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