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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, 06 May 20
KOSPO INVITED COAL BIDS FOR LOW CALORIFIC VALUE COAL
COALspot.com: Korea Southern Power Co., Ltd. (KOSPO) has issued an International tender for 160,000 Metric Tons (MT) Low Calorific Value Coal for J ...
Wednesday, 06 May 20
COST CHALLENGES IN A US$20/BBL WORLD - WOOD MACKENZIE
A new approach is needed to ensure supply sector resilience
How will US$20/bbl affect the oil and gas supply chain?
It’s going to g ...
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MARKET INSIGHT - INTERMODAL
It comes as no surprise that activity in the dry bulk SnP market remains soft, with asset values caught in the downward spiral generated by the Cov ...
Wednesday, 06 May 20
FLOATING STORAGE OF OIL CARGOES - STANDARD CLUB
KNOWLEDGE TO ELEVATE
Due to a combination of circumstances there is now a worldwide shortage of storage space ashore for both unrefi ...
Wednesday, 06 May 20
IRON ORE TRADE REMAINS REMARKABLY RESILIENT THIS YEAR, AT LEAST IN ASIA - BANCHERO COSTA
Iron ore trade remains remarkably resilient this year, at least in Asia, despite the global economic impact from COVID-19. In the first 4 months of ...
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- Indogreen Group - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Indian Energy Exchange, India
- Indonesian Coal Mining Association
- Merrill Lynch Commodities Europe
- Kumho Petrochemical, South Korea
- Minerals Council of Australia
- SMC Global Power, Philippines
- Krishnapatnam Port Company Ltd. - India
- GMR Energy Limited - India
- Interocean Group of Companies - India
- Bhoruka Overseas - Indonesia
- Star Paper Mills Limited - India
- Marubeni Corporation - India
- Rashtriya Ispat Nigam Limited - India
- Borneo Indobara - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- PNOC Exploration Corporation - Philippines
- Kohat Cement Company Ltd. - Pakistan
- Sindya Power Generating Company Private Ltd
- Billiton Holdings Pty Ltd - Australia
- Parry Sugars Refinery, India
- Central Electricity Authority - India
- Sree Jayajothi Cements Limited - India
- Latin American Coal - Colombia
- Eastern Coal Council - USA
- Kalimantan Lumbung Energi - Indonesia
- Bukit Baiduri Energy - Indonesia
- Siam City Cement PLC, Thailand
- South Luzon Thermal Energy Corporation
- Makarim & Taira - Indonesia
- Salva Resources Pvt Ltd - India
- Central Java Power - Indonesia
- Deloitte Consulting - India
- GAC Shipping (India) Pvt Ltd
- Australian Commodity Traders Exchange
- Power Finance Corporation Ltd., India
- Price Waterhouse Coopers - Russia
- Anglo American - United Kingdom
- Sakthi Sugars Limited - India
- Orica Australia Pty. Ltd.
- OPG Power Generation Pvt Ltd - India
- IHS Mccloskey Coal Group - USA
- Sojitz Corporation - Japan
- Directorate Of Revenue Intelligence - India
- Kapuas Tunggal Persada - Indonesia
- Grasim Industreis Ltd - India
- Kartika Selabumi Mining - Indonesia
- International Coal Ventures Pvt Ltd - India
- Orica Mining Services - Indonesia
- Cement Manufacturers Association - India
- McConnell Dowell - Australia
- Attock Cement Pakistan Limited
- Altura Mining Limited, Indonesia
- Planning Commission, India
- Mercuria Energy - Indonesia
- White Energy Company Limited
- Therma Luzon, Inc, Philippines
- Georgia Ports Authority, United States
- Australian Coal Association
- Global Coal Blending Company Limited - Australia
- Gujarat Electricity Regulatory Commission - India
- Dalmia Cement Bharat India
- London Commodity Brokers - England
- Trasteel International SA, Italy
- Leighton Contractors Pty Ltd - Australia
- Ministry of Transport, Egypt
- Globalindo Alam Lestari - Indonesia
- Standard Chartered Bank - UAE
- Barasentosa Lestari - Indonesia
- Straits Asia Resources Limited - Singapore
- Alfred C Toepfer International GmbH - Germany
- Bharathi Cement Corporation - India
- Semirara Mining and Power Corporation, Philippines
- Ceylon Electricity Board - Sri Lanka
- Agrawal Coal Company - India
- Chamber of Mines of South Africa
- Vizag Seaport Private Limited - India
- Jindal Steel & Power Ltd - India
- PTC India Limited - India
- Meralco Power Generation, Philippines
- Indika Energy - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Semirara Mining Corp, Philippines
- Indo Tambangraya Megah - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Pendopo Energi Batubara - Indonesia
- The State Trading Corporation of India Ltd
- Mercator Lines Limited - India
