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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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Saturday, 21 March 20
PANAMAX: 82,000DWT SHIP AGREED $4,250 FOR A COAL TRIP VIA INDONESIA REDELIVERY SOUTH CHINA - BALTIC BRIEFING
Capesize
The Capesize market made some headway this past week despite being buffeted by the global pandemic storm. With the market in a constan ...
Friday, 20 March 20
VOLATILITY TO INCREASE IN TANKER MARKET FOLLOWING OIL PRICE WAR - DREWRY
Crude oil prices plunged by more than a third in the past week after OPEC+ failed to agree on production cut as demand softened in the aftermath of ...
Friday, 20 March 20
CHINA'S BENCHMARK POWER COAL PRICE DROPS SLIGHTLY - XINHUA
China’s benchmark power coal price dropped slightly during the past week.
The Bohai-Rim Steam-Coal Price Index (BSPI), a gauge ...
Friday, 20 March 20
OIL PRICES COULD FALL BELOW ZERO: ANALYST - FOX BUSINESS
Plunging oil prices could be headed a lot lower – possibly below zero, according to one Wall Street analyst.
West Texas Interm ...
Friday, 20 March 20
84% OF FEBRUARY BUNKER SALES IN SINGAPORE ARE LOW-SULPHUR FUELS - BIMCO
Low-sulphur fuels accounted for 84% of total February sales in Singapore, slightly up from 83% in January. The sale of low-sulphur fuel oil (LSFO) ...
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- Singapore Mercantile Exchange
- SMC Global Power, Philippines
- Orica Australia Pty. Ltd.
- Kideco Jaya Agung - Indonesia
- Salva Resources Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- Eastern Energy - Thailand
- Carbofer General Trading SA - India
- Merrill Lynch Commodities Europe
- The University of Queensland
- Dalmia Cement Bharat India
- Maharashtra Electricity Regulatory Commission - India
- AsiaOL BioFuels Corp., Philippines
- Miang Besar Coal Terminal - Indonesia
- Siam City Cement - Thailand
- Semirara Mining and Power Corporation, Philippines
- Siam City Cement PLC, Thailand
- Star Paper Mills Limited - India
- Energy Development Corp, Philippines
- Deloitte Consulting - India
- Renaissance Capital - South Africa
- Banpu Public Company Limited - Thailand
- Global Business Power Corporation, Philippines
- GAC Shipping (India) Pvt Ltd
- CNBM International Corporation - China
- Ambuja Cements Ltd - India
- The State Trading Corporation of India Ltd
- Ceylon Electricity Board - Sri Lanka
- Sical Logistics Limited - India
- Antam Resourcindo - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- PNOC Exploration Corporation - Philippines
- Coal and Oil Company - UAE
- Aboitiz Power Corporation - Philippines
- Heidelberg Cement - Germany
- Offshore Bulk Terminal Pte Ltd, Singapore
- Ministry of Mines - Canada
- Kobexindo Tractors - Indoneisa
- Kapuas Tunggal Persada - Indonesia
- Binh Thuan Hamico - Vietnam
- Meenaskhi Energy Private Limited - India
- Attock Cement Pakistan Limited
- Global Coal Blending Company Limited - Australia
- Ind-Barath Power Infra Limited - India
- Chettinad Cement Corporation Ltd - India
- Anglo American - United Kingdom
- Karaikal Port Pvt Ltd - India
- Iligan Light & Power Inc, Philippines
- Australian Commodity Traders Exchange
- Krishnapatnam Port Company Ltd. - India
- Vijayanagar Sugar Pvt Ltd - India
- Parliament of New Zealand
- Cigading International Bulk Terminal - Indonesia
- SN Aboitiz Power Inc, Philippines
- Mercator Lines Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Holcim Trading Pte Ltd - Singapore
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Global Green Power PLC Corporation, Philippines
- Energy Link Ltd, New Zealand
- Planning Commission, India
- Mintek Dendrill Indonesia
- Romanian Commodities Exchange
- The Treasury - Australian Government
- Central Java Power - Indonesia
- Samtan Co., Ltd - South Korea
- Bangladesh Power Developement Board
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Directorate Of Revenue Intelligence - India
- Aditya Birla Group - India
- Coastal Gujarat Power Limited - India
- VISA Power Limited - India
- Larsen & Toubro Limited - India
- Oldendorff Carriers - Singapore
- Sindya Power Generating Company Private Ltd
- Billiton Holdings Pty Ltd - Australia
- Indian Energy Exchange, India
- Sakthi Sugars Limited - India
- Wilmar Investment Holdings
- Africa Commodities Group - South Africa
- Videocon Industries ltd - India
- Electricity Authority, New Zealand
- Mercuria Energy - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Maheswari Brothers Coal Limited - India
- Indonesian Coal Mining Association
- Indian Oil Corporation Limited
