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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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Tuesday, 05 May 20
SUPRAMAXES: YTD SLIDE HAS BEEN 45%, WITH THE AVERAGE FOR 2020 TCA HOLDING AT US$5,793 - ALLIED
It has been almost three months since the WHO officially categorized the current coronavirus outbreak as a global pandemic, an outbreak that has br ...
Monday, 04 May 20
U.S. ESTIMATED COAL PRODUCTION FALL 39.4% YEAR ON YEAR IN THE WEEK ENDED APRIL 25 - EIA
Estimated U.S. coal production totaled about 8.6 million short tons (MMst) For the week ended April 25, 2020, says EIA in its latest report.
E ...
Saturday, 02 May 20
SUPRAMAX: ASIA, STRONGER NUMBERS - A 55.000-DWT WAS FIXED FROM INDONESIA TO CHINA IN THE MID $6,000S - BALTIC BRIEFING
Capesize
A tepid week for the big ships, as macro concerns continued to weigh heavily on the index. All of the major voyage routes lost value, ...
Friday, 01 May 20
KOSPO INVITED OFFER FOR 5600 NCV COAL FOR Q3 2020 LOADING
COALspot.com: Korea Southern Power Co., Ltd. (KOSPO) has issued an International tender for 260,000 Metric Tons (MT) steam coal for Boryeong Power ...
Friday, 01 May 20
GLOBAL COAL DEMAND TO FALL BY ABOUT 8% IN 2020,THE LARGEST DROP SINCE WORLD WAR II - IEA
We expect global coal demand to fall by about 8% in 2020, the largest drop since World War II, with coal use declining in virtually every sector of ...
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- Petrochimia International Co. Ltd.- Taiwan
- Planning Commission, India
- Kepco SPC Power Corporation, Philippines
- Leighton Contractors Pty Ltd - Australia
- SN Aboitiz Power Inc, Philippines
- McConnell Dowell - Australia
- Barasentosa Lestari - Indonesia
- PNOC Exploration Corporation - Philippines
- Banpu Public Company Limited - Thailand
- Bhatia International Limited - India
- Thiess Contractors Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Toyota Tsusho Corporation, Japan
- Chettinad Cement Corporation Ltd - India
- Commonwealth Bank - Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Aditya Birla Group - India
- Alfred C Toepfer International GmbH - Germany
- Baramulti Group, Indonesia
- Indonesian Coal Mining Association
- Videocon Industries ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Essar Steel Hazira Ltd - India
- Makarim & Taira - Indonesia
- Savvy Resources Ltd - HongKong
- Heidelberg Cement - Germany
- Holcim Trading Pte Ltd - Singapore
- Renaissance Capital - South Africa
- Chamber of Mines of South Africa
- Central Java Power - Indonesia
- Goldman Sachs - Singapore
- Miang Besar Coal Terminal - Indonesia
- Deloitte Consulting - India
- Kalimantan Lumbung Energi - Indonesia
- Larsen & Toubro Limited - India
- Electricity Generating Authority of Thailand
- The Treasury - Australian Government
- Gujarat Sidhee Cement - India
- Directorate Of Revenue Intelligence - India
- Port Waratah Coal Services - Australia
- Coastal Gujarat Power Limited - India
- PowerSource Philippines DevCo
- Eastern Coal Council - USA
- Ceylon Electricity Board - Sri Lanka
- TeaM Sual Corporation - Philippines
- Carbofer General Trading SA - India
- Edison Trading Spa - Italy
- Maheswari Brothers Coal Limited - India
- Kapuas Tunggal Persada - Indonesia
- Ministry of Mines - Canada
- Straits Asia Resources Limited - Singapore
- Coal and Oil Company - UAE
- Rio Tinto Coal - Australia
- The University of Queensland
- Medco Energi Mining Internasional
- Aboitiz Power Corporation - Philippines
- Ministry of Finance - Indonesia
- Semirara Mining Corp, Philippines
- Global Green Power PLC Corporation, Philippines
- Kartika Selabumi Mining - Indonesia
- Siam City Cement - Thailand
- ASAPP Information Group - India
- Economic Council, Georgia
- Merrill Lynch Commodities Europe
- GN Power Mariveles Coal Plant, Philippines
- International Coal Ventures Pvt Ltd - India
- Salva Resources Pvt Ltd - India
- Independent Power Producers Association of India
- Uttam Galva Steels Limited - India
- GMR Energy Limited - India
- London Commodity Brokers - England
- Jindal Steel & Power Ltd - India
- Standard Chartered Bank - UAE
- Kideco Jaya Agung - Indonesia
- Petron Corporation, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Metalloyd Limited - United Kingdom
- Sindya Power Generating Company Private Ltd
- Electricity Authority, New Zealand
- Bangladesh Power Developement Board
- Interocean Group of Companies - India
- Dalmia Cement Bharat India
- ICICI Bank Limited - India
- Australian Coal Association
- Samtan Co., Ltd - South Korea
- Indika Energy - Indonesia
- Parliament of New Zealand
- Therma Luzon, Inc, Philippines
- AsiaOL BioFuels Corp., Philippines
- Orica Australia Pty. Ltd.
