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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, 12 June 19
IMO 2020 - COUNTDOWN TO 1 JANUARY 2020 -HOW WILL THE CHANGES AFFECT REFINING AND SHIPPING? - WOOD MACKENZIE
We know that the IMO’s regulations represent the biggest step change the shipping industry has ever seen and the implications will be felt th ...
Wednesday, 12 June 19
SHIPPING MARKET INSIGHT - INTERMODAL
This year’s tanker S&P activity keeps edging higher compared to the same period in 2018. Year to date we have seen some 143 ships, rangin ...
Tuesday, 11 June 19
INDONESIAN COAL PRICE REFERENCE SET AT $81.48 PER TON IN JUNE, DOWN 15.66 PERCENT YEAR-ON-YEAR
COALspot.com: The Ministry of Energy and Mineral Resources of the Republic of Indonesia has revised down again the benchmark price of Indonesian th ...
Monday, 10 June 19
CONSECUTIVE OWNERS OF CARGO: WHO HOLDS TITLE AND THE RIGHT TO SUE? - COLIN BIGGERS & PAISLEY
KNOWLEDGE TO ELEVATE
In Tritton Resources Pty Ltd v Ever Rock Navigation S.A. [2019] FCA 276, the Federal Court considered the application of ...
Monday, 10 June 19
KOSPO INVITES BIDS FOR 1,305,000 MT OF MIN 5600 KCAL/KG NCV COAL FOR SEPT 2019 TO DEC 2021
COALspot.com: South Korea state-owned utility Korea Southern Power Co. Ltd (KOSPO) issued a tender for 435,000 MT (per year) of max 5,600 kcal/kg N ...
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- Xindia Steels Limited - India
- Antam Resourcindo - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Karaikal Port Pvt Ltd - India
- Aboitiz Power Corporation - Philippines
- Trasteel International SA, Italy
- SMG Consultants - Indonesia
- Borneo Indobara - Indonesia
- European Bulk Services B.V. - Netherlands
- Ambuja Cements Ltd - India
- Independent Power Producers Association of India
- Indonesian Coal Mining Association
- Petrochimia International Co. Ltd.- Taiwan
- Sindya Power Generating Company Private Ltd
- Uttam Galva Steels Limited - India
- Gujarat Sidhee Cement - India
- San Jose City I Power Corp, Philippines
- Latin American Coal - Colombia
- SN Aboitiz Power Inc, Philippines
- Kaltim Prima Coal - Indonesia
- Kepco SPC Power Corporation, Philippines
- OPG Power Generation Pvt Ltd - India
- Pendopo Energi Batubara - Indonesia
- Electricity Authority, New Zealand
- Gujarat Mineral Development Corp Ltd - India
- Georgia Ports Authority, United States
- Vizag Seaport Private Limited - India
- Bhoruka Overseas - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Ind-Barath Power Infra Limited - India
- Timah Investasi Mineral - Indoneisa
- GN Power Mariveles Coal Plant, Philippines
- Tamil Nadu electricity Board
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- Semirara Mining Corp, Philippines
- Indogreen Group - Indonesia
- Posco Energy - South Korea
- Indian Oil Corporation Limited
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- Pipit Mutiara Jaya. PT, Indonesia
- VISA Power Limited - India
- Merrill Lynch Commodities Europe
- Salva Resources Pvt Ltd - India
- Mercator Lines Limited - India
- Kideco Jaya Agung - Indonesia
- Indika Energy - Indonesia
- Oldendorff Carriers - Singapore
- Sarangani Energy Corporation, Philippines
- IHS Mccloskey Coal Group - USA
- Wilmar Investment Holdings
- Mintek Dendrill Indonesia
- Globalindo Alam Lestari - Indonesia
- Sakthi Sugars Limited - India
- The Treasury - Australian Government
- Altura Mining Limited, Indonesia
- Videocon Industries ltd - India
- Coastal Gujarat Power Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Electricity Generating Authority of Thailand
- Power Finance Corporation Ltd., India
- Bayan Resources Tbk. - Indonesia
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- Bukit Asam (Persero) Tbk - Indonesia
- Carbofer General Trading SA - India
- Thiess Contractors Indonesia
- Toyota Tsusho Corporation, Japan
- Indo Tambangraya Megah - Indonesia
- Coalindo Energy - Indonesia
- Bangladesh Power Developement Board
- Kohat Cement Company Ltd. - Pakistan
- TeaM Sual Corporation - Philippines
- Bhushan Steel Limited - India
- Edison Trading Spa - Italy
- Manunggal Multi Energi - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Siam City Cement PLC, Thailand
- Bulk Trading Sa - Switzerland
- Minerals Council of Australia
- Ministry of Transport, Egypt
- Bhatia International Limited - India
- New Zealand Coal & Carbon
- Directorate Of Revenue Intelligence - India
- Africa Commodities Group - South Africa
- Banpu Public Company Limited - Thailand
- LBH Netherlands Bv - Netherlands
- Siam City Cement - Thailand
- Sical Logistics Limited - India