- Parliament of New Zealand
- LBH Netherlands Bv - Netherlands
- Karaikal Port Pvt Ltd - India
- Intertek Mineral Services - Indonesia
- Ministry of Finance - Indonesia
- Global Business Power Corporation, Philippines
- Coal and Oil Company - UAE
- Aditya Birla Group - India
- Essar Steel Hazira Ltd - India
- Binh Thuan Hamico - Vietnam
- Baramulti Group, Indonesia
- Wilmar Investment Holdings
- Gujarat Sidhee Cement - India
- TeaM Sual Corporation - Philippines
- Singapore Mercantile Exchange
- Eastern Energy - Thailand
- Tata Chemicals Ltd - India
- Port Waratah Coal Services - Australia
- Rio Tinto Coal - Australia
- Ind-Barath Power Infra Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Pipit Mutiara Jaya. PT, Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Economic Council, Georgia
- Petrochimia International Co. Ltd.- Taiwan
- Sinarmas Energy and Mining - Indonesia
- Kaltim Prima Coal - Indonesia
- Global Green Power PLC Corporation, Philippines
- Electricity Authority, New Zealand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Electricity Generating Authority of Thailand
- Kobexindo Tractors - Indoneisa
- SMG Consultants - Indonesia
- Videocon Industries ltd - India
- Energy Development Corp, Philippines
- Kepco SPC Power Corporation, Philippines
- Oldendorff Carriers - Singapore
- CNBM International Corporation - China
- Jaiprakash Power Ventures ltd
- Larsen & Toubro Limited - India
- Ministry of Mines - Canada
- The University of Queensland
- Medco Energi Mining Internasional
- VISA Power Limited - India
- ASAPP Information Group - India
- Bukit Asam (Persero) Tbk - Indonesia
- ICICI Bank Limited - India
- Metalloyd Limited - United Kingdom
- Wood Mackenzie - Singapore
- Iligan Light & Power Inc, Philippines
- Thiess Contractors Indonesia
- Ambuja Cements Ltd - India
- The Treasury - Australian Government
- Uttam Galva Steels Limited - India
- Indian Oil Corporation Limited
- SN Aboitiz Power Inc, Philippines
- Goldman Sachs - Singapore
- Asmin Koalindo Tuhup - Indonesia
- Coalindo Energy - Indonesia
- New Zealand Coal & Carbon
- IEA Clean Coal Centre - UK
- Chettinad Cement Corporation Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Vedanta Resources Plc - India
- Savvy Resources Ltd - HongKong
- Aboitiz Power Corporation - Philippines
- Toyota Tsusho Corporation, Japan
- Bangladesh Power Developement Board
- Africa Commodities Group - South Africa
- European Bulk Services B.V. - Netherlands
- Jorong Barutama Greston.PT - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Riau Bara Harum - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Sarangani Energy Corporation, Philippines
- Malabar Cements Ltd - India
- Formosa Plastics Group - Taiwan
- Renaissance Capital - South Africa
- Cigading International Bulk Terminal - Indonesia
- Samtan Co., Ltd - South Korea
- GN Power Mariveles Coal Plant, Philippines
- Energy Link Ltd, New Zealand
- Neyveli Lignite Corporation Ltd, - India
- Romanian Commodities Exchange
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bhatia International Limited - India
- Simpson Spence & Young - Indonesia
- Commonwealth Bank - Australia
- CIMB Investment Bank - Malaysia
- Coastal Gujarat Power Limited - India
- Lanco Infratech Ltd - India
- Mjunction Services Limited - India
- MS Steel International - UAE
- Bank of Tokyo Mitsubishi UFJ Ltd
- Siam City Cement - Thailand
- Carbofer General Trading SA - India
- Bulk Trading Sa - Switzerland
- Bhushan Steel Limited - India
- Thai Mozambique Logistica
- San Jose City I Power Corp, Philippines
- Sical Logistics Limited - India
- Kideco Jaya Agung - Indonesia
- India Bulls Power Limited - India
- PetroVietnam Power Coal Import and Supply Company
- PowerSource Philippines DevCo
- Mintek Dendrill Indonesia
- Petron Corporation, Philippines
- Bukit Makmur.PT - Indonesia
- Banpu Public Company Limited - Thailand
- Bayan Resources Tbk. - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Antam Resourcindo - Indonesia
- Meenaskhi Energy Private Limited - India
- Posco Energy - South Korea
- Heidelberg Cement - Germany
- GVK Power & Infra Limited - India
- Xindia Steels Limited - India
- Manunggal Multi Energi - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- TNB Fuel Sdn Bhd - Malaysia
- Maheswari Brothers Coal Limited - India
- Edison Trading Spa - Italy
- Timah Investasi Mineral - Indoneisa
- Madhucon Powers Ltd - India
- Independent Power Producers Association of India
- Tamil Nadu electricity Board
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