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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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Thursday, 23 December 21
COAL DEMAND TO PEAK IN INDIA BY 2030, WILL BACK UP RENEWABLES: NITI REPORT - BUSINESS STANDARD
Coal will remain India’s mainstay energy source and the country will shape global demand this decade, two reports have said a month after the ...
Thursday, 23 December 21
INDONESIA’S 2022 COAL OUTPUT SEEN BETWEEN 637 MLN-664 MLN T- OFFICIAL - REUTERS
Indonesia’s 2022 coal output is estimated at between 637 million to 664 million tonnes based on production plans currently being finalised, s ...
Thursday, 23 December 21
VALE ANNOUNCES THE SALE OF ITS COAL ASSETS
Vale informs that, on this date, it has entered into a binding agreement with Vulcan to sell the Moatize coal mine and the Nacala Logistics Corrido ...
Thursday, 23 December 21
INDIA: CAPTIVE POWER PRODUCERS URGE GOVT TO ENSURE NORMAL COAL SUPPLIES - PTI
A captive power producers’ association has urged the government for 100 per cent normalisation of coal supply to captive power producers whil ...
Thursday, 23 December 21
MARKET INSIGHT - INTERMODAL
As an outstanding year for the dry bulk freight market comes to a close, so does a thriving year for the SnP market which can only be compared to 2 ...
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- Simpson Spence & Young - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Ambuja Cements Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Bangladesh Power Developement Board
- Holcim Trading Pte Ltd - Singapore
- Miang Besar Coal Terminal - Indonesia
- Eastern Energy - Thailand
- Singapore Mercantile Exchange
- Straits Asia Resources Limited - Singapore
- Agrawal Coal Company - India
- Australian Commodity Traders Exchange
- Eastern Coal Council - USA
- McConnell Dowell - Australia
- LBH Netherlands Bv - Netherlands
- Semirara Mining Corp, Philippines
- Indonesian Coal Mining Association
- Anglo American - United Kingdom
- Cement Manufacturers Association - India
- Global Business Power Corporation, Philippines
- Africa Commodities Group - South Africa
- Iligan Light & Power Inc, Philippines
- Kepco SPC Power Corporation, Philippines
- Maheswari Brothers Coal Limited - India
- CNBM International Corporation - China
- Attock Cement Pakistan Limited
- Indian Oil Corporation Limited
- TNB Fuel Sdn Bhd - Malaysia
- Kartika Selabumi Mining - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Planning Commission, India
- Coal and Oil Company - UAE
- Aditya Birla Group - India
- Siam City Cement PLC, Thailand
- Mjunction Services Limited - India
- Meralco Power Generation, Philippines
- Sakthi Sugars Limited - India
- Xindia Steels Limited - India
- Uttam Galva Steels Limited - India
- Videocon Industries ltd - India
- Independent Power Producers Association of India
- Kobexindo Tractors - Indoneisa
- Sical Logistics Limited - India
- Malabar Cements Ltd - India
- Orica Australia Pty. Ltd.
- San Jose City I Power Corp, Philippines
- Timah Investasi Mineral - Indoneisa
- Ministry of Transport, Egypt
- Binh Thuan Hamico - Vietnam
- Metalloyd Limited - United Kingdom
- Commonwealth Bank - Australia
- Coalindo Energy - Indonesia
- Ministry of Mines - Canada
- European Bulk Services B.V. - Netherlands
- Mintek Dendrill Indonesia
- Australian Coal Association
- Bank of Tokyo Mitsubishi UFJ Ltd
- Ceylon Electricity Board - Sri Lanka
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kumho Petrochemical, South Korea
- Renaissance Capital - South Africa
- PNOC Exploration Corporation - Philippines
- Globalindo Alam Lestari - Indonesia
- Energy Link Ltd, New Zealand
- PetroVietnam Power Coal Import and Supply Company
- Wilmar Investment Holdings
- Kaltim Prima Coal - Indonesia
- Thiess Contractors Indonesia
- International Coal Ventures Pvt Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Makarim & Taira - Indonesia
- Pendopo Energi Batubara - Indonesia
- Electricity Authority, New Zealand
- SMC Global Power, Philippines
- Formosa Plastics Group - Taiwan
- Kapuas Tunggal Persada - Indonesia
- Vedanta Resources Plc - India
- Billiton Holdings Pty Ltd - Australia
- Port Waratah Coal Services - Australia
- MS Steel International - UAE
- New Zealand Coal & Carbon
- Minerals Council of Australia
- The University of Queensland
- Intertek Mineral Services - Indonesia
- Essar Steel Hazira Ltd - India
- Economic Council, Georgia
- Jaiprakash Power Ventures ltd
- Carbofer General Trading SA - India
- Krishnapatnam Port Company Ltd. - India
- The State Trading Corporation of India Ltd
