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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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Tuesday, 17 September 19
THE DRY BULK FREIGHT MARKET IS ALREADY ON A DOWNWARD CORRECTION - ALLIED
Here we are again, just a breath before the final quarter of the year. Under typical circumstances and on the basis of what we have seen during the ...
Monday, 16 September 19
COLOMBIAN COAL PRODUCTION TO FALL 5% THIS YEAR, MINING GROUP SAYS - REUTERS
Colombia’s coal production will decline to around 80 million tonnes in 2019, nearly 5% below last year’s, because of low prices and dro ...
Monday, 16 September 19
THE COAL-D SHOULDER? - BALTIC EXCHANGE
Good fortune and the number 13 don’t usually go hand in hand, but when it comes to coal, 2013 actually seems to have been the commodity&rsquo ...
Monday, 16 September 19
SCRUBBERS AND FUEL PROFIT SHARE CLAUSES - CLYDE&CO
From 1 January 2020, Regulation 14 of MARPOL Annex VI provides that the sulphur content in fuel oil used on board ships shall be reduced from a max ...
Monday, 16 September 19
KOREA SOUTH-EAST POWER INVITES BIDS FOR MAX 1,290,000 METRIC TONS OF STEAMING COAL
COALspot.com: South Korea’s Korea East-West Power Co. Ltd has issued an international tender for total 1,290,000 Metric Tons steam coal.
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- Uttam Galva Steels Limited - India
- Singapore Mercantile Exchange
- Pendopo Energi Batubara - Indonesia
- Intertek Mineral Services - Indonesia
- Kumho Petrochemical, South Korea
- Maharashtra Electricity Regulatory Commission - India
- Madhucon Powers Ltd - India
- The Treasury - Australian Government
- PowerSource Philippines DevCo
- Tamil Nadu electricity Board
- Sindya Power Generating Company Private Ltd
- Bangladesh Power Developement Board
- Commonwealth Bank - Australia
- Electricity Generating Authority of Thailand
- Indogreen Group - Indonesia
- Orica Mining Services - Indonesia
- Manunggal Multi Energi - Indonesia
- Price Waterhouse Coopers - Russia
- Mintek Dendrill Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Simpson Spence & Young - Indonesia
- Binh Thuan Hamico - Vietnam
- Antam Resourcindo - Indonesia
- Planning Commission, India
- Toyota Tsusho Corporation, Japan
- India Bulls Power Limited - India
- Banpu Public Company Limited - Thailand
- Ambuja Cements Ltd - India
- McConnell Dowell - Australia
- Grasim Industreis Ltd - India
- PNOC Exploration Corporation - Philippines
- Alfred C Toepfer International GmbH - Germany
- Bhushan Steel Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Eastern Energy - Thailand
- Gujarat Mineral Development Corp Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Wood Mackenzie - Singapore
- Holcim Trading Pte Ltd - Singapore
- Parry Sugars Refinery, India
- Karaikal Port Pvt Ltd - India
- Mjunction Services Limited - India
- Interocean Group of Companies - India
- Bhatia International Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Chettinad Cement Corporation Ltd - India
- Indo Tambangraya Megah - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Energy Link Ltd, New Zealand
- Australian Coal Association
- AsiaOL BioFuels Corp., Philippines
- Riau Bara Harum - Indonesia
- Malabar Cements Ltd - India
- OPG Power Generation Pvt Ltd - India
- Economic Council, Georgia
- Maheswari Brothers Coal Limited - India
- Indian Oil Corporation Limited
- ICICI Bank Limited - India
- The State Trading Corporation of India Ltd
- Medco Energi Mining Internasional
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Rio Tinto Coal - Australia
- PTC India Limited - India
- Mercator Lines Limited - India
- White Energy Company Limited
- Agrawal Coal Company - India
- International Coal Ventures Pvt Ltd - India
- GMR Energy Limited - India
- Energy Development Corp, Philippines
- Merrill Lynch Commodities Europe
- SMC Global Power, Philippines
- Chamber of Mines of South Africa
- Dalmia Cement Bharat India
- Wilmar Investment Holdings
- CNBM International Corporation - China
- Attock Cement Pakistan Limited
- TNB Fuel Sdn Bhd - Malaysia
- Directorate General of MIneral and Coal - Indonesia
- Directorate Of Revenue Intelligence - India
- Kideco Jaya Agung - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Australian Commodity Traders Exchange
- Kepco SPC Power Corporation, Philippines
- ASAPP Information Group - India
- Samtan Co., Ltd - South Korea
- Siam City Cement - Thailand
- Bayan Resources Tbk. - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Bukit Baiduri Energy - Indonesia
