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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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Monday, 18 November 19
SUPRAMAX: IN THE INDONESIAN COAL BUSINESS, A 58KDWT VESSEL FIXED DELIVERY PHILIPPINES, REDELIVERY INDIA AT CLOSE TO $8,000 - BALTIC BRIEFING
Capesize
For most of the week the rates were nudging up under a flurry of activity in the Pacific as levels for the West Australia to China C5 ...
Saturday, 16 November 19
LIFE AFTER FOSSIL FUELS: THE DAYS OF OIL AND COAL TRANSPORTATION ARE NUMBERED - BALTIC EXCHANGE
With the world fiercely focused on a decarbonised future, fossil fuel movers and traders might rightly be reconsidering their future. But cast a wi ...
Saturday, 16 November 19
OIL MARKET REPORT: PAUSING TO REFLECT - IEA
Global oil demand in 3Q19 increased by 1.1 mb/d year-on-year (y-o-y), more than double the 435 kb/d seen in 2Q19. China’s demand increased by ...
Friday, 15 November 19
RISING ENERGY DEMAND IN SOUTHEAST ASIA TO BE MET AND SUPPORTED BY COAL - WORLD COAL
Last week the International Energy Agency (IEA) released its semi-annual Southeast Asia Energy Outlook report which outlines the latest insights in ...
Thursday, 14 November 19
EIA EXPECTS U.S. STEAM COAL EXPORTS TO FACE INCREASING COMPETITION FROM EASTERN EUROPEAN SOURCES
EIA expects total U.S. coal production in 2019 to total 698 million short tons (MMst), an 8% decrease from the 2018 level of 756 MMst. The decline ...
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- GN Power Mariveles Coal Plant, Philippines
- Agrawal Coal Company - India
- European Bulk Services B.V. - Netherlands
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- PowerSource Philippines DevCo
- Africa Commodities Group - South Africa
- Power Finance Corporation Ltd., India
- Ceylon Electricity Board - Sri Lanka
- Thiess Contractors Indonesia
- Renaissance Capital - South Africa
- Global Business Power Corporation, Philippines
- Oldendorff Carriers - Singapore
- Minerals Council of Australia
- Leighton Contractors Pty Ltd - Australia
- Altura Mining Limited, Indonesia
- Manunggal Multi Energi - Indonesia
- Intertek Mineral Services - Indonesia
- ICICI Bank Limited - India
- Vizag Seaport Private Limited - India
- Central Java Power - Indonesia
- Heidelberg Cement - Germany
- Binh Thuan Hamico - Vietnam
- Tamil Nadu electricity Board
- Xindia Steels Limited - India
- India Bulls Power Limited - India
- Economic Council, Georgia
- Siam City Cement PLC, Thailand
- Bangladesh Power Developement Board
- Riau Bara Harum - Indonesia
- Antam Resourcindo - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Wood Mackenzie - Singapore
- Bukit Asam (Persero) Tbk - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Semirara Mining Corp, Philippines
- Krishnapatnam Port Company Ltd. - India
- Borneo Indobara - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Directorate Of Revenue Intelligence - India
- Australian Commodity Traders Exchange
- London Commodity Brokers - England
- Sindya Power Generating Company Private Ltd
- Chamber of Mines of South Africa
- SMC Global Power, Philippines
- Mintek Dendrill Indonesia
- Billiton Holdings Pty Ltd - Australia
- Semirara Mining and Power Corporation, Philippines
- Mercuria Energy - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Chettinad Cement Corporation Ltd - India
- Baramulti Group, Indonesia
- TeaM Sual Corporation - Philippines
- Merrill Lynch Commodities Europe
- Larsen & Toubro Limited - India
- Gujarat Electricity Regulatory Commission - India
- Cigading International Bulk Terminal - Indonesia
- Meenaskhi Energy Private Limited - India
- Ind-Barath Power Infra Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Videocon Industries ltd - India
- Bhatia International Limited - India
- Energy Link Ltd, New Zealand
- Global Coal Blending Company Limited - Australia
- Electricity Generating Authority of Thailand
- Jorong Barutama Greston.PT - Indonesia
- Iligan Light & Power Inc, Philippines
- Sojitz Corporation - Japan
- Wilmar Investment Holdings
- Kideco Jaya Agung - Indonesia
- Meralco Power Generation, Philippines
- Commonwealth Bank - Australia
- Singapore Mercantile Exchange
- Neyveli Lignite Corporation Ltd, - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- IEA Clean Coal Centre - UK
- Independent Power Producers Association of India
- Petron Corporation, Philippines
- Simpson Spence & Young - Indonesia
- ASAPP Information Group - India
- LBH Netherlands Bv - Netherlands
- Kartika Selabumi Mining - Indonesia
- The University of Queensland
- SN Aboitiz Power Inc, Philippines
- Kaltim Prima Coal - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Malabar Cements Ltd - India
- Orica Australia Pty. Ltd.
