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