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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, 15 February 20
CHEN ZHIDA: NOVEL CORONAVIRUS - IMPLICATIONS FOR CHARTERPARTIES - SHIPOWNERS' CLUB
KNOWLEDGE TO ELEVATE
Last month, the Club issued a bulletin on the 2019 Novel Coronavirus (COVID-19) which explained the origin of the virus a ...
Saturday, 15 February 20
AFRAMAX: A MORE POSITIVE ATTITUDE EXISTED IN THIS SECTOR WITH RATES IMPROVING ON ALL ROUTES - BALTIC BRIEFING
VLCC
The market in the Middle East was unmoved this week, with Chinese refiners continuing to slow imports, allied with the impact of the Coron ...
Saturday, 15 February 20
A 56,000DWT VESSEL WAS CONCLUDED BASIS DELIVERY SINGAPORE VIA INDONESIA REDELIVERY CHINA IN THE LOW $6,000S - BALTIC BRIEFING
Capesize
Riding the downward momentum of the previous week, the market was always going to be hard pressed to make any sort of revival. With mu ...
Saturday, 15 February 20
U.S. COAL PRODUCTION WILL TOTAL 595 MMST IN 2020, DOWN 14% FROM 2019 - EIA
EIA forecasts that U.S. coal production will total 595 million short tons (MMst) in 2020, down 95 MMst (14%) from 2019.
Lower ...
Friday, 14 February 20
WHY THE WORLD ECONOMY WILL BE FACING CHINA'S CORONAVIRUS FOR A LONG TIME - CNBC
Everywhere we look we see the headlines and commentators talking about the coronavirus and its impact on tourism, trade and investment between Chin ...
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- Electricity Authority, New Zealand
- Chettinad Cement Corporation Ltd - India
- Maheswari Brothers Coal Limited - India
- Siam City Cement PLC, Thailand
- Jindal Steel & Power Ltd - India
- Standard Chartered Bank - UAE
- Australian Coal Association
- Makarim & Taira - Indonesia
- Salva Resources Pvt Ltd - India
- Toyota Tsusho Corporation, Japan
- Attock Cement Pakistan Limited
- PetroVietnam Power Coal Import and Supply Company
- MS Steel International - UAE
- Indian Oil Corporation Limited
- Gujarat Electricity Regulatory Commission - India
- Cigading International Bulk Terminal - Indonesia
- Eastern Energy - Thailand
- Malabar Cements Ltd - India
- Rio Tinto Coal - Australia
- Antam Resourcindo - Indonesia
- Bhatia International Limited - India
- Banpu Public Company Limited - Thailand
- Semirara Mining and Power Corporation, Philippines
- Bhoruka Overseas - Indonesia
- Kaltim Prima Coal - Indonesia
- Kideco Jaya Agung - Indonesia
- Tamil Nadu electricity Board
- The State Trading Corporation of India Ltd
- Kobexindo Tractors - Indoneisa
- Australian Commodity Traders Exchange
- Orica Australia Pty. Ltd.
- Indo Tambangraya Megah - Indonesia
- South Luzon Thermal Energy Corporation
- Gujarat Mineral Development Corp Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Borneo Indobara - Indonesia
- CNBM International Corporation - China
- Globalindo Alam Lestari - Indonesia
- GVK Power & Infra Limited - India
- PNOC Exploration Corporation - Philippines
- Indogreen Group - Indonesia
- Sical Logistics Limited - India
- Indika Energy - Indonesia
- Meralco Power Generation, Philippines
- Eastern Coal Council - USA
- Timah Investasi Mineral - Indoneisa
- SN Aboitiz Power Inc, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Neyveli Lignite Corporation Ltd, - India
- Sakthi Sugars Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- TNB Fuel Sdn Bhd - Malaysia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Dalmia Cement Bharat India
- Medco Energi Mining Internasional
- Jorong Barutama Greston.PT - Indonesia
- CIMB Investment Bank - Malaysia
- Kapuas Tunggal Persada - Indonesia
- Altura Mining Limited, Indonesia
- Bukit Baiduri Energy - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Grasim Industreis Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Chamber of Mines of South Africa
- Bhushan Steel Limited - India
- Indonesian Coal Mining Association
- ICICI Bank Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Vedanta Resources Plc - India
- Interocean Group of Companies - India
- Meenaskhi Energy Private Limited - India
- Planning Commission, India
- Bukit Asam (Persero) Tbk - Indonesia
- Manunggal Multi Energi - Indonesia
- SMG Consultants - Indonesia
- Bulk Trading Sa - Switzerland
- Jaiprakash Power Ventures ltd
- Lanco Infratech Ltd - India
- Central Electricity Authority - India
- Pendopo Energi Batubara - Indonesia
- Ambuja Cements Ltd - India
- Sindya Power Generating Company Private Ltd
- Alfred C Toepfer International GmbH - Germany
- Minerals Council of Australia
- Energy Development Corp, Philippines
- Electricity Generating Authority of Thailand
- Iligan Light & Power Inc, Philippines
