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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, 29 May 19
SHIPPING MARKET INSIGHT - INTERMODAL
Reflecting on the first quarter of 2019, the product tanker market was healthy, with average earnings significantly up compared to the first quarte ...
Sunday, 26 May 19
SUPRAMAX: A LIMITED ACTIVITY WAS REPORTED, WITH THE UPCOMING INDONESIAN HOLIDAYS SLOWING COAL MOVEMENTS - BALTIC BRIEFING
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The past week marked one of the busier periods for Capesizes this year. With a subdued start due to a public holiday in Singapore on M ...
Wednesday, 22 May 19
SHIPPING MARKET INSIGHT - INTERMODAL
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Saturday, 18 May 19
SUPRAMAX: 56,000DWT OPEN PANJANG FIXING AT $10,500 FOR A TRIP VIA INDONESIA, AND REDELIVERY CHINA - BALTIC EXCHANGE
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The market continues to ebb and flow with a generally positive up trend. The Capesize 5TC opened with upward momentum from last week&r ...
Friday, 17 May 19
CHINA'S BENCHMARK POWER COAL PRICE REMAINS FLAT - XINHUA
China’s benchmark power coal price remained flat during the past week.
The Bohai-Rim Steam-Coal Price Index (BSPI), a gauge of ...
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- Globalindo Alam Lestari - Indonesia
- Sical Logistics Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- AsiaOL BioFuels Corp., Philippines
- Binh Thuan Hamico - Vietnam
- Ceylon Electricity Board - Sri Lanka
- Jaiprakash Power Ventures ltd
- Kapuas Tunggal Persada - Indonesia
- Electricity Authority, New Zealand
- Bukit Makmur.PT - Indonesia
- Siam City Cement PLC, Thailand
- Mintek Dendrill Indonesia
- Manunggal Multi Energi - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Star Paper Mills Limited - India
- IEA Clean Coal Centre - UK
- Chamber of Mines of South Africa
- Indonesian Coal Mining Association
- Bukit Baiduri Energy - Indonesia
- LBH Netherlands Bv - Netherlands
- Electricity Generating Authority of Thailand
- Directorate Of Revenue Intelligence - India
- Baramulti Group, Indonesia
- GN Power Mariveles Coal Plant, Philippines
- SMC Global Power, Philippines
- India Bulls Power Limited - India
- Thiess Contractors Indonesia
- Leighton Contractors Pty Ltd - Australia
- Carbofer General Trading SA - India
- Australian Commodity Traders Exchange
- Commonwealth Bank - Australia
- Ministry of Mines - Canada
- Eastern Coal Council - USA
- Energy Development Corp, Philippines
- Tamil Nadu electricity Board
- Orica Mining Services - Indonesia
- Price Waterhouse Coopers - Russia
- Barasentosa Lestari - Indonesia
- Kobexindo Tractors - Indoneisa
- Global Coal Blending Company Limited - Australia
- Mercuria Energy - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- GAC Shipping (India) Pvt Ltd
- Sinarmas Energy and Mining - Indonesia
- Indian Energy Exchange, India
- Vijayanagar Sugar Pvt Ltd - India
- Port Waratah Coal Services - Australia
- Coastal Gujarat Power Limited - India
- Savvy Resources Ltd - HongKong
- MS Steel International - UAE
- Ministry of Finance - Indonesia
- New Zealand Coal & Carbon
- Antam Resourcindo - Indonesia
- Aboitiz Power Corporation - Philippines
- PetroVietnam Power Coal Import and Supply Company
- PTC India Limited - India
- TeaM Sual Corporation - Philippines
- Economic Council, Georgia
- Timah Investasi Mineral - Indoneisa
- Minerals Council of Australia
- Kideco Jaya Agung - Indonesia
- Agrawal Coal Company - India
- Coal and Oil Company - UAE
- Tata Chemicals Ltd - India
- Meralco Power Generation, Philippines
- Cigading International Bulk Terminal - Indonesia
- Planning Commission, India
- Kalimantan Lumbung Energi - Indonesia
- Karaikal Port Pvt Ltd - India
- Energy Link Ltd, New Zealand
- Karbindo Abesyapradhi - Indoneisa
- Madhucon Powers Ltd - India
- European Bulk Services B.V. - Netherlands
- Vizag Seaport Private Limited - India
- Meenaskhi Energy Private Limited - India
- OPG Power Generation Pvt Ltd - India
- Kumho Petrochemical, South Korea
- Georgia Ports Authority, United States
- Holcim Trading Pte Ltd - Singapore
- Krishnapatnam Port Company Ltd. - India
- Chettinad Cement Corporation Ltd - India
- Medco Energi Mining Internasional
- PowerSource Philippines DevCo
- Independent Power Producers Association of India
- London Commodity Brokers - England
- Trasteel International SA, Italy
- Posco Energy - South Korea
- Grasim Industreis Ltd - India
- Lanco Infratech Ltd - India