- The Treasury - Australian Government
- Savvy Resources Ltd - HongKong
- Bhushan Steel Limited - India
- Borneo Indobara - Indonesia
- Wood Mackenzie - Singapore
- Romanian Commodities Exchange
- ASAPP Information Group - India
- GVK Power & Infra Limited - India
- Georgia Ports Authority, United States
- Indogreen Group - Indonesia
- Ministry of Finance - Indonesia
- Global Coal Blending Company Limited - Australia
- Lanco Infratech Ltd - India
- Manunggal Multi Energi - Indonesia
- Meenaskhi Energy Private Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Petrochimia International Co. Ltd.- Taiwan
- Thai Mozambique Logistica
- PowerSource Philippines DevCo
- Kohat Cement Company Ltd. - Pakistan
- SMG Consultants - Indonesia
- Parliament of New Zealand
- Sarangani Energy Corporation, Philippines
- Parry Sugars Refinery, India
- Dalmia Cement Bharat India
- Leighton Contractors Pty Ltd - Australia
- Grasim Industreis Ltd - India
- Bukit Baiduri Energy - Indonesia
- Standard Chartered Bank - UAE
- TeaM Sual Corporation - Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Trasteel International SA, Italy
- Kideco Jaya Agung - Indonesia
- Baramulti Group, Indonesia
- Jindal Steel & Power Ltd - India
- Medco Energi Mining Internasional
- Petron Corporation, Philippines
- Tata Chemicals Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Siam City Cement - Thailand
- South Luzon Thermal Energy Corporation
- London Commodity Brokers - England
- GMR Energy Limited - India
- Bukit Makmur.PT - Indonesia
- Oldendorff Carriers - Singapore
- Vizag Seaport Private Limited - India
- Sojitz Corporation - Japan
- SN Aboitiz Power Inc, Philippines
- Bharathi Cement Corporation - India
- Therma Luzon, Inc, Philippines
- AsiaOL BioFuels Corp., Philippines
- PTC India Limited - India
- Altura Mining Limited, Indonesia
- Indika Energy - Indonesia
- Central Electricity Authority - India
- Bukit Asam (Persero) Tbk - Indonesia
- Chamber of Mines of South Africa
- Madhucon Powers Ltd - India
- Toyota Tsusho Corporation, Japan
- Goldman Sachs - Singapore
- Latin American Coal - Colombia
- Indo Tambangraya Megah - Indonesia
- IEA Clean Coal Centre - UK
- Mercator Lines Limited - India
- Salva Resources Pvt Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Antam Resourcindo - Indonesia
- Ind-Barath Power Infra Limited - India
- Chettinad Cement Corporation Ltd - India
- Directorate Of Revenue Intelligence - India
- Neyveli Lignite Corporation Ltd, - India
- Banpu Public Company Limited - Thailand
- Rashtriya Ispat Nigam Limited - India
- Energy Development Corp, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sree Jayajothi Cements Limited - India
- Coastal Gujarat Power Limited - India
- Deloitte Consulting - India
- Central Java Power - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- OPG Power Generation Pvt Ltd - India
- Mercuria Energy - Indonesia
- Indian Energy Exchange, India
- Karaikal Port Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- VISA Power Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- CIMB Investment Bank - Malaysia
- Barasentosa Lestari - Indonesia
- Heidelberg Cement - Germany
- Global Green Power PLC Corporation, Philippines
- Alfred C Toepfer International GmbH - Germany
- Rio Tinto Coal - Australia
- Bhoruka Overseas - Indonesia
- Interocean Group of Companies - India
- Pipit Mutiara Jaya. PT, Indonesia
- Power Finance Corporation Ltd., India
- Directorate General of MIneral and Coal - Indonesia
- Merrill Lynch Commodities Europe
- Maharashtra Electricity Regulatory Commission - India
- India Bulls Power Limited - India
- White Energy Company Limited
- Posco Energy - South Korea
- Larsen & Toubro Limited - India
- Bayan Resources Tbk. - Indonesia
- Riau Bara Harum - Indonesia
- Gujarat Sidhee Cement - India
- IHS Mccloskey Coal Group - USA
- Electricity Generating Authority of Thailand
- Gujarat Electricity Regulatory Commission - India
- Price Waterhouse Coopers - Russia
- Tamil Nadu electricity Board
- GN Power Mariveles Coal Plant, Philippines
- Star Paper Mills Limited - India
- GAC Shipping (India) Pvt Ltd
- Bhatia International Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- ICICI Bank Limited - India
- Marubeni Corporation - India
- Orica Mining Services - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Sindya Power Generating Company Private Ltd
- Sinarmas Energy and Mining - Indonesia
- Aboitiz Power Corporation - Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Edison Trading Spa - Italy
- Samtan Co., Ltd - South Korea
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