- Electricity Generating Authority of Thailand
- Metalloyd Limited - United Kingdom
- Parry Sugars Refinery, India
- OPG Power Generation Pvt Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Pendopo Energi Batubara - Indonesia
- Essar Steel Hazira Ltd - India
- Indo Tambangraya Megah - Indonesia
- Sojitz Corporation - Japan
- SMG Consultants - Indonesia
- Bukit Makmur.PT - Indonesia
- PTC India Limited - India
- Gujarat Electricity Regulatory Commission - India
- Marubeni Corporation - India
- Indogreen Group - Indonesia
- GVK Power & Infra Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Bukit Asam (Persero) Tbk - Indonesia
- Orica Mining Services - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Manunggal Multi Energi - Indonesia
- Eastern Coal Council - USA
- Bharathi Cement Corporation - India
- Bhushan Steel Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Toyota Tsusho Corporation, Japan
- Semirara Mining Corp, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Globalindo Alam Lestari - Indonesia
- Vizag Seaport Private Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Grasim Industreis Ltd - India
- Sarangani Energy Corporation, Philippines
- Ministry of Transport, Egypt
- Bahari Cakrawala Sebuku - Indonesia
- Jaiprakash Power Ventures ltd
- Sree Jayajothi Cements Limited - India
- Makarim & Taira - Indonesia
- Simpson Spence & Young - Indonesia
- CIMB Investment Bank - Malaysia
- Meralco Power Generation, Philippines
- Goldman Sachs - Singapore
- Indika Energy - Indonesia
- International Coal Ventures Pvt Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Xindia Steels Limited - India
- Lanco Infratech Ltd - India
- Edison Trading Spa - Italy
- India Bulls Power Limited - India
- Central Electricity Authority - India
- Port Waratah Coal Services - Australia
- Thai Mozambique Logistica
- Medco Energi Mining Internasional
- Riau Bara Harum - Indonesia
- TeaM Sual Corporation - Philippines
- Latin American Coal - Colombia
- Price Waterhouse Coopers - Russia
- Commonwealth Bank - Australia
- Bhatia International Limited - India
- Borneo Indobara - Indonesia
- London Commodity Brokers - England
- Bukit Baiduri Energy - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Trasteel International SA, Italy
- South Luzon Thermal Energy Corporation
- Australian Coal Association
- Formosa Plastics Group - Taiwan
- Intertek Mineral Services - Indonesia
- Jindal Steel & Power Ltd - India
- PowerSource Philippines DevCo
- GMR Energy Limited - India
- LBH Netherlands Bv - Netherlands
- Baramulti Group, Indonesia
- Alfred C Toepfer International GmbH - Germany
- Timah Investasi Mineral - Indoneisa
- Tamil Nadu electricity Board
- Therma Luzon, Inc, Philippines
- Leighton Contractors Pty Ltd - Australia
- San Jose City I Power Corp, Philippines
- Altura Mining Limited, Indonesia
- Minerals Council of Australia
- Gujarat Sidhee Cement - India
- Posco Energy - South Korea
- Straits Asia Resources Limited - Singapore
- Rashtriya Ispat Nigam Limited - India
- ICICI Bank Limited - India
- Tata Chemicals Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Petron Corporation, Philippines
- Malabar Cements Ltd - India
- Vedanta Resources Plc - India
- Kalimantan Lumbung Energi - Indonesia
- IHS Mccloskey Coal Group - USA
- Cement Manufacturers Association - India
- Kumho Petrochemical, South Korea
- Agrawal Coal Company - India
- Thiess Contractors Indonesia
- Georgia Ports Authority, United States
- Barasentosa Lestari - Indonesia
- Wood Mackenzie - Singapore
- ASAPP Information Group - India
- New Zealand Coal & Carbon
- Standard Chartered Bank - UAE
- Gujarat Mineral Development Corp Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- McConnell Dowell - Australia
- Kepco SPC Power Corporation, Philippines
- Independent Power Producers Association of India
- Bhoruka Overseas - Indonesia
- Mjunction Services Limited - India
- Chamber of Mines of South Africa
- MS Steel International - UAE
- Uttam Galva Steels Limited - India
- Kaltim Prima Coal - Indonesia
- Madhucon Powers Ltd - India
- Interocean Group of Companies - India
- Asmin Koalindo Tuhup - Indonesia
- Coalindo Energy - Indonesia
- Rio Tinto Coal - Australia
- Ministry of Finance - Indonesia
- Economic Council, Georgia
- Savvy Resources Ltd - HongKong
- Kartika Selabumi Mining - Indonesia
- European Bulk Services B.V. - Netherlands
- Bayan Resources Tbk. - Indonesia
- Power Finance Corporation Ltd., India
- Bank of Tokyo Mitsubishi UFJ Ltd
- IEA Clean Coal Centre - UK
- White Energy Company Limited
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