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