barutama Greston.PT - Indonesia
- PowerSource Philippines DevCo
- IEA Clean Coal Centre - UK
- Makarim & Taira - Indonesia
- Siam City Cement PLC, Thailand
- Samtan Co., Ltd - South Korea
- Kalimantan Lumbung Energi - Indonesia
- Tata Chemicals Ltd - India
- Aboitiz Power Corporation - Philippines
- Directorate Of Revenue Intelligence - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Latin American Coal - Colombia
- Madhucon Powers Ltd - India
- Agrawal Coal Company - India
- Price Waterhouse Coopers - Russia
- Trasteel International SA, Italy
- Gujarat Mineral Development Corp Ltd - India
- White Energy Company Limited
- Ceylon Electricity Board - Sri Lanka
- Karbindo Abesyapradhi - Indoneisa
- SN Aboitiz Power Inc, Philippines
- Mercator Lines Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Medco Energi Mining Internasional
- GMR Energy Limited - India
- Kaltim Prima Coal - Indonesia
- Wilmar Investment Holdings
- Bhushan Steel Limited - India
- ASAPP Information Group - India
- Singapore Mercantile Exchange
- Interocean Group of Companies - India
- Bukit Baiduri Energy - Indonesia
- Bukit Makmur.PT - Indonesia
- Georgia Ports Authority, United States
- Maharashtra Electricity Regulatory Commission - India
- Energy Development Corp, Philippines
- Global Green Power PLC Corporation, Philippines
- Bhatia International Limited - India
- Timah Investasi Mineral - Indoneisa
- Billiton Holdings Pty Ltd - Australia
- GAC Shipping (India) Pvt Ltd
- Kumho Petrochemical, South Korea
- Wood Mackenzie - Singapore
- Orica Mining Services - Indonesia
- Renaissance Capital - South Africa
- Ministry of Mines - Canada
- Sojitz Corporation - Japan
- Sakthi Sugars Limited - India
- Toyota Tsusho Corporation, Japan
- Ambuja Cements Ltd - India
- New Zealand Coal & Carbon
- Bulk Trading Sa - Switzerland
- Altura Mining Limited, Indonesia
- Thiess Contractors Indonesia
- Commonwealth Bank - Australia
- Barasentosa Lestari - Indonesia
- Baramulti Group, Indonesia
- Miang Besar Coal Terminal - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Rashtriya Ispat Nigam Limited - India
- Riau Bara Harum - Indonesia
- The Treasury - Australian Government
- Maheswari Brothers Coal Limited - India
- Bhoruka Overseas - Indonesia
- Aditya Birla Group - India
- Leighton Contractors Pty Ltd - Australia
- Siam City Cement - Thailand
- Global Business Power Corporation, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Central Java Power - Indonesia
- Meenaskhi Energy Private Limited - India
- IHS Mccloskey Coal Group - USA
- Sarangani Energy Corporation, Philippines
- Vizag Seaport Private Limited - India
- Borneo Indobara - Indonesia
- Binh Thuan Hamico - Vietnam
- Grasim Industreis Ltd - India
- Mercuria Energy - Indonesia
- Uttam Galva Steels Limited - India
- Sinarmas Energy and Mining - Indonesia
- Chettinad Cement Corporation Ltd - India
- Mjunction Services Limited - India
- GVK Power & Infra Limited - India
- Holcim Trading Pte Ltd - Singapore
- Ministry of Finance - Indonesia
- Australian Coal Association
- Heidelberg Cement - Germany
- Edison Trading Spa - Italy
- The State Trading Corporation of India Ltd
- Parliament of New Zealand
- Jindal Steel & Power Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- ICICI Bank Limited - India
- Thai Mozambique Logistica
- Salva Resources Pvt Ltd - India
- Oldendorff Carriers - Singapore
- International Coal Ventures Pvt Ltd - India
- PTC India Limited - India
- Attock Cement Pakistan Limited
- Malabar Cements Ltd - India
- Videocon Industries ltd - India
- India Bulls Power Limited - India
- Mintek Dendrill Indonesia
- Planning Commission, India
- San Jose City I Power Corp, Philippines
- Bayan Resources Tbk. - Indonesia
- CNBM International Corporation - China
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Ministry of Transport, Egypt
- PNOC Exploration Corporation - Philippines
- VISA Power Limited - India
- Star Paper Mills Limited - India
- Sindya Power Generating Company Private Ltd
- Gujarat Sidhee Cement - India
- Orica Australia Pty. Ltd.
- Directorate General of MIneral and Coal - Indonesia
- Semirara Mining Corp, Philippines
- Kobexindo Tractors - Indoneisa
- PetroVietnam Power Coal Import and Supply Company
- GN Power Mariveles Coal Plant, Philippines
- Central Electricity Authority - India
- SMC Global Power, Philippines
- Electricity Generating Authority of Thailand
- European Bulk Services B.V. - Netherlands
- Standard Chartered Bank - UAE
- Indogreen Group - Indonesia
- Electricity Authority, New Zealand
- Globalindo Alam Lestari - Indonesia
- Coal and Oil Company - UAE
- Indika Energy - Indonesia
- Goldman Sachs - Singapore
- Romanian Commodities Exchange
- Kapuas Tunggal Persada - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Iligan Light & Power Inc, Philippines
- Merrill Lynch Commodities Europe
- Ind-Barath Power Infra Limited - India
- Alfred C Toepfer International GmbH - Germany
- LBH Netherlands Bv - Netherlands
- TeaM Sual Corporation - Philippines
- Power Finance Corporation Ltd., India
- Eastern Energy - Thailand
- Vedanta Resources Plc - India
- Formosa Plastics Group - Taiwan
- Lanco Infratech Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Indian Oil Corporation Limited
- Kohat Cement Company Ltd. - Pakistan
- Indonesian Coal Mining Association
- Port Waratah Coal Services - Australia
- Energy Link Ltd, New Zealand
- Eastern Coal Council - USA
- Sical Logistics Limited - India
- Larsen & Toubro Limited - India
- Minerals Council of Australia
- The University of Queensland
- London Commodity Brokers - England
- Coastal Gujarat Power Limited - India
- Savvy Resources Ltd - HongKong
- Kartika Selabumi Mining - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Marubeni Corporation - India
- Posco Energy - South Korea
- Africa Commodities Group - South Africa
- Krishnapatnam Port Company Ltd. - India
- Simpson Spence & Young - Indonesia
- Indian Energy Exchange, India
- Independent Power Producers Association of India
- Meralco Power Generation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- South Luzon Thermal Energy Corporation
- Coalindo Energy - Indonesia
- Cement Manufacturers Association - India
- Jaiprakash Power Ventures ltd
- Australian Commodity Traders Exchange
- Kideco Jaya Agung - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Intertek Mineral Services - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Economic Council, Georgia
- Chamber of Mines of South Africa
- CIMB Investment Bank - Malaysia
- Pipit Mutiara Jaya. PT, Indonesia
- Deloitte Consulting - India
- Gujarat Electricity Regulatory Commission - India
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