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