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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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Wednesday, 31 July 19
INDIA'S 2019 THERMAL COAL IMPORTS SEEN AT 180-185 MLN T - WOODMAC
India is expected to import 180-185 million tonnes of thermal coal in 2019, said Dale Hazelton, head of thermal coal at consultancy Wood Mackenzie. ...
Wednesday, 31 July 19
SHIPPING MARKET INSIGHT - INTERMODAL
It was a fairly busy week in the dry S&P market. Despite the ease of Capesize rates which impacted Panamaxes as well, interest from potential b ...
Sunday, 28 July 19
ULTRAMAX - INDONESIAN COAL CARGOES SAW A 63,000DWT SHIP FIXING DELIVERY FOR A SOUTH CHINA TRIP VIA INDONESIA, REDELIVERY CHINA, AT $11,700 - BALTIC BRIEFING
Capesize
The market was a white knuckled ride this past week as a large downside movement shed value quickly leaving many in bewilderment. The ...
Wednesday, 24 July 19
CHINA TAIYUAN COAL TRANSACTION PRICE INDEX DOWN 0.27 PCT - XINHUA
China Taiyuan coal transaction price index stood at 138.78 points Monday, down 0.27 percent week on week.
The index, released by Chi ...
Wednesday, 24 July 19
SHIPPING MARKET INSIGHT - INTERMODAL
Tonnes of ink has been spent analysing the rebound of the dry bulk market the last weeks with the most representative example being the rising perf ...
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- Indika Energy - Indonesia
- Baramulti Group, Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Central Electricity Authority - India
- Global Coal Blending Company Limited - Australia
- Globalindo Alam Lestari - Indonesia
- Altura Mining Limited, Indonesia
- Ceylon Electricity Board - Sri Lanka
- Ministry of Mines - Canada
- Indonesian Coal Mining Association
- Deloitte Consulting - India
- Electricity Authority, New Zealand
- Cement Manufacturers Association - India
- Goldman Sachs - Singapore
- Siam City Cement - Thailand
- LBH Netherlands Bv - Netherlands
- GMR Energy Limited - India
- Global Green Power PLC Corporation, Philippines
- Aditya Birla Group - India
- Tamil Nadu electricity Board
- Rio Tinto Coal - Australia
- Simpson Spence & Young - Indonesia
- Manunggal Multi Energi - Indonesia
- Indo Tambangraya Megah - Indonesia
- Lanco Infratech Ltd - India
- Karaikal Port Pvt Ltd - India
- MS Steel International - UAE
- White Energy Company Limited
- Bharathi Cement Corporation - India
- Sarangani Energy Corporation, Philippines
- Thai Mozambique Logistica
- Coal and Oil Company - UAE
- Coalindo Energy - Indonesia
- Riau Bara Harum - Indonesia
- Marubeni Corporation - India
- Straits Asia Resources Limited - Singapore
- Standard Chartered Bank - UAE
- Economic Council, Georgia
- Bhatia International Limited - India
- Ministry of Transport, Egypt
- Port Waratah Coal Services - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- PNOC Exploration Corporation - Philippines
- Aboitiz Power Corporation - Philippines
- Karbindo Abesyapradhi - Indoneisa
- London Commodity Brokers - England
- Parry Sugars Refinery, India
- TeaM Sual Corporation - Philippines
- Mercator Lines Limited - India
- Australian Coal Association
- Bukit Makmur.PT - Indonesia
- Kobexindo Tractors - Indoneisa
- Semirara Mining and Power Corporation, Philippines
- Price Waterhouse Coopers - Russia
- Singapore Mercantile Exchange
- Larsen & Toubro Limited - India
- South Luzon Thermal Energy Corporation
- Kumho Petrochemical, South Korea
- Gujarat Mineral Development Corp Ltd - India
- ASAPP Information Group - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bayan Resources Tbk. - Indonesia
- Global Business Power Corporation, Philippines
- Meralco Power Generation, Philippines
- Eastern Energy - Thailand
- Bukit Asam (Persero) Tbk - Indonesia
- Thiess Contractors Indonesia
- Krishnapatnam Port Company Ltd. - India
- Wood Mackenzie - Singapore
- Iligan Light & Power Inc, Philippines
- Savvy Resources Ltd - HongKong
- Mintek Dendrill Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Madhucon Powers Ltd - India
- Sojitz Corporation - Japan
- Kepco SPC Power Corporation, Philippines
- Semirara Mining Corp, Philippines
- Africa Commodities Group - South Africa
- Salva Resources Pvt Ltd - India
- Orica Australia Pty. Ltd.
