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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, 15 October 21
GLOBAL STEEL DEMAND GROWTH DOWNGRADED FOR 2021 DUE TO CHINA - WORLD STEEL ASSOCIATION
The World Steel Association (worldsteel) today released an update of its Short Range Outlook (SRO) for 2021 and 2022. worldsteel forecasts that ste ...
Thursday, 14 October 21
SPIKING COAL PRICES: DON’T BLAME THE ENERGY TRANSITION - IEEFA
Volatility highlights urgency for renewables-based energy solutions
“Energy crisis.” The phrase evokes nearly-forgotten ...
Thursday, 14 October 21
EIA FORECASTS U.S. COAL PRODUCTION TOTALS 588 MMST IN 2021, UP 53 MMST YOY
U.S. coal production in EIA's forecasts totals 588 million short tons (MMst) in 2021, 53 MMst more than in 2020.
According ...
Wednesday, 13 October 21
COAL PRICES ARE ROARING BACK AMID A GLOBAL ENERGY CRUNCH - SYDNEY MORNING HERALD
Soaring coal prices have placed Australia’s mining and energy exports on track to reach a record $349 billion this year evenas the value of t ...
Wednesday, 13 October 21
CHINA ISN'T THE ONLY HUGE ASIAN ECONOMY WITH A COAL SHORTAGE NOW - CNBC
China is not the only Asian giant grappling with an energy crunch — India is also teetering on the edge of a power crisis.
Mos ...
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- PowerSource Philippines DevCo
- Gujarat Sidhee Cement - India
- PetroVietnam Power Coal Import and Supply Company
- Mjunction Services Limited - India
- White Energy Company Limited
- Malabar Cements Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Africa Commodities Group - South Africa
- Aditya Birla Group - India
- Vizag Seaport Private Limited - India
- Marubeni Corporation - India
- IHS Mccloskey Coal Group - USA
- Agrawal Coal Company - India
- Cement Manufacturers Association - India
- Standard Chartered Bank - UAE
- Larsen & Toubro Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Uttam Galva Steels Limited - India
- Kartika Selabumi Mining - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Maharashtra Electricity Regulatory Commission - India
- Energy Development Corp, Philippines
- Xindia Steels Limited - India
- Cigading International Bulk Terminal - Indonesia
- SMC Global Power, Philippines
- Bukit Baiduri Energy - Indonesia
- Indogreen Group - Indonesia
- Banpu Public Company Limited - Thailand
- Rio Tinto Coal - Australia
- Bhoruka Overseas - Indonesia
- Oldendorff Carriers - Singapore
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Riau Bara Harum - Indonesia
- Indonesian Coal Mining Association
- London Commodity Brokers - England
- Bharathi Cement Corporation - India
- Meralco Power Generation, Philippines
- Globalindo Alam Lestari - Indonesia
- Ambuja Cements Ltd - India
- Krishnapatnam Port Company Ltd. - India
- OPG Power Generation Pvt Ltd - India
- Indika Energy - Indonesia
- Orica Mining Services - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Siam City Cement - Thailand
- Edison Trading Spa - Italy
- Kohat Cement Company Ltd. - Pakistan
- Rashtriya Ispat Nigam Limited - India
- Kepco SPC Power Corporation, Philippines
- Independent Power Producers Association of India
- ICICI Bank Limited - India
- Tamil Nadu electricity Board
- Lanco Infratech Ltd - India
- Pendopo Energi Batubara - Indonesia
- Ministry of Finance - Indonesia
- Semirara Mining Corp, Philippines
- Sindya Power Generating Company Private Ltd
- Directorate Of Revenue Intelligence - India
- Parliament of New Zealand
- Attock Cement Pakistan Limited
- Medco Energi Mining Internasional
- Metalloyd Limited - United Kingdom
- Karaikal Port Pvt Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Bahari Cakrawala Sebuku - Indonesia
- Therma Luzon, Inc, Philippines
- GAC Shipping (India) Pvt Ltd
- Savvy Resources Ltd - HongKong
- Kalimantan Lumbung Energi - Indonesia
- PNOC Exploration Corporation - Philippines
- Commonwealth Bank - Australia
- Bhatia International Limited - India
- Planning Commission, India
- European Bulk Services B.V. - Netherlands
- Price Waterhouse Coopers - Russia
- Ind-Barath Power Infra Limited - India
- Grasim Industreis Ltd - India
- Electricity Generating Authority of Thailand
- Toyota Tsusho Corporation, Japan
- Kaltim Prima Coal - Indonesia
- Thai Mozambique Logistica
- Energy Link Ltd, New Zealand
- Meenaskhi Energy Private Limited - India
- PTC India Limited - India
- Australian Coal Association
- Latin American Coal - Colombia
- Gujarat Mineral Development Corp Ltd - India
- AsiaOL BioFuels Corp., Philippines
