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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, 16 January 20
SUPRAMAX: INDO/CHINA ROUND VOYAGE FIXING AROUND LOW/MID USD 6,000 BSS APS INDO - FEARNLEYS
Capesize
Still very rough seas for the big ships, with the majority of the fleet trading Far East or fronthaul and consequently earning far les ...
Wednesday, 15 January 20
ASIA PACIFIC GAS AND LNG - 6 THEMES TO WATCH IN 2020 - WOOD MACKENZIE
NEWS RELEASE
Wood Mackenzie has identified six themes that will impact Asia Pacific’s gas and LNG markets in 2020
Asian LNG spot pr ...
Wednesday, 15 January 20
PREDICTIONS FOR 2020: 'SLOWBALISATION" IS THE NEW GLOBALISATION - PWC
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Wednesday, 15 January 20
SHIPPING MARKET INSIGHT - INERMODAL
Happy New Year and all the best for IMO 2020 !!
The early days of IMO 2020 coming into force have certainly had an impact on the indus ...
Tuesday, 14 January 20
SOLAS AMENDMENTS ENTERING INTO FORCE 1 JANUARY 2020 - STANDARD CLUB
While the latest amendments to MARPOL annex VI which entered into force on 1 January 2020 limiting the SOx emissions from ships has been the centre ...
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- Therma Luzon, Inc, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Malabar Cements Ltd - India
- Bayan Resources Tbk. - Indonesia
- Independent Power Producers Association of India
- London Commodity Brokers - England
- Energy Link Ltd, New Zealand
- Bank of Tokyo Mitsubishi UFJ Ltd
- Sree Jayajothi Cements Limited - India
- Meenaskhi Energy Private Limited - India
- Uttam Galva Steels Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Power Finance Corporation Ltd., India
- Vizag Seaport Private Limited - India
- Siam City Cement - Thailand
- Kideco Jaya Agung - Indonesia
- Kobexindo Tractors - Indoneisa
- Semirara Mining Corp, Philippines
- Coastal Gujarat Power Limited - India
- Leighton Contractors Pty Ltd - Australia
- Global Coal Blending Company Limited - Australia
- Formosa Plastics Group - Taiwan
- Tamil Nadu electricity Board
- SMC Global Power, Philippines
- Salva Resources Pvt Ltd - India
- Bukit Baiduri Energy - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Cement Manufacturers Association - India
- Attock Cement Pakistan Limited
- Trasteel International SA, Italy
- Minerals Council of Australia
- Bhatia International Limited - India
- Heidelberg Cement - Germany
- MS Steel International - UAE
- Mercator Lines Limited - India
- Straits Asia Resources Limited - Singapore
- Orica Mining Services - Indonesia
- Africa Commodities Group - South Africa
- Holcim Trading Pte Ltd - Singapore
- Baramulti Group, Indonesia
- Economic Council, Georgia
- Alfred C Toepfer International GmbH - Germany
- Rio Tinto Coal - Australia
- Orica Australia Pty. Ltd.
- Planning Commission, India
- GN Power Mariveles Coal Plant, Philippines
- CIMB Investment Bank - Malaysia
- Kepco SPC Power Corporation, Philippines
- Intertek Mineral Services - Indonesia
- Merrill Lynch Commodities Europe
- Sinarmas Energy and Mining - Indonesia
- Dalmia Cement Bharat India
- Ambuja Cements Ltd - India
- Banpu Public Company Limited - Thailand
- Toyota Tsusho Corporation, Japan
- Jorong Barutama Greston.PT - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Aboitiz Power Corporation - Philippines
- Makarim & Taira - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Simpson Spence & Young - Indonesia
- Gujarat Sidhee Cement - India
- Standard Chartered Bank - UAE
- Indogreen Group - Indonesia
- Port Waratah Coal Services - Australia
- Maharashtra Electricity Regulatory Commission - India
- Jindal Steel & Power Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- South Luzon Thermal Energy Corporation
- Ministry of Finance - Indonesia
- Carbofer General Trading SA - India
- Gujarat Mineral Development Corp Ltd - India
- Romanian Commodities Exchange
- PetroVietnam Power Coal Import and Supply Company
- Wood Mackenzie - Singapore
- Eastern Energy - Thailand
- Metalloyd Limited - United Kingdom
- Mintek Dendrill Indonesia
- Indonesian Coal Mining Association
- Eastern Coal Council - USA
- Krishnapatnam Port Company Ltd. - India
- Ministry of Transport, Egypt
- Kapuas Tunggal Persada - Indonesia
- Maheswari Brothers Coal Limited - India
- Kaltim Prima Coal - Indonesia
- Star Paper Mills Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- White Energy Company Limited
- Meralco Power Generation, Philippines
- Bhoruka Overseas - Indonesia
