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