- CIMB Investment Bank - Malaysia
- Holcim Trading Pte Ltd - Singapore
- Timah Investasi Mineral - Indoneisa
- Binh Thuan Hamico - Vietnam
- Global Green Power PLC Corporation, Philippines
- Petron Corporation, Philippines
- Bayan Resources Tbk. - Indonesia
- Manunggal Multi Energi - Indonesia
- Madhucon Powers Ltd - India
- Singapore Mercantile Exchange
- Central Java Power - Indonesia
- Dalmia Cement Bharat India
- International Coal Ventures Pvt Ltd - India
- Kumho Petrochemical, South Korea
- Simpson Spence & Young - Indonesia
- Bulk Trading Sa - Switzerland
- SN Aboitiz Power Inc, Philippines
- Port Waratah Coal Services - Australia
- ASAPP Information Group - India
- Samtan Co., Ltd - South Korea
- Parry Sugars Refinery, India
- Posco Energy - South Korea
- Goldman Sachs - Singapore
- LBH Netherlands Bv - Netherlands
- Tata Chemicals Ltd - India
- Borneo Indobara - Indonesia
- Videocon Industries ltd - India
- Coalindo Energy - Indonesia
- Mintek Dendrill Indonesia
- Kobexindo Tractors - Indoneisa
- Bangladesh Power Developement Board
- Straits Asia Resources Limited - Singapore
- Iligan Light & Power Inc, Philippines
- Sinarmas Energy and Mining - Indonesia
- Indian Energy Exchange, India
- McConnell Dowell - Australia
- Star Paper Mills Limited - India
- Indian Oil Corporation Limited
- Power Finance Corporation Ltd., India
- Eastern Energy - Thailand
- Maheswari Brothers Coal Limited - India
- Wood Mackenzie - Singapore
- Heidelberg Cement - Germany
- Antam Resourcindo - Indonesia
- Georgia Ports Authority, United States
- Pipit Mutiara Jaya. PT, Indonesia
- Bukit Makmur.PT - Indonesia
- Electricity Authority, New Zealand
- Directorate General of MIneral and Coal - Indonesia
- Mercuria Energy - Indonesia
- Renaissance Capital - South Africa
- Salva Resources Pvt Ltd - India
- Economic Council, Georgia
- Sarangani Energy Corporation, Philippines
- The University of Queensland
- Romanian Commodities Exchange
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Anglo American - United Kingdom
- CNBM International Corporation - China
- Ministry of Mines - Canada
- South Luzon Thermal Energy Corporation
- Neyveli Lignite Corporation Ltd, - India
- Wilmar Investment Holdings
- New Zealand Coal & Carbon
- Baramulti Group, Indonesia
- Essar Steel Hazira Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Chamber of Mines of South Africa
- India Bulls Power Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- TNB Fuel Sdn Bhd - Malaysia
- Semirara Mining and Power Corporation, Philippines
- VISA Power Limited - India
- Mercator Lines Limited - India
- Intertek Mineral Services - Indonesia
- Aboitiz Power Corporation - Philippines
- Siam City Cement PLC, Thailand
- Central Electricity Authority - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Coastal Gujarat Power Limited - India
- GVK Power & Infra Limited - India
- Kideco Jaya Agung - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Makarim & Taira - Indonesia
- Orica Australia Pty. Ltd.
- The Treasury - Australian Government
- Chettinad Cement Corporation Ltd - India
- Jaiprakash Power Ventures ltd
- IEA Clean Coal Centre - UK
- Barasentosa Lestari - Indonesia
- Deloitte Consulting - India
- Altura Mining Limited, Indonesia
- Trasteel International SA, Italy
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Global Business Power Corporation, Philippines
- Global Coal Blending Company Limited - Australia
- Jindal Steel & Power Ltd - India
- GMR Energy Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Interocean Group of Companies - India
- Thiess Contractors Indonesia
- Ministry of Transport, Egypt
- Eastern Coal Council - USA
- Sical Logistics Limited - India
- Australian Commodity Traders Exchange
- San Jose City I Power Corp, Philippines
- Billiton Holdings Pty Ltd - Australia
- Indo Tambangraya Megah - Indonesia
- SMG Consultants - Indonesia
- Bhushan Steel Limited - India
- Sree Jayajothi Cements Limited - India
- Miang Besar Coal Terminal - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kapuas Tunggal Persada - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Coal and Oil Company - UAE
- Formosa Plastics Group - Taiwan
- The State Trading Corporation of India Ltd
- Minerals Council of Australia
- Sojitz Corporation - Japan
- TeaM Sual Corporation - Philippines
- MS Steel International - UAE
- Merrill Lynch Commodities Europe
- Sakthi Sugars Limited - India
- Vedanta Resources Plc - India
- Carbofer General Trading SA - India
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