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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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Monday, 18 May 20
TAKING ADVANTAGE OF VIRUS DISTRACTION - BALTIC EXCHANGE
As the industry grapples to deal with exceptional Covid-19-related challenges, a deeper threat is coming to the fore. At this time of crisis, more ...
Monday, 18 May 20
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Monday, 18 May 20
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Sunday, 17 May 20
A 55,000 OPEN ILIGAN FIXING AT $6,500 VIA INDONESIA REDELIVERY INDIA - BALTIC BRIEFING
Capesize
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Friday, 15 May 20
CHINA'S COAL CONSUMPTION TO FALL Y/Y IN SECOND QUARTER, IMPROVEMENT EXPECTED IN SECOND HALF - INDUSTRY BODY: REUTERS
China’s coal consumption is expected to decline in the second quarter from a year earlier, but will see an improvement in the second half of ...
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- Cement Manufacturers Association - India
- European Bulk Services B.V. - Netherlands
- Toyota Tsusho Corporation, Japan
- Makarim & Taira - Indonesia
- Africa Commodities Group - South Africa
- Rashtriya Ispat Nigam Limited - India
- Billiton Holdings Pty Ltd - Australia
- Kideco Jaya Agung - Indonesia
- Riau Bara Harum - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Global Coal Blending Company Limited - Australia
- Chamber of Mines of South Africa
- GAC Shipping (India) Pvt Ltd
- Indogreen Group - Indonesia
- Timah Investasi Mineral - Indoneisa
- Leighton Contractors Pty Ltd - Australia
- Vijayanagar Sugar Pvt Ltd - India
- IHS Mccloskey Coal Group - USA
- PowerSource Philippines DevCo
- Attock Cement Pakistan Limited
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Binh Thuan Hamico - Vietnam
- Maharashtra Electricity Regulatory Commission - India
- South Luzon Thermal Energy Corporation
- Kohat Cement Company Ltd. - Pakistan
- PTC India Limited - India
- The Treasury - Australian Government
- Gujarat Electricity Regulatory Commission - India
- Energy Link Ltd, New Zealand
- Metalloyd Limited - United Kingdom
- Indonesian Coal Mining Association
- Bangladesh Power Developement Board
- Planning Commission, India
- Georgia Ports Authority, United States
- Iligan Light & Power Inc, Philippines
- Ministry of Transport, Egypt
- Star Paper Mills Limited - India
- Eastern Energy - Thailand
- Ind-Barath Power Infra Limited - India
- AsiaOL BioFuels Corp., Philippines
- Maheswari Brothers Coal Limited - India
- Energy Development Corp, Philippines
- Indo Tambangraya Megah - Indonesia
- Sical Logistics Limited - India
- Ceylon Electricity Board - Sri Lanka
- Electricity Authority, New Zealand
- Siam City Cement PLC, Thailand
- ICICI Bank Limited - India
- Bukit Makmur.PT - Indonesia
- Kepco SPC Power Corporation, Philippines
- London Commodity Brokers - England
- Coastal Gujarat Power Limited - India
- The State Trading Corporation of India Ltd
- Vedanta Resources Plc - India
- Bukit Asam (Persero) Tbk - Indonesia
- Tata Chemicals Ltd - India
- Formosa Plastics Group - Taiwan
- ASAPP Information Group - India
- GVK Power & Infra Limited - India
- Commonwealth Bank - Australia
- Holcim Trading Pte Ltd - Singapore
- Intertek Mineral Services - Indonesia
- Bulk Trading Sa - Switzerland
- Latin American Coal - Colombia
- Deloitte Consulting - India
- Chettinad Cement Corporation Ltd - India
- TeaM Sual Corporation - Philippines
- Larsen & Toubro Limited - India
- Medco Energi Mining Internasional
- Oldendorff Carriers - Singapore
- SMG Consultants - Indonesia
- Essar Steel Hazira Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Savvy Resources Ltd - HongKong
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bank of Tokyo Mitsubishi UFJ Ltd
- Samtan Co., Ltd - South Korea
- Sinarmas Energy and Mining - Indonesia
- Thiess Contractors Indonesia
- Lanco Infratech Ltd - India
- CIMB Investment Bank - Malaysia
- Banpu Public Company Limited - Thailand
- Salva Resources Pvt Ltd - India
- Coalindo Energy - Indonesia
- Ministry of Mines - Canada
- Xindia Steels Limited - India
- LBH Netherlands Bv - Netherlands
- Ministry of Finance - Indonesia
- Kaltim Prima Coal - Indonesia
- Sakthi Sugars Limited - India
- SMC Global Power, Philippines
- Karaikal Port Pvt Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Mercuria Energy - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Wilmar Investment Holdings
