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