- Bukit Baiduri Energy - Indonesia
- Toyota Tsusho Corporation, Japan
- Banpu Public Company Limited - Thailand
- Pipit Mutiara Jaya. PT, Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Independent Power Producers Association of India
- Vedanta Resources Plc - India
- Merrill Lynch Commodities Europe
- New Zealand Coal & Carbon
- Indogreen Group - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Coastal Gujarat Power Limited - India
- Chamber of Mines of South Africa
- Mercuria Energy - Indonesia
- Energy Development Corp, Philippines
- CIMB Investment Bank - Malaysia
- Samtan Co., Ltd - South Korea
- Malabar Cements Ltd - India
- Central Java Power - Indonesia
- Carbofer General Trading SA - India
- Antam Resourcindo - Indonesia
- International Coal Ventures Pvt Ltd - India
- Trasteel International SA, Italy
- OPG Power Generation Pvt Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Grasim Industreis Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bhoruka Overseas - Indonesia
- Metalloyd Limited - United Kingdom
- Romanian Commodities Exchange
- Makarim & Taira - Indonesia
- Attock Cement Pakistan Limited
- Essar Steel Hazira Ltd - India
- SMG Consultants - Indonesia
- Sakthi Sugars Limited - India
- Meenaskhi Energy Private Limited - India
- Renaissance Capital - South Africa
- Ministry of Finance - Indonesia
- Agrawal Coal Company - India
- Commonwealth Bank - Australia
- The Treasury - Australian Government
- Anglo American - United Kingdom
- Alfred C Toepfer International GmbH - Germany
- Minerals Council of Australia
- Planning Commission, India
- Timah Investasi Mineral - Indoneisa
- Asmin Koalindo Tuhup - Indonesia
- ICICI Bank Limited - India
- Posco Energy - South Korea
- Sree Jayajothi Cements Limited - India
- Rashtriya Ispat Nigam Limited - India
- Videocon Industries ltd - India
- Eastern Coal Council - USA
- Cigading International Bulk Terminal - Indonesia
- Edison Trading Spa - Italy
- Sical Logistics Limited - India
- Ambuja Cements Ltd - India
- Kideco Jaya Agung - Indonesia
- Georgia Ports Authority, United States
- Oldendorff Carriers - Singapore
- Neyveli Lignite Corporation Ltd, - India
- Dalmia Cement Bharat India
- Interocean Group of Companies - India
- Siam City Cement PLC, Thailand
- Vizag Seaport Private Limited - India
- Mjunction Services Limited - India
- Maheswari Brothers Coal Limited - India
- European Bulk Services B.V. - Netherlands
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Star Paper Mills Limited - India
- Petron Corporation, Philippines
- Miang Besar Coal Terminal - Indonesia
- Xindia Steels Limited - India
- AsiaOL BioFuels Corp., Philippines
- Directorate Of Revenue Intelligence - India
- The University of Queensland
- Kapuas Tunggal Persada - Indonesia
- Indian Energy Exchange, India
- San Jose City I Power Corp, Philippines
- Australian Commodity Traders Exchange
- Kartika Selabumi Mining - Indonesia
- Uttam Galva Steels Limited - India
- PowerSource Philippines DevCo
- PTC India Limited - India
- SMC Global Power, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Electricity Generating Authority of Thailand
- SN Aboitiz Power Inc, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Gujarat Electricity Regulatory Commission - India
- Power Finance Corporation Ltd., India
- Tata Chemicals Ltd - India
- Sindya Power Generating Company Private Ltd
- Energy Link Ltd, New Zealand
- Directorate General of MIneral and Coal - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Billiton Holdings Pty Ltd - Australia
- Parliament of New Zealand
- Bangladesh Power Developement Board
- Petrochimia International Co. Ltd.- Taiwan
- McConnell Dowell - Australia
- Jaiprakash Power Ventures ltd
- Barasentosa Lestari - Indonesia
- Borneo Indobara - Indonesia
- Jindal Steel & Power Ltd - India
- Intertek Mineral Services - Indonesia
- Kaltim Prima Coal - Indonesia
- Bulk Trading Sa - Switzerland
- Pendopo Energi Batubara - Indonesia
- VISA Power Limited - India
- Formosa Plastics Group - Taiwan
- Medco Energi Mining Internasional
- Chettinad Cement Corporation Ltd - India
- Indian Oil Corporation Limited
- Kalimantan Lumbung Energi - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Heidelberg Cement - Germany
- Jorong Barutama Greston.PT - Indonesia
- Latin American Coal - Colombia
- India Bulls Power Limited - India
- Kohat Cement Company Ltd. - Pakistan
- IEA Clean Coal Centre - UK
- Binh Thuan Hamico - Vietnam
- Orica Mining Services - Indonesia
- Gujarat Sidhee Cement - India
- PetroVietnam Power Coal Import and Supply Company
- Bhushan Steel Limited - India
- IHS Mccloskey Coal Group - USA
- Ind-Barath Power Infra Limited - India
- GVK Power & Infra Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- GAC Shipping (India) Pvt Ltd
- CNBM International Corporation - China
- Therma Luzon, Inc, Philippines
- Wilmar Investment Holdings
- The State Trading Corporation of India Ltd
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