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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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Wednesday, 20 October 21
CHINA COAL HITS RECORD HIGH AMID TIGHT SUPPLIES - REUTERS
China coal prices hit a record high on Tuesday buoyed by a widening power crunch and cold weather despite Beijing’s efforts to bolster supply ...
Wednesday, 20 October 21
MARKET INSIGHT - INTERMODAL
IMO 2020, Ballast Water Treatment regulations, Green Recycling, GHG emissions, EEXI, CII, ETS, Fit for 55, Carbon price/levy, the Poseidon Principl ...
Tuesday, 19 October 21
SPONGE IRON SECTOR MIGHT REPORT NEGATIVE GROWTH DUE TO COAL CRISIS: SIMA - PTI
The domestic sponge iron industry might report a negative growth in the ongoing December quarter “if the shortage of coal is allowed to conti ...
Tuesday, 19 October 21
COAL INDIA, THE FALL GUY FOR POWER CRISIS - INDIA EXPRESS
The post-Covid economic recovery has led to a major increase in the demand for power, both in India and globally. In India, coal-based power plants ...
Saturday, 16 October 21
SOLAR INSTALLATION SURGE PUTS INDIA ON TRACK TO CAP COAL-FIRED POWER AS EARLY AS 2024 - IEEFA
Recent increase in solar power installations could push coal to peak sooner than expected
If India keeps installing solar capacity a ...
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- Jindal Steel & Power Ltd - India
- South Luzon Thermal Energy Corporation
- Electricity Generating Authority of Thailand
- Indo Tambangraya Megah - Indonesia
- ICICI Bank Limited - India
- Ind-Barath Power Infra Limited - India
- Eastern Energy - Thailand
- Planning Commission, India
- Carbofer General Trading SA - India
- SMG Consultants - Indonesia
- Petron Corporation, Philippines
- Kideco Jaya Agung - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Baramulti Group, Indonesia
- Star Paper Mills Limited - India
- The State Trading Corporation of India Ltd
- Jaiprakash Power Ventures ltd
- CIMB Investment Bank - Malaysia
- Gujarat Electricity Regulatory Commission - India
- Aboitiz Power Corporation - Philippines
- GAC Shipping (India) Pvt Ltd
- Pendopo Energi Batubara - Indonesia
- Makarim & Taira - Indonesia
- Eastern Coal Council - USA
- Maharashtra Electricity Regulatory Commission - India
- Africa Commodities Group - South Africa
- Larsen & Toubro Limited - India
- Indonesian Coal Mining Association
- White Energy Company Limited
- Straits Asia Resources Limited - Singapore
- Anglo American - United Kingdom
- Australian Commodity Traders Exchange
- Energy Link Ltd, New Zealand
- Essar Steel Hazira Ltd - India
- IEA Clean Coal Centre - UK
- Meralco Power Generation, Philippines
- Iligan Light & Power Inc, Philippines
- Sojitz Corporation - Japan
- Sinarmas Energy and Mining - Indonesia
- Gujarat Sidhee Cement - India
- Madhucon Powers Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Vizag Seaport Private Limited - India
- Kepco SPC Power Corporation, Philippines
- India Bulls Power Limited - India
- Bayan Resources Tbk. - Indonesia
- Merrill Lynch Commodities Europe
- Billiton Holdings Pty Ltd - Australia
- McConnell Dowell - Australia
- Bangladesh Power Developement Board
- Bukit Baiduri Energy - Indonesia
- Altura Mining Limited, Indonesia
- Thai Mozambique Logistica
- Binh Thuan Hamico - Vietnam
- Agrawal Coal Company - India
- Indian Energy Exchange, India
- Cement Manufacturers Association - India
- The University of Queensland
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Petrochimia International Co. Ltd.- Taiwan
- Maheswari Brothers Coal Limited - India
- Ministry of Finance - Indonesia
- MS Steel International - UAE
- Orica Australia Pty. Ltd.