- Romanian Commodities Exchange
- Global Green Power PLC Corporation, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Tamil Nadu electricity Board
- Alfred C Toepfer International GmbH - Germany
- Mercator Lines Limited - India
- Coal and Oil Company - UAE
- Bhoruka Overseas - Indonesia
- IEA Clean Coal Centre - UK
- Indian Oil Corporation Limited
- Central Java Power - Indonesia
- Heidelberg Cement - Germany
- Meenaskhi Energy Private Limited - India
- Malabar Cements Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Gujarat Sidhee Cement - India
- Kumho Petrochemical, South Korea
- Therma Luzon, Inc, Philippines
- Electricity Generating Authority of Thailand
- Borneo Indobara - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Port Waratah Coal Services - Australia
- Global Business Power Corporation, Philippines
- Kapuas Tunggal Persada - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- CNBM International Corporation - China
- Videocon Industries ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Rio Tinto Coal - Australia
- Petron Corporation, Philippines
- Madhucon Powers Ltd - India
- Orica Mining Services - Indonesia
- Meralco Power Generation, Philippines
- OPG Power Generation Pvt Ltd - India
- Sojitz Corporation - Japan
- Jindal Steel & Power Ltd - India
- Barasentosa Lestari - Indonesia
- Carbofer General Trading SA - India
- Sree Jayajothi Cements Limited - India
- MS Steel International - UAE
- Sarangani Energy Corporation, Philippines
- GMR Energy Limited - India
- The University of Queensland
- Karbindo Abesyapradhi - Indoneisa
- Bukit Baiduri Energy - Indonesia
- Pendopo Energi Batubara - Indonesia
- Minerals Council of Australia
- Bhushan Steel Limited - India
- PNOC Exploration Corporation - Philippines
- Semirara Mining Corp, Philippines
- Jaiprakash Power Ventures ltd
- Altura Mining Limited, Indonesia
- San Jose City I Power Corp, Philippines
- India Bulls Power Limited - India
- Anglo American - United Kingdom
- Edison Trading Spa - Italy
- Economic Council, Georgia
- SN Aboitiz Power Inc, Philippines
- Mjunction Services Limited - India
- Siam City Cement - Thailand
- McConnell Dowell - Australia
- Bharathi Cement Corporation - India
- Grasim Industreis Ltd - India
- Antam Resourcindo - Indonesia
- Trasteel International SA, Italy
- Gujarat Mineral Development Corp Ltd - India
- Singapore Mercantile Exchange
- Price Waterhouse Coopers - Russia
- Kartika Selabumi Mining - Indonesia
- Parliament of New Zealand
- Pipit Mutiara Jaya. PT, Indonesia
- Central Electricity Authority - India
- Eastern Coal Council - USA
- Interocean Group of Companies - India
- Jorong Barutama Greston.PT - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Aditya Birla Group - India
- Sindya Power Generating Company Private Ltd
- Neyveli Lignite Corporation Ltd, - India
- Miang Besar Coal Terminal - Indonesia
- Wood Mackenzie - Singapore
- Bayan Resources Tbk. - Indonesia
- Manunggal Multi Energi - Indonesia
- Agrawal Coal Company - India
- Indian Energy Exchange, India
- Marubeni Corporation - India
- Merrill Lynch Commodities Europe
- Indika Energy - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Baramulti Group, Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Kobexindo Tractors - Indoneisa
- Parry Sugars Refinery, India
- New Zealand Coal & Carbon
- Directorate Of Revenue Intelligence - India
- Renaissance Capital - South Africa
- Globalindo Alam Lestari - Indonesia
- Thai Mozambique Logistica
- Australian Coal Association
- Independent Power Producers Association of India
- VISA Power Limited - India
- Vizag Seaport Private Limited - India
- Uttam Galva Steels Limited - India
- Aboitiz Power Corporation - Philippines
- Ambuja Cements Ltd - India
- Bhatia International Limited - India
- Mintek Dendrill Indonesia
- Posco Energy - South Korea
- Australian Commodity Traders Exchange
- White Energy Company Limited
- Goldman Sachs - Singapore
- Semirara Mining and Power Corporation, Philippines
- International Coal Ventures Pvt Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Straits Asia Resources Limited - Singapore
- Dalmia Cement Bharat India
- Standard Chartered Bank - UAE
- Orica Australia Pty. Ltd.
- Power Finance Corporation Ltd., India
- Simpson Spence & Young - Indonesia
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