- South Luzon Thermal Energy Corporation
- Bayan Resources Tbk. - Indonesia
- Vedanta Resources Plc - India
- Bangladesh Power Developement Board
- Coalindo Energy - Indonesia
- CIMB Investment Bank - Malaysia
- Petrochimia International Co. Ltd.- Taiwan
- Latin American Coal - Colombia
- Petron Corporation, Philippines
- Sree Jayajothi Cements Limited - India
- Mercator Lines Limited - India
- Larsen & Toubro Limited - India
- Ambuja Cements Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Toyota Tsusho Corporation, Japan
- Uttam Galva Steels Limited - India
- Miang Besar Coal Terminal - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Australian Coal Association
- Pipit Mutiara Jaya. PT, Indonesia
- Indika Energy - Indonesia
- Global Green Power PLC Corporation, Philippines
- Bulk Trading Sa - Switzerland
- Gujarat Sidhee Cement - India
- Jindal Steel & Power Ltd - India
- Romanian Commodities Exchange
- Xindia Steels Limited - India
- Marubeni Corporation - India
- Gujarat Mineral Development Corp Ltd - India
- Aditya Birla Group - India
- Essar Steel Hazira Ltd - India
- Central Java Power - Indonesia
- Straits Asia Resources Limited - Singapore
- Kepco SPC Power Corporation, Philippines
- Salva Resources Pvt Ltd - India
- Sarangani Energy Corporation, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- International Coal Ventures Pvt Ltd - India
- Bhatia International Limited - India
- Bhushan Steel Limited - India
- IHS Mccloskey Coal Group - USA
- Iligan Light & Power Inc, Philippines
- Merrill Lynch Commodities Europe
- Videocon Industries ltd - India
- Makarim & Taira - Indonesia
- Standard Chartered Bank - UAE
- Kartika Selabumi Mining - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Power Finance Corporation Ltd., India
- Jorong Barutama Greston.PT - Indonesia
- Singapore Mercantile Exchange
- Eastern Energy - Thailand
- Bhoruka Overseas - Indonesia
- Central Electricity Authority - India
- ICICI Bank Limited - India
- Attock Cement Pakistan Limited
- Asia Pacific Energy Resources Ventures Inc, Philippines
- ASAPP Information Group - India
- Therma Luzon, Inc, Philippines
- Dalmia Cement Bharat India
- Siam City Cement - Thailand
- Sakthi Sugars Limited - India
- Semirara Mining and Power Corporation, Philippines
- Maheswari Brothers Coal Limited - India
- Bharathi Cement Corporation - India
- White Energy Company Limited
- GVK Power & Infra Limited - India
- Goldman Sachs - Singapore
- The State Trading Corporation of India Ltd
- Ind-Barath Power Infra Limited - India
- SMG Consultants - Indonesia
- Cement Manufacturers Association - India
- CNBM International Corporation - China
- Ministry of Transport, Egypt
- Formosa Plastics Group - Taiwan
- McConnell Dowell - Australia
- Global Business Power Corporation, Philippines
- Renaissance Capital - South Africa
- Orica Australia Pty. Ltd.
- Borneo Indobara - Indonesia
- Indian Oil Corporation Limited
- Maharashtra Electricity Regulatory Commission - India
- Wilmar Investment Holdings
- Samtan Co., Ltd - South Korea
- Pendopo Energi Batubara - Indonesia
- Banpu Public Company Limited - Thailand
- Offshore Bulk Terminal Pte Ltd, Singapore
- VISA Power Limited - India
- Indogreen Group - Indonesia
- Malabar Cements Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Parry Sugars Refinery, India
- Indo Tambangraya Megah - Indonesia
- Riau Bara Harum - Indonesia
- Altura Mining Limited, Indonesia
- Edison Trading Spa - Italy
- Anglo American - United Kingdom
- Intertek Mineral Services - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Heidelberg Cement - Germany
- GMR Energy Limited - India
- Oldendorff Carriers - Singapore
- Metalloyd Limited - United Kingdom
- San Jose City I Power Corp, Philippines
- Thai Mozambique Logistica
- Interocean Group of Companies - India
- Mjunction Services Limited - India
- PNOC Exploration Corporation - Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Gujarat Electricity Regulatory Commission - India
- Sindya Power Generating Company Private Ltd
- TNB Fuel Sdn Bhd - Malaysia
- The University of Queensland
- The Treasury - Australian Government
- Simpson Spence & Young - Indonesia
- Africa Commodities Group - South Africa
- Deloitte Consulting - India
- Wood Mackenzie - Singapore
- SN Aboitiz Power Inc, Philippines
- Kaltim Prima Coal - Indonesia
- Rio Tinto Coal - Australia
- Bukit Asam (Persero) Tbk - Indonesia
- Sojitz Corporation - Japan
- Semirara Mining Corp, Philippines
- Parliament of New Zealand
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