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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, 18 June 19
TANKER SHIPPING: WHILE WE WAIT FOR 2020 TO KICK IN, IT'S ALL ABOUT POLITICS - BIMCO
Demand drivers and freight rates
Iran, Libya and Venezuela face export limitations because of sanctions and internal political troubles. At the s ...
Saturday, 15 June 19
SUPRAMAX: A 58,000-TONNER, OPEN QINGDAO, WAS BOOKED TO REDELIVER IN EAST COAST INDIA AT $6,500 - BALTIC BRIEFING
Capesize
The market closed on a quiet Friday last week after a few hectic days of mid-week trading. Trade routes from Brazil to the Far East we ...
Friday, 14 June 19
PANAMAX: OUTLOOK IS MIXED - FERNLEYS
Capesize
Sentiment changed to a more nervous tone as pacific cargo volumes failed to deliver as expected, however latest activity indicates res ...
Friday, 14 June 19
ELECTRONIC (PAPERLESS) TRADING - SKULD
KNOWLEDGE TO ELEVATE
Electronic Shipping Solutions: Bolero International Ltd, E-Title Authority Pte Ltd, Global Share S.A. (edoxOnline platfor ...
Wednesday, 12 June 19
KOSPO INVITES BIDS FOR 140,000 MT OF 4,600 NCV COAL FOR SEP. 2019 LOADING
COALspot.com: South Korea state-owned utility Korea Southern Power Co. Ltd (KOSPO) issued a tender for 140,000 MT of minimum 4,600 kcal/kg NCV coal ...
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- Gujarat Electricity Regulatory Commission - India
- Electricity Authority, New Zealand
- Singapore Mercantile Exchange
- OPG Power Generation Pvt Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Chettinad Cement Corporation Ltd - India
- Attock Cement Pakistan Limited
- Bukit Makmur.PT - Indonesia
- Directorate Of Revenue Intelligence - India
- Indian Energy Exchange, India
- Jorong Barutama Greston.PT - Indonesia
- Global Coal Blending Company Limited - Australia
- Central Java Power - Indonesia
- Bulk Trading Sa - Switzerland
- Siam City Cement PLC, Thailand
- Samtan Co., Ltd - South Korea
- Directorate General of MIneral and Coal - Indonesia
- Sakthi Sugars Limited - India
- Bukit Baiduri Energy - Indonesia
- Jindal Steel & Power Ltd - India
- White Energy Company Limited
- Toyota Tsusho Corporation, Japan
- Karaikal Port Pvt Ltd - India
- Parliament of New Zealand
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Agrawal Coal Company - India
- Commonwealth Bank - Australia
- Carbofer General Trading SA - India
- Sindya Power Generating Company Private Ltd
- Formosa Plastics Group - Taiwan
- Coastal Gujarat Power Limited - India
- Globalindo Alam Lestari - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Kartika Selabumi Mining - Indonesia
- Coalindo Energy - Indonesia
- Meralco Power Generation, Philippines
- Thiess Contractors Indonesia
- GAC Shipping (India) Pvt Ltd
- Mintek Dendrill Indonesia
- Australian Coal Association
- Ministry of Finance - Indonesia
- Ministry of Mines - Canada
- AsiaOL BioFuels Corp., Philippines
- Oldendorff Carriers - Singapore
- Kobexindo Tractors - Indoneisa
- Mjunction Services Limited - India
- Maharashtra Electricity Regulatory Commission - India
- PTC India Limited - India
- Banpu Public Company Limited - Thailand
- New Zealand Coal & Carbon
- Wilmar Investment Holdings
- Ind-Barath Power Infra Limited - India
- Sinarmas Energy and Mining - Indonesia
- Thai Mozambique Logistica
- IHS Mccloskey Coal Group - USA
- GMR Energy Limited - India
- Indian Oil Corporation Limited
- Merrill Lynch Commodities Europe
- Cement Manufacturers Association - India
- South Luzon Thermal Energy Corporation
- TeaM Sual Corporation - Philippines
- Vedanta Resources Plc - India
- Coal and Oil Company - UAE
- Edison Trading Spa - Italy
- Intertek Mineral Services - Indonesia
- SMC Global Power, Philippines
- SN Aboitiz Power Inc, Philippines
- India Bulls Power Limited - India
- Minerals Council of Australia
- International Coal Ventures Pvt Ltd - India
- Lanco Infratech Ltd - India
- Chamber of Mines of South Africa
- Miang Besar Coal Terminal - Indonesia
- Global Business Power Corporation, Philippines
- Makarim & Taira - Indonesia
- Mercator Lines Limited - India
- Orica Mining Services - Indonesia
- Renaissance Capital - South Africa
- Georgia Ports Authority, United States
- Videocon Industries ltd - India
- Kapuas Tunggal Persada - Indonesia
- Price Waterhouse Coopers - Russia
- Pendopo Energi Batubara - Indonesia
- Gujarat Sidhee Cement - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- The Treasury - Australian Government
- Vizag Seaport Private Limited - India
- Marubeni Corporation - India
- PowerSource Philippines DevCo
- Wood Mackenzie - Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- IEA Clean Coal Centre - UK
- Holcim Trading Pte Ltd - Singapore
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Indogreen Group - Indonesia
- Xindia Steels Limited - India
- London Commodity Brokers - England
- Independent Power Producers Association of India
- Essar Steel Hazira Ltd - India
- Global Green Power PLC Corporation, Philippines
- Kumho Petrochemical, South Korea
- Simpson Spence & Young - Indonesia
- Eastern Coal Council - USA
- Straits Asia Resources Limited - Singapore
- Altura Mining Limited, Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- San Jose City I Power Corp, Philippines
- Meenaskhi Energy Private Limited - India
- Bharathi Cement Corporation - India
- European Bulk Services B.V. - Netherlands
- Leighton Contractors Pty Ltd - Australia
- Krishnapatnam Port Company Ltd. - India
- ICICI Bank Limited - India
- Goldman Sachs - Singapore
- Indo Tambangraya Megah - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Rio Tinto Coal - Australia
- Karbindo Abesyapradhi - Indoneisa
- Parry Sugars Refinery, India
- Interocean Group of Companies - India
- Barasentosa Lestari - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Eastern Energy - Thailand
- Anglo American - United Kingdom
- Orica Australia Pty. Ltd.
