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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, 04 February 22
RENEWABLES ON THE RISE, COAL CONTINUOUSLY FALLING - EUROPEAN COMMISSION
Although oil (34.5%) and natural gas (23.7%) were still the most important fuel sources in the EU energy mix in 2020, renewable energy’s shar ...
Thursday, 03 February 22
COAL SHORTAGE NOW AT ALARMING LEVELS, SAY ALUMINIUM PRODUCERS - IANS
With no relief in sight despite coal stocks running critically low and production disruptions looming across the Indian aluminium sector, the Alumi ...
Wednesday, 02 February 22
HIGH COKING COAL PRICES PROVIDE GLIMPSE INTO STEELMAKING'S FUTURE - MCKINSEY
Last year was a volatile one in global commodity markets. Demand for coking coal, an essential raw material in the production of steel, was extreme ...
Wednesday, 02 February 22
INDONESIA'S RESTRICTIONS ON COMMODITIES RATTLE MARKETS, MORE MOVES LIKELY - REUTERS
In just the first month of this year, Indonesian policymakers have rattled global markets with restrictions on some of its biggest commodities expo ...
Wednesday, 02 February 22
CHINA'S TOP COAL PRODUCER FORECASTS 28 PCT PROFIT GROWTH IN 2021 - XINHUA
China Shenhua Energy Company Limited, one of the country’s biggest coal producers, said its net profits are expected to jump by 28 percent in ...
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- Aditya Birla Group - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- San Jose City I Power Corp, Philippines
- Kapuas Tunggal Persada - Indonesia
- Interocean Group of Companies - India
- Ind-Barath Power Infra Limited - India
- AsiaOL BioFuels Corp., Philippines
- Videocon Industries ltd - India
- Agrawal Coal Company - India
- TeaM Sual Corporation - Philippines
- GN Power Mariveles Coal Plant, Philippines
- Carbofer General Trading SA - India
- ASAPP Information Group - India
- Renaissance Capital - South Africa
- Coal and Oil Company - UAE
- Orica Mining Services - Indonesia
- Semirara Mining Corp, Philippines
- Australian Coal Association
- The State Trading Corporation of India Ltd
- Energy Link Ltd, New Zealand
- Parry Sugars Refinery, India
- Directorate Of Revenue Intelligence - India
- Bulk Trading Sa - Switzerland
- Indo Tambangraya Megah - Indonesia
- Mintek Dendrill Indonesia
- Wilmar Investment Holdings
- Barasentosa Lestari - Indonesia
- Latin American Coal - Colombia
- Karbindo Abesyapradhi - Indoneisa
- Ministry of Mines - Canada
- Indogreen Group - Indonesia
- Kobexindo Tractors - Indoneisa
- Kaltim Prima Coal - Indonesia
- Planning Commission, India
- Jaiprakash Power Ventures ltd
- Energy Development Corp, Philippines
- Borneo Indobara - Indonesia
- Intertek Mineral Services - Indonesia
- Simpson Spence & Young - Indonesia
- Binh Thuan Hamico - Vietnam
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kumho Petrochemical, South Korea
- Africa Commodities Group - South Africa
- Offshore Bulk Terminal Pte Ltd, Singapore
- IHS Mccloskey Coal Group - USA
- Samtan Co., Ltd - South Korea
- Baramulti Group, Indonesia
- Timah Investasi Mineral - Indoneisa
- Central Java Power - Indonesia
- Mercator Lines Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Kalimantan Lumbung Energi - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Vedanta Resources Plc - India
- Metalloyd Limited - United Kingdom
- CIMB Investment Bank - Malaysia
- Straits Asia Resources Limited - Singapore
- Central Electricity Authority - India
- Marubeni Corporation - India
- Mjunction Services Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Tata Chemicals Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Asmin Koalindo Tuhup - Indonesia
- Anglo American - United Kingdom
- SN Aboitiz Power Inc, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Thiess Contractors Indonesia
- Bangladesh Power Developement Board
- Star Paper Mills Limited - India
- MS Steel International - UAE
- Indonesian Coal Mining Association
- Bharathi Cement Corporation - India
- GAC Shipping (India) Pvt Ltd
- Ministry of Finance - Indonesia
- Ministry of Transport, Egypt
- Commonwealth Bank - Australia
- Mercuria Energy - Indonesia
- Holcim Trading Pte Ltd - Singapore
- GVK Power & Infra Limited - India
- European Bulk Services B.V. - Netherlands
- Sical Logistics Limited - India
- Bukit Makmur.PT - Indonesia
- IEA Clean Coal Centre - UK
- Electricity Generating Authority of Thailand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Singapore Mercantile Exchange
- Toyota Tsusho Corporation, Japan
- Rio Tinto Coal - Australia
- Directorate General of MIneral and Coal - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Chamber of Mines of South Africa
- Georgia Ports Authority, United States
- VISA Power Limited - India
- South Luzon Thermal Energy Corporation
- Edison Trading Spa - Italy
- Price Waterhouse Coopers - Russia
- Uttam Galva Steels Limited - India
- Thai Mozambique Logistica
- Ceylon Electricity Board - Sri Lanka
- Standard Chartered Bank - UAE
- Romanian Commodities Exchange
- Heidelberg Cement - Germany
- Tamil Nadu electricity Board
- Grasim Industreis Ltd - India
- Economic Council, Georgia
- India Bulls Power Limited - India
- Meralco Power Generation, Philippines
- Eastern Energy - Thailand
- Orica Australia Pty. Ltd.
