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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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Thursday, 19 March 20
A CRUDE TSUNAMI: UP TO 3 MILLION BPD OF EXTRA OIL CAN HIT THE MARKET FROM APRIL, MORE COMING IN MAY - RYSTAD ENERGY
The extra oil coming into the global market from April will be as much as 3 million barrels per day (bpd), Rystad Energy estimates. Two million bpd ...
Thursday, 19 March 20
BIMCO REVISES 2020 FORECAST FOR MAIN SHIPPING MARKETS
The coronavirus pandemic is impacting global shipping demand for 2020 negatively. The speed of the virus spread makes it difficult to assess the fu ...
Thursday, 19 March 20
U.S. COAL EXPORTS DECLINED IN 2019 - EIA
In 2019, U.S. coal exports declined to 93 million short tons (MMst), a 20% decrease from the previous year, according to the U.S. Energy Informatio ...
Thursday, 19 March 20
SOUTH KOREA'S KOSPO INVITED BIDS FOR MIN 3,700 OR MIN 4,200 NCV LOW CALORIFIC VALUE COAL
COALspot.com: Korea Southern Power Co., Ltd. (KOSPO), has issued an international tender for total 160,000 MT (±10%) (80,000 x 2 Panamax) of ...
Wednesday, 18 March 20
DRY BULK: INDONESIAN COAL CARGOES PROVIDING A BIG BOOST IN THE EAST WHERE SENTIMENT FOR HANDIES ALSO STARTED IMPROVING - INTERMODAL
The BDI ended last week with small gains on the back of an encouraging number of cargoes out of key trading regions that helped sustain the reserve ...
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- Vijayanagar Sugar Pvt Ltd - India
- Aditya Birla Group - India
- Rio Tinto Coal - Australia
- Semirara Mining and Power Corporation, Philippines
- Sakthi Sugars Limited - India
- Singapore Mercantile Exchange
- Kartika Selabumi Mining - Indonesia
- IEA Clean Coal Centre - UK
- Economic Council, Georgia
- Deloitte Consulting - India
- Parliament of New Zealand
- Australian Coal Association
- Billiton Holdings Pty Ltd - Australia
- Grasim Industreis Ltd - India
- Heidelberg Cement - Germany
- Ministry of Transport, Egypt
- Thiess Contractors Indonesia
- Ceylon Electricity Board - Sri Lanka
- South Luzon Thermal Energy Corporation
- Siam City Cement - Thailand
- Electricity Generating Authority of Thailand
- Eastern Energy - Thailand
- Leighton Contractors Pty Ltd - Australia
- Sindya Power Generating Company Private Ltd
- Essar Steel Hazira Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- CIMB Investment Bank - Malaysia
- Central Java Power - Indonesia
- Oldendorff Carriers - Singapore
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- AsiaOL BioFuels Corp., Philippines
- Meenaskhi Energy Private Limited - India
- Bangladesh Power Developement Board
- GAC Shipping (India) Pvt Ltd
- McConnell Dowell - Australia
- The State Trading Corporation of India Ltd
- Mintek Dendrill Indonesia
- Baramulti Group, Indonesia
- Madhucon Powers Ltd - India
- The University of Queensland
- European Bulk Services B.V. - Netherlands
- Bukit Baiduri Energy - Indonesia
- Thai Mozambique Logistica
- GMR Energy Limited - India
- Mercuria Energy - Indonesia
- Sree Jayajothi Cements Limited - India
- ICICI Bank Limited - India
- Antam Resourcindo - Indonesia
- San Jose City I Power Corp, Philippines
- Bulk Trading Sa - Switzerland
- Uttam Galva Steels Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Bukit Asam (Persero) Tbk - Indonesia
- Makarim & Taira - Indonesia
- Interocean Group of Companies - India
- Posco Energy - South Korea
- The Treasury - Australian Government
- Offshore Bulk Terminal Pte Ltd, Singapore
- Planning Commission, India
- Energy Development Corp, Philippines
- Coastal Gujarat Power Limited - India
- GVK Power & Infra Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Meralco Power Generation, Philippines
- Kumho Petrochemical, South Korea
- Tamil Nadu electricity Board
- Banpu Public Company Limited - Thailand
- Pipit Mutiara Jaya. PT, Indonesia
- Goldman Sachs - Singapore
- Kaltim Prima Coal - Indonesia
- Petron Corporation, Philippines
- Borneo Indobara - Indonesia
- Iligan Light & Power Inc, Philippines
- SMC Global Power, Philippines
- Formosa Plastics Group - Taiwan
- CNBM International Corporation - China
- Indian Oil Corporation Limited
- Neyveli Lignite Corporation Ltd, - India
- Australian Commodity Traders Exchange
- Indo Tambangraya Megah - Indonesia
- London Commodity Brokers - England
- Standard Chartered Bank - UAE
- Commonwealth Bank - Australia
- Central Electricity Authority - India
- Gujarat Mineral Development Corp Ltd - India
- Chamber of Mines of South Africa
- Binh Thuan Hamico - Vietnam
- Bukit Makmur.PT - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Cigading International Bulk Terminal - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- PetroVietnam Power Coal Import and Supply Company
- Coalindo Energy - Indonesia
- Mercator Lines Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Larsen & Toubro Limited - India
- India Bulls Power Limited - India
- Edison Trading Spa - Italy
- Kideco Jaya Agung - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Jindal Steel & Power Ltd - India
- Semirara Mining Corp, Philippines
- PowerSource Philippines DevCo
- Kobexindo Tractors - Indoneisa
- Barasentosa Lestari - Indonesia
- Intertek Mineral Services - Indonesia
- Tata Chemicals Ltd - India
- SN Aboitiz Power Inc, Philippines
- Bhoruka Overseas - Indonesia
- Electricity Authority, New Zealand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Carbofer General Trading SA - India
- Lanco Infratech Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Gujarat Electricity Regulatory Commission - India
- Metalloyd Limited - United Kingdom
- Energy Link Ltd, New Zealand
- TeaM Sual Corporation - Philippines
- Miang Besar Coal Terminal - Indonesia
- Global Green Power PLC Corporation, Philippines
- Ministry of Finance - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Globalindo Alam Lestari - Indonesia
- Price Waterhouse Coopers - Russia
- Orica Australia Pty. Ltd.