- Global Green Power PLC Corporation, Philippines
- Anglo American - United Kingdom
- Coastal Gujarat Power Limited - India
- Metalloyd Limited - United Kingdom
- Pipit Mutiara Jaya. PT, Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- PNOC Exploration Corporation - Philippines
- Vedanta Resources Plc - India
- Madhucon Powers Ltd - India
- Globalindo Alam Lestari - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Bayan Resources Tbk. - Indonesia
- Toyota Tsusho Corporation, Japan
- Bukit Makmur.PT - Indonesia
- Bharathi Cement Corporation - India
- Electricity Authority, New Zealand
- Sarangani Energy Corporation, Philippines
- Miang Besar Coal Terminal - Indonesia
- GMR Energy Limited - India
- Kepco SPC Power Corporation, Philippines
- Marubeni Corporation - India
- Ministry of Mines - Canada
- Edison Trading Spa - Italy
- Planning Commission, India
- CIMB Investment Bank - Malaysia
- Attock Cement Pakistan Limited
- Star Paper Mills Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Gujarat Sidhee Cement - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Therma Luzon, Inc, Philippines
- Kobexindo Tractors - Indoneisa
- San Jose City I Power Corp, Philippines
- Coal and Oil Company - UAE
- Rio Tinto Coal - Australia
- AsiaOL BioFuels Corp., Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Savvy Resources Ltd - HongKong
- International Coal Ventures Pvt Ltd - India
- Banpu Public Company Limited - Thailand
- Indian Oil Corporation Limited
- Kumho Petrochemical, South Korea
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Cement Manufacturers Association - India
- Ministry of Transport, Egypt
- Port Waratah Coal Services - Australia
- Sical Logistics Limited - India
- Formosa Plastics Group - Taiwan
- Bulk Trading Sa - Switzerland
- New Zealand Coal & Carbon
- Mercator Lines Limited - India
- Thai Mozambique Logistica
- Indogreen Group - Indonesia
- Barasentosa Lestari - Indonesia
- Uttam Galva Steels Limited - India
- Medco Energi Mining Internasional
- Samtan Co., Ltd - South Korea
- Carbofer General Trading SA - India
- Central Electricity Authority - India
- Interocean Group of Companies - India
- Indian Energy Exchange, India
- Aboitiz Power Corporation - Philippines
- Orica Mining Services - Indonesia
- Maheswari Brothers Coal Limited - India
- Aditya Birla Group - India
- Grasim Industreis Ltd - India
- OPG Power Generation Pvt Ltd - India
- Mjunction Services Limited - India
- Bhushan Steel Limited - India
- IHS Mccloskey Coal Group - USA
- Australian Coal Association
- Karbindo Abesyapradhi - Indoneisa
- Romanian Commodities Exchange
- Kohat Cement Company Ltd. - Pakistan
- Jaiprakash Power Ventures ltd
- The State Trading Corporation of India Ltd
- Holcim Trading Pte Ltd - Singapore
- Price Waterhouse Coopers - Russia
- The Treasury - Australian Government
- Karaikal Port Pvt Ltd - India
- Indika Energy - Indonesia
- Tata Chemicals Ltd - India
- GVK Power & Infra Limited - India
- McConnell Dowell - Australia
- Asmin Koalindo Tuhup - Indonesia
- GAC Shipping (India) Pvt Ltd
- Trasteel International SA, Italy
- Eastern Energy - Thailand
- Indo Tambangraya Megah - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bukit Baiduri Energy - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Parliament of New Zealand
- CNBM International Corporation - China
- Essar Steel Hazira Ltd - India
- Eastern Coal Council - USA
- SMG Consultants - Indonesia
- Georgia Ports Authority, United States
- Salva Resources Pvt Ltd - India
- Coalindo Energy - Indonesia
- Latin American Coal - Colombia
- Parry Sugars Refinery, India
- Standard Chartered Bank - UAE
- Sakthi Sugars Limited - India
- Ministry of Finance - Indonesia
- Indonesian Coal Mining Association
- Directorate General of MIneral and Coal - Indonesia
- Pendopo Energi Batubara - Indonesia
- Makarim & Taira - Indonesia
- Bhoruka Overseas - Indonesia
- Timah Investasi Mineral - Indoneisa
- Siam City Cement - Thailand
- Sinarmas Energy and Mining - Indonesia
- Posco Energy - South Korea
- PTC India Limited - India
- Jindal Steel & Power Ltd - India
- Lanco Infratech Ltd - India
- South Luzon Thermal Energy Corporation
- White Energy Company Limited
- PetroVietnam Power Coal Import and Supply Company
- Sree Jayajothi Cements Limited - India
- MS Steel International - UAE
- VISA Power Limited - India
- Rashtriya Ispat Nigam Limited - India
- Straits Asia Resources Limited - Singapore
- Ambuja Cements Ltd - India
- Deloitte Consulting - India
- Dalmia Cement Bharat India
- Energy Development Corp, Philippines
- Goldman Sachs - Singapore
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