- SN Aboitiz Power Inc, Philippines
- Cigading International Bulk Terminal - Indonesia
- Romanian Commodities Exchange
- Kapuas Tunggal Persada - Indonesia
- CIMB Investment Bank - Malaysia
- Power Finance Corporation Ltd., India
- Independent Power Producers Association of India
- Marubeni Corporation - India
- Meralco Power Generation, Philippines
- GAC Shipping (India) Pvt Ltd
- Gujarat Sidhee Cement - India
- Altura Mining Limited, Indonesia
- Xindia Steels Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Iligan Light & Power Inc, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Salva Resources Pvt Ltd - India
- Anglo American - United Kingdom
- Coalindo Energy - Indonesia
- IHS Mccloskey Coal Group - USA
- San Jose City I Power Corp, Philippines
- Kartika Selabumi Mining - Indonesia
- Metalloyd Limited - United Kingdom
- Neyveli Lignite Corporation Ltd, - India
- Sakthi Sugars Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Jorong Barutama Greston.PT - Indonesia
- Ministry of Mines - Canada
- European Bulk Services B.V. - Netherlands
- Edison Trading Spa - Italy
- Sree Jayajothi Cements Limited - India
- London Commodity Brokers - England
- The University of Queensland
- Vedanta Resources Plc - India
- Baramulti Group, Indonesia
- Bulk Trading Sa - Switzerland
- Larsen & Toubro Limited - India
- Therma Luzon, Inc, Philippines
- Aditya Birla Group - India
- Karbindo Abesyapradhi - Indoneisa
- Makarim & Taira - Indonesia
- Bukit Makmur.PT - Indonesia
- Jaiprakash Power Ventures ltd
- Kalimantan Lumbung Energi - Indonesia
- South Luzon Thermal Energy Corporation
- Billiton Holdings Pty Ltd - Australia
- Renaissance Capital - South Africa
- Latin American Coal - Colombia
- PetroVietnam Power Coal Import and Supply Company
- Mercuria Energy - Indonesia
- Meenaskhi Energy Private Limited - India
- Kaltim Prima Coal - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Cement Manufacturers Association - India
- Port Waratah Coal Services - Australia
- Posco Energy - South Korea
- Miang Besar Coal Terminal - Indonesia
- MS Steel International - UAE
- Sarangani Energy Corporation, Philippines
- Standard Chartered Bank - UAE
- Minerals Council of Australia
- Savvy Resources Ltd - HongKong
- Formosa Plastics Group - Taiwan
- LBH Netherlands Bv - Netherlands
- Bank of Tokyo Mitsubishi UFJ Ltd
- Borneo Indobara - Indonesia
- Ind-Barath Power Infra Limited - India
- GVK Power & Infra Limited - India
- Eastern Coal Council - USA
- Leighton Contractors Pty Ltd - Australia
- Bhoruka Overseas - Indonesia
- Kobexindo Tractors - Indoneisa
- Bharathi Cement Corporation - India
- Thiess Contractors Indonesia
- Lanco Infratech Ltd - India
- Carbofer General Trading SA - India
- Goldman Sachs - Singapore
- Trasteel International SA, Italy
- Pipit Mutiara Jaya. PT, Indonesia
- Tata Chemicals Ltd - India
- Oldendorff Carriers - Singapore
- Ceylon Electricity Board - Sri Lanka
- SMG Consultants - Indonesia
- Orica Australia Pty. Ltd.
- Jindal Steel & Power Ltd - India
- Indonesian Coal Mining Association
- Thai Mozambique Logistica
- Sojitz Corporation - Japan
- IEA Clean Coal Centre - UK
- Africa Commodities Group - South Africa
- Semirara Mining Corp, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Siam City Cement PLC, Thailand
- Ministry of Transport, Egypt
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Sical Logistics Limited - India
- Central Java Power - Indonesia
- Global Business Power Corporation, Philippines
- New Zealand Coal & Carbon
- Globalindo Alam Lestari - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Petrochimia International Co. Ltd.- Taiwan
- Essar Steel Hazira Ltd - India
- Parliament of New Zealand
- TeaM Sual Corporation - Philippines
- Straits Asia Resources Limited - Singapore
- Georgia Ports Authority, United States
- Indian Energy Exchange, India
- Indika Energy - Indonesia
- Timah Investasi Mineral - Indoneisa
- Vizag Seaport Private Limited - India
- Global Green Power PLC Corporation, Philippines
- Deloitte Consulting - India
- Barasentosa Lestari - Indonesia
- Coal and Oil Company - UAE
- Videocon Industries ltd - India
- VISA Power Limited - India
- Electricity Authority, New Zealand
- Petron Corporation, Philippines
- Central Electricity Authority - India
- Aboitiz Power Corporation - Philippines
- Coastal Gujarat Power Limited - India
- Heidelberg Cement - Germany
- Ministry of Finance - Indonesia
- Global Coal Blending Company Limited - Australia
- Star Paper Mills Limited - India
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