- Xindia Steels Limited - India
- Kumho Petrochemical, South Korea
- Jorong Barutama Greston.PT - Indonesia
- SMG Consultants - Indonesia
- MS Steel International - UAE
- Global Coal Blending Company Limited - Australia
- CNBM International Corporation - China
- Posco Energy - South Korea
- Ind-Barath Power Infra Limited - India
- Wood Mackenzie - Singapore
- Indogreen Group - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Mercator Lines Limited - India
- Indian Oil Corporation Limited
- Parry Sugars Refinery, India
- The State Trading Corporation of India Ltd
- Riau Bara Harum - Indonesia
- Sical Logistics Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Timah Investasi Mineral - Indoneisa
- Karbindo Abesyapradhi - Indoneisa
- Energy Development Corp, Philippines
- PTC India Limited - India
- VISA Power Limited - India
- Ministry of Transport, Egypt
- Sree Jayajothi Cements Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Pendopo Energi Batubara - Indonesia
- Mjunction Services Limited - India
- Coalindo Energy - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Grasim Industreis Ltd - India
- IHS Mccloskey Coal Group - USA
- Vedanta Resources Plc - India
- Vizag Seaport Private Limited - India
- Indo Tambangraya Megah - Indonesia
- Formosa Plastics Group - Taiwan
- Sarangani Energy Corporation, Philippines
- Africa Commodities Group - South Africa
- New Zealand Coal & Carbon
- GVK Power & Infra Limited - India
- Central Electricity Authority - India
- Power Finance Corporation Ltd., India
- Billiton Holdings Pty Ltd - Australia
- Kobexindo Tractors - Indoneisa
- Wilmar Investment Holdings
- Tamil Nadu electricity Board
- Meralco Power Generation, Philippines
- Semirara Mining and Power Corporation, Philippines
- India Bulls Power Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Orica Mining Services - Indonesia
- Indian Energy Exchange, India
- Bukit Makmur.PT - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Madhucon Powers Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- IEA Clean Coal Centre - UK
- Bulk Trading Sa - Switzerland
- Mintek Dendrill Indonesia
- Oldendorff Carriers - Singapore
- Kaltim Prima Coal - Indonesia
- CIMB Investment Bank - Malaysia
- Iligan Light & Power Inc, Philippines
- Meenaskhi Energy Private Limited - India
- Cement Manufacturers Association - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Manunggal Multi Energi - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Mercuria Energy - Indonesia
- Minerals Council of Australia
- Bukit Asam (Persero) Tbk - Indonesia
- Antam Resourcindo - Indonesia
- Tata Chemicals Ltd - India
- Bharathi Cement Corporation - India
- Attock Cement Pakistan Limited
- Intertek Mineral Services - Indonesia
- Bhoruka Overseas - Indonesia
- Latin American Coal - Colombia
- San Jose City I Power Corp, Philippines
- Bukit Baiduri Energy - Indonesia
- South Luzon Thermal Energy Corporation
- Australian Commodity Traders Exchange
- Simpson Spence & Young - Indonesia
- Georgia Ports Authority, United States
- Price Waterhouse Coopers - Russia
- Trasteel International SA, Italy
- Malabar Cements Ltd - India
- Singapore Mercantile Exchange
- Romanian Commodities Exchange
- Sakthi Sugars Limited - India
- Karaikal Port Pvt Ltd - India
- Bhushan Steel Limited - India
- Star Paper Mills Limited - India
- Altura Mining Limited, Indonesia
- Globalindo Alam Lestari - Indonesia
- Borneo Indobara - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- GAC Shipping (India) Pvt Ltd
- White Energy Company Limited
- LBH Netherlands Bv - Netherlands
- Gujarat Electricity Regulatory Commission - India
- Energy Link Ltd, New Zealand
- OPG Power Generation Pvt Ltd - India
- Siam City Cement PLC, Thailand
- Ambuja Cements Ltd - India
- Binh Thuan Hamico - Vietnam
- SMC Global Power, Philippines
- Thai Mozambique Logistica
- Eastern Energy - Thailand
- Global Business Power Corporation, Philippines
- Sojitz Corporation - Japan
- Lanco Infratech Ltd - India
- Marubeni Corporation - India
- Agrawal Coal Company - India
- Cigading International Bulk Terminal - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Anglo American - United Kingdom
- European Bulk Services B.V. - Netherlands
- Jaiprakash Power Ventures ltd
- Bayan Resources Tbk. - Indonesia
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