- Orica Mining Services - Indonesia
- Iligan Light & Power Inc, Philippines
- Larsen & Toubro Limited - India
- SMC Global Power, Philippines
- Kobexindo Tractors - Indoneisa
- Mjunction Services Limited - India
- Rashtriya Ispat Nigam Limited - India
- Anglo American - United Kingdom
- Agrawal Coal Company - India
- Dalmia Cement Bharat India
- The State Trading Corporation of India Ltd
- Maharashtra Electricity Regulatory Commission - India
- PTC India Limited - India
- Riau Bara Harum - Indonesia
- Ministry of Finance - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Barasentosa Lestari - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Gujarat Electricity Regulatory Commission - India
- McConnell Dowell - Australia
- Bukit Makmur.PT - Indonesia
- Meralco Power Generation, Philippines
- Price Waterhouse Coopers - Russia
- Sojitz Corporation - Japan
- Karbindo Abesyapradhi - Indoneisa
- Intertek Mineral Services - Indonesia
- Madhucon Powers Ltd - India
- GAC Shipping (India) Pvt Ltd
- MS Steel International - UAE
- Baramulti Group, Indonesia
- Savvy Resources Ltd - HongKong
- Lanco Infratech Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Standard Chartered Bank - UAE
- Renaissance Capital - South Africa
- Global Coal Blending Company Limited - Australia
- Parliament of New Zealand
- Neyveli Lignite Corporation Ltd, - India
- Kartika Selabumi Mining - Indonesia
- Maheswari Brothers Coal Limited - India
- Petron Corporation, Philippines
- Bharathi Cement Corporation - India
- Goldman Sachs - Singapore
- Romanian Commodities Exchange
- Eastern Coal Council - USA
- Miang Besar Coal Terminal - Indonesia
- Alfred C Toepfer International GmbH - Germany
- CNBM International Corporation - China
- Heidelberg Cement - Germany
- TNB Fuel Sdn Bhd - Malaysia
- Commonwealth Bank - Australia
- Global Green Power PLC Corporation, Philippines
- Singapore Mercantile Exchange
- Formosa Plastics Group - Taiwan
- CIMB Investment Bank - Malaysia
- Rio Tinto Coal - Australia
- Malabar Cements Ltd - India
- ICICI Bank Limited - India
- Vedanta Resources Plc - India
- Chettinad Cement Corporation Ltd - India
- Straits Asia Resources Limited - Singapore
- Energy Development Corp, Philippines
- Central Java Power - Indonesia
- PNOC Exploration Corporation - Philippines
- White Energy Company Limited
- South Luzon Thermal Energy Corporation
- Therma Luzon, Inc, Philippines
- Medco Energi Mining Internasional
- Chamber of Mines of South Africa
- Port Waratah Coal Services - Australia
- Orica Australia Pty. Ltd.
- Mercuria Energy - Indonesia
- Cigading International Bulk Terminal - Indonesia
- London Commodity Brokers - England
- Ministry of Mines - Canada
- Global Business Power Corporation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- PetroVietnam Power Coal Import and Supply Company
- Kumho Petrochemical, South Korea
- Interocean Group of Companies - India
- Grasim Industreis Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Wood Mackenzie - Singapore
- Binh Thuan Hamico - Vietnam
- Metalloyd Limited - United Kingdom
- Leighton Contractors Pty Ltd - Australia
- Central Electricity Authority - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- The University of Queensland
- Ceylon Electricity Board - Sri Lanka
- Krishnapatnam Port Company Ltd. - India
- Cement Manufacturers Association - India
- Deloitte Consulting - India
- Kapuas Tunggal Persada - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Eastern Energy - Thailand
- Aditya Birla Group - India
- ASAPP Information Group - India
- Bukit Baiduri Energy - Indonesia
- GVK Power & Infra Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Simpson Spence & Young - Indonesia
- Coal and Oil Company - UAE
- IEA Clean Coal Centre - UK
- PowerSource Philippines DevCo
- International Coal Ventures Pvt Ltd - India
- Samtan Co., Ltd - South Korea
- Planning Commission, India
- Makarim & Taira - Indonesia
- Australian Coal Association
- India Bulls Power Limited - India
- Jindal Steel & Power Ltd - India
- Marubeni Corporation - India
- Jaiprakash Power Ventures ltd
- Indian Energy Exchange, India
- Economic Council, Georgia
- Essar Steel Hazira Ltd - India
- Sree Jayajothi Cements Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Australian Commodity Traders Exchange
- Attock Cement Pakistan Limited
- Thai Mozambique Logistica
- GMR Energy Limited - India
- Tata Chemicals Ltd - India
- Energy Link Ltd, New Zealand
- Parry Sugars Refinery, India
- Meenaskhi Energy Private Limited - India
- Semirara Mining and Power Corporation, Philippines
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