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