- Bharathi Cement Corporation - India
- European Bulk Services B.V. - Netherlands
- San Jose City I Power Corp, Philippines
- Chettinad Cement Corporation Ltd - India
- Riau Bara Harum - Indonesia
- IHS Mccloskey Coal Group - USA
- PTC India Limited - India
- The Treasury - Australian Government
- Lanco Infratech Ltd - India
- Posco Energy - South Korea
- Indika Energy - Indonesia
- Videocon Industries ltd - India
- ICICI Bank Limited - India
- Globalindo Alam Lestari - Indonesia
- Essar Steel Hazira Ltd - India
- Tata Chemicals Ltd - India
- Billiton Holdings Pty Ltd - Australia
- GMR Energy Limited - India
- Indian Energy Exchange, India
- VISA Power Limited - India
- Iligan Light & Power Inc, Philippines
- SN Aboitiz Power Inc, Philippines
- Marubeni Corporation - India
- OPG Power Generation Pvt Ltd - India
- Parry Sugars Refinery, India
- Georgia Ports Authority, United States
- SMG Consultants - Indonesia
- Parliament of New Zealand
- Directorate General of MIneral and Coal - Indonesia
- Kartika Selabumi Mining - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Goldman Sachs - Singapore
- Commonwealth Bank - Australia
- Vijayanagar Sugar Pvt Ltd - India
- Sindya Power Generating Company Private Ltd
- Deloitte Consulting - India
- Ministry of Mines - Canada
- GVK Power & Infra Limited - India
- TeaM Sual Corporation - Philippines
- Petron Corporation, Philippines
- Ind-Barath Power Infra Limited - India
- Savvy Resources Ltd - HongKong
- Larsen & Toubro Limited - India
- AsiaOL BioFuels Corp., Philippines
- Renaissance Capital - South Africa
- Bhushan Steel Limited - India
- Electricity Authority, New Zealand
- Coalindo Energy - Indonesia
- PowerSource Philippines DevCo
- ASAPP Information Group - India
- Indo Tambangraya Megah - Indonesia
- Kumho Petrochemical, South Korea
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Sarangani Energy Corporation, Philippines
- Australian Coal Association
- Edison Trading Spa - Italy
- Australian Commodity Traders Exchange
- Central Electricity Authority - India
- Kohat Cement Company Ltd. - Pakistan
- CNBM International Corporation - China
- Electricity Generating Authority of Thailand
- Neyveli Lignite Corporation Ltd, - India
- Singapore Mercantile Exchange
- Mercuria Energy - Indonesia
- Global Business Power Corporation, Philippines
- Samtan Co., Ltd - South Korea
- The State Trading Corporation of India Ltd
- Offshore Bulk Terminal Pte Ltd, Singapore
- Karaikal Port Pvt Ltd - India
- Sakthi Sugars Limited - India
- Latin American Coal - Colombia
- Indian Oil Corporation Limited
- Energy Development Corp, Philippines
- Altura Mining Limited, Indonesia
- Miang Besar Coal Terminal - Indonesia
- LBH Netherlands Bv - Netherlands
- Coal and Oil Company - UAE
- Semirara Mining and Power Corporation, Philippines
- Oldendorff Carriers - Singapore
- Anglo American - United Kingdom
- GAC Shipping (India) Pvt Ltd
- Global Green Power PLC Corporation, Philippines
- Grasim Industreis Ltd - India
- Jaiprakash Power Ventures ltd
- Ceylon Electricity Board - Sri Lanka
- India Bulls Power Limited - India
- Thai Mozambique Logistica
- Madhucon Powers Ltd - India
- Thiess Contractors Indonesia
- Antam Resourcindo - Indonesia
- PNOC Exploration Corporation - Philippines
- Binh Thuan Hamico - Vietnam
- Kalimantan Lumbung Energi - Indonesia
- Directorate Of Revenue Intelligence - India
- Central Java Power - Indonesia
- Price Waterhouse Coopers - Russia
- Manunggal Multi Energi - Indonesia
- Pendopo Energi Batubara - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- The University of Queensland
- IEA Clean Coal Centre - UK
- Bangladesh Power Developement Board
- Chamber of Mines of South Africa
- Petrochimia International Co. Ltd.- Taiwan
- Sical Logistics Limited - India
- Cigading International Bulk Terminal - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Mjunction Services Limited - India
- New Zealand Coal & Carbon
- Vedanta Resources Plc - India
- Interocean Group of Companies - India
- Borneo Indobara - Indonesia
- Bulk Trading Sa - Switzerland
- Xindia Steels Limited - India
- Agrawal Coal Company - India
- Barasentosa Lestari - Indonesia
- Aditya Birla Group - India
- Siam City Cement PLC, Thailand
- Wilmar Investment Holdings
- Bukit Makmur.PT - Indonesia
- Timah Investasi Mineral - Indoneisa
- Sojitz Corporation - Japan
- Medco Energi Mining Internasional
- McConnell Dowell - Australia
- International Coal Ventures Pvt Ltd - India
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