- New Zealand Coal & Carbon
- Manunggal Multi Energi - Indonesia
- Minerals Council of Australia
- Agrawal Coal Company - India
- Trasteel International SA, Italy
- Global Business Power Corporation, Philippines
- Straits Asia Resources Limited - Singapore
- Bhatia International Limited - India
- Bayan Resources Tbk. - Indonesia
- Rashtriya Ispat Nigam Limited - India
- SMG Consultants - Indonesia
- Merrill Lynch Commodities Europe
- Chettinad Cement Corporation Ltd - India
- Power Finance Corporation Ltd., India
- GN Power Mariveles Coal Plant, Philippines
- Sojitz Corporation - Japan
- Savvy Resources Ltd - HongKong
- Sinarmas Energy and Mining - Indonesia
- Medco Energi Mining Internasional
- Ind-Barath Power Infra Limited - India
- Videocon Industries ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Karaikal Port Pvt Ltd - India
- Wilmar Investment Holdings
- Independent Power Producers Association of India
- Indonesian Coal Mining Association
- LBH Netherlands Bv - Netherlands
- Sarangani Energy Corporation, Philippines
- Aboitiz Power Corporation - Philippines
- Attock Cement Pakistan Limited
- Africa Commodities Group - South Africa
- Krishnapatnam Port Company Ltd. - India
- Gujarat Sidhee Cement - India
- Kapuas Tunggal Persada - Indonesia
- Parry Sugars Refinery, India
- Siam City Cement PLC, Thailand
- ASAPP Information Group - India
- Asmin Koalindo Tuhup - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Global Coal Blending Company Limited - Australia
- Coal and Oil Company - UAE
- Dalmia Cement Bharat India
- International Coal Ventures Pvt Ltd - India
- Therma Luzon, Inc, Philippines
- Indian Energy Exchange, India
- Malabar Cements Ltd - India
- PNOC Exploration Corporation - Philippines
- Bhushan Steel Limited - India
- Orica Mining Services - Indonesia
- OPG Power Generation Pvt Ltd - India
- VISA Power Limited - India
- Indika Energy - Indonesia
- Maheswari Brothers Coal Limited - India
- Ambuja Cements Ltd - India
- Simpson Spence & Young - Indonesia
- Sical Logistics Limited - India
- Cement Manufacturers Association - India
- Indogreen Group - Indonesia
- Ministry of Mines - Canada
- Pendopo Energi Batubara - Indonesia
- Kepco SPC Power Corporation, Philippines
- Bharathi Cement Corporation - India
- MS Steel International - UAE
- Alfred C Toepfer International GmbH - Germany
- Marubeni Corporation - India
- Vedanta Resources Plc - India
- Latin American Coal - Colombia
- Jaiprakash Power Ventures ltd
- Toyota Tsusho Corporation, Japan
- Mjunction Services Limited - India
- Xindia Steels Limited - India
- Directorate Of Revenue Intelligence - India
- Anglo American - United Kingdom
- Holcim Trading Pte Ltd - Singapore
- Vizag Seaport Private Limited - India
- Timah Investasi Mineral - Indoneisa
- Samtan Co., Ltd - South Korea
- PTC India Limited - India
- Star Paper Mills Limited - India
- Wood Mackenzie - Singapore
- Altura Mining Limited, Indonesia
- IHS Mccloskey Coal Group - USA
- Georgia Ports Authority, United States
- Kalimantan Lumbung Energi - Indonesia
- Renaissance Capital - South Africa
- Romanian Commodities Exchange
- Port Waratah Coal Services - Australia
- White Energy Company Limited
- Riau Bara Harum - Indonesia
- Salva Resources Pvt Ltd - India
- Eastern Coal Council - USA
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