- Ambuja Cements Ltd - India
- Coastal Gujarat Power Limited - India
- Wood Mackenzie - Singapore
- Global Green Power PLC Corporation, Philippines
- Riau Bara Harum - Indonesia
- GMR Energy Limited - India
- Global Coal Blending Company Limited - Australia
- Attock Cement Pakistan Limited
- Sakthi Sugars Limited - India
- Sree Jayajothi Cements Limited - India
- Global Business Power Corporation, Philippines
- Chettinad Cement Corporation Ltd - India
- Trasteel International SA, Italy
- LBH Netherlands Bv - Netherlands
- Pendopo Energi Batubara - Indonesia
- McConnell Dowell - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sojitz Corporation - Japan
- Kohat Cement Company Ltd. - Pakistan
- Krishnapatnam Port Company Ltd. - India
- Malabar Cements Ltd - India
- The University of Queensland
- PetroVietnam Power Coal Import and Supply Company
- Medco Energi Mining Internasional
- Coalindo Energy - Indonesia
- Lanco Infratech Ltd - India
- Karaikal Port Pvt Ltd - India
- Power Finance Corporation Ltd., India
- Miang Besar Coal Terminal - Indonesia
- Bayan Resources Tbk. - Indonesia
- Salva Resources Pvt Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Xindia Steels Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Bhushan Steel Limited - India
- Kideco Jaya Agung - Indonesia
- Manunggal Multi Energi - Indonesia
- Larsen & Toubro Limited - India
- Globalindo Alam Lestari - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Neyveli Lignite Corporation Ltd, - India
- Therma Luzon, Inc, Philippines
- Kartika Selabumi Mining - Indonesia
- Port Waratah Coal Services - Australia
- Indika Energy - Indonesia
- Parliament of New Zealand
- PNOC Exploration Corporation - Philippines
- Vijayanagar Sugar Pvt Ltd - India
- New Zealand Coal & Carbon
- London Commodity Brokers - England
- Indian Oil Corporation Limited
- CNBM International Corporation - China
- Oldendorff Carriers - Singapore
- Australian Commodity Traders Exchange
- Goldman Sachs - Singapore
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Independent Power Producers Association of India
- Sindya Power Generating Company Private Ltd
- Cigading International Bulk Terminal - Indonesia
- Dalmia Cement Bharat India
- Madhucon Powers Ltd - India
- Altura Mining Limited, Indonesia
- Bukit Baiduri Energy - Indonesia
- PTC India Limited - India
- SMG Consultants - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Essar Steel Hazira Ltd - India
- White Energy Company Limited
- Vizag Seaport Private Limited - India
- Siam City Cement - Thailand
- Deloitte Consulting - India
- Cement Manufacturers Association - India
- ICICI Bank Limited - India
- Electricity Authority, New Zealand
- Gujarat Sidhee Cement - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Savvy Resources Ltd - HongKong
- Iligan Light & Power Inc, Philippines
- Aboitiz Power Corporation - Philippines
- The Treasury - Australian Government
- Makarim & Taira - Indonesia
- Petron Corporation, Philippines
- Meenaskhi Energy Private Limited - India
- Minerals Council of Australia
- Sarangani Energy Corporation, Philippines
- Bhoruka Overseas - Indonesia
- Siam City Cement PLC, Thailand
- Gujarat Electricity Regulatory Commission - India
- Merrill Lynch Commodities Europe
- Kepco SPC Power Corporation, Philippines
- Sinarmas Energy and Mining - Indonesia
- OPG Power Generation Pvt Ltd - India
- Eastern Coal Council - USA
- Semirara Mining and Power Corporation, Philippines
- Indian Energy Exchange, India
- Maheswari Brothers Coal Limited - India
- Bhatia International Limited - India
- Formosa Plastics Group - Taiwan
- Posco Energy - South Korea
- Banpu Public Company Limited - Thailand
- Antam Resourcindo - Indonesia
- International Coal Ventures Pvt Ltd - India
- SMC Global Power, Philippines
- PowerSource Philippines DevCo
- Jindal Steel & Power Ltd - India
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