- Kaltim Prima Coal - Indonesia
- Savvy Resources Ltd - HongKong
- Standard Chartered Bank - UAE
- Madhucon Powers Ltd - India
- Africa Commodities Group - South Africa
- Kohat Cement Company Ltd. - Pakistan
- The University of Queensland
- Aditya Birla Group - India
- Ministry of Transport, Egypt
- PNOC Exploration Corporation - Philippines
- Maheswari Brothers Coal Limited - India
- Energy Link Ltd, New Zealand
- Manunggal Multi Energi - Indonesia
- Star Paper Mills Limited - India
- Electricity Generating Authority of Thailand
- Offshore Bulk Terminal Pte Ltd, Singapore
- Salva Resources Pvt Ltd - India
- Semirara Mining Corp, Philippines
- Ceylon Electricity Board - Sri Lanka
- LBH Netherlands Bv - Netherlands
- Binh Thuan Hamico - Vietnam
- Kepco SPC Power Corporation, Philippines
- Mercuria Energy - Indonesia
- Uttam Galva Steels Limited - India
- Bangladesh Power Developement Board
- Energy Development Corp, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Siam City Cement - Thailand
- Sical Logistics Limited - India
- Tamil Nadu electricity Board
- Rashtriya Ispat Nigam Limited - India
- Riau Bara Harum - Indonesia
- Sojitz Corporation - Japan
- Sarangani Energy Corporation, Philippines
- Planning Commission, India
- GN Power Mariveles Coal Plant, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Heidelberg Cement - Germany
- Power Finance Corporation Ltd., India
- Baramulti Group, Indonesia
- ASAPP Information Group - India
- Kalimantan Lumbung Energi - Indonesia
- Metalloyd Limited - United Kingdom
- Jaiprakash Power Ventures ltd
- Gujarat Mineral Development Corp Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Timah Investasi Mineral - Indoneisa
- Alfred C Toepfer International GmbH - Germany
- Port Waratah Coal Services - Australia
- Romanian Commodities Exchange
- Antam Resourcindo - Indonesia
- Petron Corporation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Ambuja Cements Ltd - India
- Grasim Industreis Ltd - India
- Latin American Coal - Colombia
- Tata Chemicals Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Malabar Cements Ltd - India
- Bhatia International Limited - India
- Sree Jayajothi Cements Limited - India
- Bayan Resources Tbk. - Indonesia
- VISA Power Limited - India
- Therma Luzon, Inc, Philippines
- Indonesian Coal Mining Association
- CIMB Investment Bank - Malaysia
- GVK Power & Infra Limited - India
- Borneo Indobara - Indonesia
- Bhoruka Overseas - Indonesia
- Larsen & Toubro Limited - India
- Indika Energy - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- McConnell Dowell - Australia
- Posco Energy - South Korea
- Iligan Light & Power Inc, Philippines
- Economic Council, Georgia
- Vijayanagar Sugar Pvt Ltd - India
- Central Electricity Authority - India
- Trasteel International SA, Italy
- Deloitte Consulting - India
- Dalmia Cement Bharat India
- MS Steel International - UAE
- Aboitiz Power Corporation - Philippines
- CNBM International Corporation - China
- Bhushan Steel Limited - India
- Kideco Jaya Agung - Indonesia
- SMG Consultants - Indonesia
- Australian Commodity Traders Exchange
- The State Trading Corporation of India Ltd
- Medco Energi Mining Internasional
- Cigading International Bulk Terminal - Indonesia
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