- Power Finance Corporation Ltd., India
- Siam City Cement PLC, Thailand
- Holcim Trading Pte Ltd - Singapore
- Bhoruka Overseas - Indonesia
- PowerSource Philippines DevCo
- Coalindo Energy - Indonesia
- Orica Mining Services - Indonesia
- Mercuria Energy - Indonesia
- Simpson Spence & Young - Indonesia
- PTC India Limited - India
- Minerals Council of Australia
- Meenaskhi Energy Private Limited - India
- Global Green Power PLC Corporation, Philippines
- Kumho Petrochemical, South Korea
- Sarangani Energy Corporation, Philippines
- Bukit Makmur.PT - Indonesia
- Latin American Coal - Colombia
- Alfred C Toepfer International GmbH - Germany
- Riau Bara Harum - Indonesia
- Manunggal Multi Energi - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Romanian Commodities Exchange
- AsiaOL BioFuels Corp., Philippines
- OPG Power Generation Pvt Ltd - India
- Posco Energy - South Korea
- Global Coal Blending Company Limited - Australia
- PNOC Exploration Corporation - Philippines
- Singapore Mercantile Exchange
- Bhushan Steel Limited - India
- Chettinad Cement Corporation Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Ceylon Electricity Board - Sri Lanka
- Renaissance Capital - South Africa
- Trasteel International SA, Italy
- Attock Cement Pakistan Limited
- Timah Investasi Mineral - Indoneisa
- Offshore Bulk Terminal Pte Ltd, Singapore
- Intertek Mineral Services - Indonesia
- Bharathi Cement Corporation - India
- Interocean Group of Companies - India
- Indika Energy - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Wilmar Investment Holdings
- San Jose City I Power Corp, Philippines
- Karaikal Port Pvt Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- International Coal Ventures Pvt Ltd - India
- Deloitte Consulting - India
- Bukit Asam (Persero) Tbk - Indonesia
- Savvy Resources Ltd - HongKong
- TeaM Sual Corporation - Philippines
- Malabar Cements Ltd - India
- Bulk Trading Sa - Switzerland
- Sindya Power Generating Company Private Ltd
- Sical Logistics Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Port Waratah Coal Services - Australia
- Toyota Tsusho Corporation, Japan
- Parry Sugars Refinery, India
- Uttam Galva Steels Limited - India
- Commonwealth Bank - Australia
- Wood Mackenzie - Singapore
- Vijayanagar Sugar Pvt Ltd - India
- Indogreen Group - Indonesia
- Formosa Plastics Group - Taiwan
- Medco Energi Mining Internasional
- Sree Jayajothi Cements Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Rio Tinto Coal - Australia
- Price Waterhouse Coopers - Russia
- Pipit Mutiara Jaya. PT, Indonesia
- Central Electricity Authority - India
- Chamber of Mines of South Africa
- London Commodity Brokers - England
- Economic Council, Georgia
- LBH Netherlands Bv - Netherlands
- Heidelberg Cement - Germany
- Coastal Gujarat Power Limited - India
- The Treasury - Australian Government
- CNBM International Corporation - China
- European Bulk Services B.V. - Netherlands
- Therma Luzon, Inc, Philippines
- VISA Power Limited - India
- Vedanta Resources Plc - India
- Neyveli Lignite Corporation Ltd, - India
- Kobexindo Tractors - Indoneisa
- Global Business Power Corporation, Philippines
- Standard Chartered Bank - UAE
- SN Aboitiz Power Inc, Philippines
- Thiess Contractors Indonesia
- Bhatia International Limited - India
- Barasentosa Lestari - Indonesia
- Goldman Sachs - Singapore
- Globalindo Alam Lestari - Indonesia
- Videocon Industries ltd - India
- Antam Resourcindo - Indonesia
- Aditya Birla Group - India
- GMR Energy Limited - India
- Electricity Authority, New Zealand
- Indian Oil Corporation Limited
- Tata Chemicals Ltd - India
- Siam City Cement - Thailand
- Rashtriya Ispat Nigam Limited - India
- Banpu Public Company Limited - Thailand
- Tamil Nadu electricity Board
- Central Java Power - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Mercator Lines Limited - India
- Dalmia Cement Bharat India
- Grasim Industreis Ltd - India
- Xindia Steels Limited - India
- SMC Global Power, Philippines
- Ambuja Cements Ltd - India
- Coal and Oil Company - UAE
- Mjunction Services Limited - India
- Salva Resources Pvt Ltd - India
- Georgia Ports Authority, United States
- Karbindo Abesyapradhi - Indoneisa
- Kartika Selabumi Mining - Indonesia
- Directorate Of Revenue Intelligence - India
- Oldendorff Carriers - Singapore
- Kaltim Prima Coal - Indonesia
- Energy Development Corp, Philippines
- Australian Coal Association
- Independent Power Producers Association of India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Samtan Co., Ltd - South Korea
- Mintek Dendrill Indonesia
- Edison Trading Spa - Italy
- Ministry of Transport, Egypt
- Borneo Indobara - Indonesia
- Metalloyd Limited - United Kingdom
- Marubeni Corporation - India
- GVK Power & Infra Limited - India
- New Zealand Coal & Carbon
- Ministry of Mines - Canada
- Leighton Contractors Pty Ltd - Australia
- ASAPP Information Group - India
- Parliament of New Zealand
- TNB Fuel Sdn Bhd - Malaysia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Directorate General of MIneral and Coal - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- IHS Mccloskey Coal Group - USA
- PetroVietnam Power Coal Import and Supply Company
- Lanco Infratech Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Sakthi Sugars Limited - India
- Semirara Mining Corp, Philippines
- Miang Besar Coal Terminal - Indonesia
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