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