- Asmin Koalindo Tuhup - Indonesia
- The University of Queensland
- Latin American Coal - Colombia
- Rashtriya Ispat Nigam Limited - India
- Billiton Holdings Pty Ltd - Australia
- PowerSource Philippines DevCo
- Bangladesh Power Developement Board
- Mintek Dendrill Indonesia
- India Bulls Power Limited - India
- Aditya Birla Group - India
- Commonwealth Bank - Australia
- Agrawal Coal Company - India
- Karbindo Abesyapradhi - Indoneisa
- Indian Energy Exchange, India
- Kalimantan Lumbung Energi - Indonesia
- OPG Power Generation Pvt Ltd - India
- Bharathi Cement Corporation - India
- Formosa Plastics Group - Taiwan
- Georgia Ports Authority, United States
- Romanian Commodities Exchange
- SMC Global Power, Philippines
- Ministry of Transport, Egypt
- Merrill Lynch Commodities Europe
- GAC Shipping (India) Pvt Ltd
- London Commodity Brokers - England
- Bahari Cakrawala Sebuku - Indonesia
- Sree Jayajothi Cements Limited - India
- Mercator Lines Limited - India
- Sarangani Energy Corporation, Philippines
- AsiaOL BioFuels Corp., Philippines
- Price Waterhouse Coopers - Russia
- Ministry of Finance - Indonesia
- Thai Mozambique Logistica
- Coastal Gujarat Power Limited - India
- Global Coal Blending Company Limited - Australia
- Wood Mackenzie - Singapore
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Aboitiz Power Corporation - Philippines
- Deloitte Consulting - India
- Maharashtra Electricity Regulatory Commission - India
- Parry Sugars Refinery, India
- Cement Manufacturers Association - India
- VISA Power Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Simpson Spence & Young - Indonesia
- The Treasury - Australian Government
- Krishnapatnam Port Company Ltd. - India
- Uttam Galva Steels Limited - India
- Sinarmas Energy and Mining - Indonesia
- Riau Bara Harum - Indonesia
- Ministry of Mines - Canada
- LBH Netherlands Bv - Netherlands
- Bayan Resources Tbk. - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Port Waratah Coal Services - Australia
- Renaissance Capital - South Africa
- Directorate General of MIneral and Coal - Indonesia
- Global Green Power PLC Corporation, Philippines
- ASAPP Information Group - India
- Pipit Mutiara Jaya. PT, Indonesia
- White Energy Company Limited
- IEA Clean Coal Centre - UK
- Anglo American - United Kingdom
- Therma Luzon, Inc, Philippines
- Videocon Industries ltd - India
- Kartika Selabumi Mining - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Oldendorff Carriers - Singapore
- Orica Mining Services - Indonesia
- Parliament of New Zealand
- Goldman Sachs - Singapore
- Xindia Steels Limited - India
- Global Business Power Corporation, Philippines
- Binh Thuan Hamico - Vietnam
- Intertek Mineral Services - Indonesia
- Baramulti Group, Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- PTC India Limited - India
- Essar Steel Hazira Ltd - India
- Vizag Seaport Private Limited - India
- Energy Link Ltd, New Zealand
- Edison Trading Spa - Italy
- Mjunction Services Limited - India
- Kumho Petrochemical, South Korea
- Siam City Cement - Thailand
- Samtan Co., Ltd - South Korea
- Sojitz Corporation - Japan
- Carbofer General Trading SA - India
- Mercuria Energy - Indonesia
- Star Paper Mills Limited - India
- Kepco SPC Power Corporation, Philippines
- Central Java Power - Indonesia
- Posco Energy - South Korea
- International Coal Ventures Pvt Ltd - India
- Petron Corporation, Philippines
- Coal and Oil Company - UAE
- Karaikal Port Pvt Ltd - India
- Bukit Makmur.PT - Indonesia
- IHS Mccloskey Coal Group - USA
- McConnell Dowell - Australia
- Singapore Mercantile Exchange
- Straits Asia Resources Limited - Singapore
- Savvy Resources Ltd - HongKong
- European Bulk Services B.V. - Netherlands
- TeaM Sual Corporation - Philippines
- Larsen & Toubro Limited - India
- Trasteel International SA, Italy
- GMR Energy Limited - India
- Thiess Contractors Indonesia
- Gujarat Sidhee Cement - India
- San Jose City I Power Corp, Philippines
- Africa Commodities Group - South Africa
- Madhucon Powers Ltd - India
- Economic Council, Georgia
- New Zealand Coal & Carbon
- Metalloyd Limited - United Kingdom
- Coalindo Energy - Indonesia
- Marubeni Corporation - India
- Directorate Of Revenue Intelligence - India
- Tata Chemicals Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Heidelberg Cement - Germany
- Semirara Mining Corp, Philippines
- Barasentosa Lestari - Indonesia
- Power Finance Corporation Ltd., India
- Miang Besar Coal Terminal - Indonesia
- Ind-Barath Power Infra Limited - India
- Wilmar Investment Holdings
- Independent Power Producers Association of India
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