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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, 09 January 19
SHIPPING MARKET INSIGHT - INERMODAL
Paraphrasing the words of a Chief economist in a latest report of the World Bank Group, the current state of the shipping market very much resemble ...
Tuesday, 08 January 19
GLOBAL TRADE GROWTH EXPECTED TO REMAIN AT HEALTHY IN 2019 - ALLIED
2019 is here and we find ourselves with new challenges for the shipping industry and the global economy as whole, with market prospects being neith ...
Monday, 07 January 19
THE NEWCASTLE BENCHMARK SPOT PRICE IS FORECAST TO DECLINE FROM AN ESTIMATED AVERAGE OF US$105 A TONNE IN 2018 TO US$74 A TONNE IN 2020 - DEPARTMENT OF INDUSTRY, AUSTRALIA
• The Newcastle benchmark spot price is forecast to decline from an estimated average of US$105 a tonne in 2018 to US$74 a tonne in 2020, prim ...
Monday, 07 January 19
INDONESIAN GOVERNMENT DECLARED COAL BENCHMARK PRICE FALLS FOR FIFTH STRAIGHT MONTH IN JANUARY 2019; LOWEST SINCE JUNE 2018
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, 07 January 19
RUSSIA'S COAL PRODUCTION UP 5.9% TO 433.4 MLN TONNES IN 2018 - TASS
Coal production in Russia in 2018 increased by 5.9% year-on-year to 433.4 mln tonnes, according to the Central Dispatching Department of Fuel Energ ...
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- Energy Development Corp, Philippines
- Orica Australia Pty. Ltd.
- Riau Bara Harum - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- PTC India Limited - India
- Aboitiz Power Corporation - Philippines
- Bukit Baiduri Energy - Indonesia
- Eastern Coal Council - USA
- Therma Luzon, Inc, Philippines
- Standard Chartered Bank - UAE
- Iligan Light & Power Inc, Philippines
- Central Java Power - Indonesia
- Petron Corporation, Philippines
- Indonesian Coal Mining Association
- Larsen & Toubro Limited - India
- Bulk Trading Sa - Switzerland
- Metalloyd Limited - United Kingdom
- Sakthi Sugars Limited - India
- Kobexindo Tractors - Indoneisa
- Dalmia Cement Bharat India
- Australian Commodity Traders Exchange
- The Treasury - Australian Government
- Timah Investasi Mineral - Indoneisa
- New Zealand Coal & Carbon
- SN Aboitiz Power Inc, Philippines
- White Energy Company Limited
- Tamil Nadu electricity Board
- Billiton Holdings Pty Ltd - Australia
- Siam City Cement PLC, Thailand
- Manunggal Multi Energi - Indonesia
- Indian Oil Corporation Limited
- Cement Manufacturers Association - India
- Cigading International Bulk Terminal - Indonesia
- PNOC Exploration Corporation - Philippines
- Ministry of Finance - Indonesia
- Mercuria Energy - Indonesia
- Directorate Of Revenue Intelligence - India
- Xindia Steels Limited - India
- Straits Asia Resources Limited - Singapore
- Anglo American - United Kingdom
- Indo Tambangraya Megah - Indonesia
- Eastern Energy - Thailand
- Central Electricity Authority - India
- Kepco SPC Power Corporation, Philippines
- Mjunction Services Limited - India
- Kapuas Tunggal Persada - Indonesia
- Mintek Dendrill Indonesia
- Latin American Coal - Colombia
- Miang Besar Coal Terminal - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Kideco Jaya Agung - Indonesia
- Trasteel International SA, Italy
- Simpson Spence & Young - Indonesia
- Commonwealth Bank - Australia
- Alfred C Toepfer International GmbH - Germany
- Gujarat Sidhee Cement - India
- Port Waratah Coal Services - Australia
- McConnell Dowell - Australia
- TNB Fuel Sdn Bhd - Malaysia
- Carbofer General Trading SA - India
- OPG Power Generation Pvt Ltd - India
- Rio Tinto Coal - Australia
- Marubeni Corporation - India
- Chettinad Cement Corporation Ltd - India
- Meenaskhi Energy Private Limited - India
- CNBM International Corporation - China
- Ind-Barath Power Infra Limited - India
- Siam City Cement - Thailand
- Vizag Seaport Private Limited - India
- Banpu Public Company Limited - Thailand
- IHS Mccloskey Coal Group - USA
- Gujarat Electricity Regulatory Commission - India
- Malabar Cements Ltd - India
- Jindal Steel & Power Ltd - India
- Posco Energy - South Korea
- Aditya Birla Group - India
- Jaiprakash Power Ventures ltd
- AsiaOL BioFuels Corp., Philippines
- PowerSource Philippines DevCo
- Thiess Contractors Indonesia
- Meralco Power Generation, Philippines
- Independent Power Producers Association of India
- Toyota Tsusho Corporation, Japan
- Ambuja Cements Ltd - India
- LBH Netherlands Bv - Netherlands
- Deloitte Consulting - India
- GMR Energy Limited - India
- Videocon Industries ltd - India
- Salva Resources Pvt Ltd - India
- Bangladesh Power Developement Board
- Thai Mozambique Logistica
- Interocean Group of Companies - India
- GN Power Mariveles Coal Plant, Philippines
- Chamber of Mines of South Africa
- Altura Mining Limited, Indonesia
- Bukit Makmur.PT - Indonesia
- Parry Sugars Refinery, India
- Georgia Ports Authority, United States
- Vedanta Resources Plc - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Rashtriya Ispat Nigam Limited - India
- Madhucon Powers Ltd - India
- Orica Mining Services - Indonesia
- Kaltim Prima Coal - Indonesia
- Electricity Authority, New Zealand
- Economic Council, Georgia
- Indogreen Group - Indonesia
- ASAPP Information Group - India
- Petrochimia International Co. Ltd.- Taiwan
- Sree Jayajothi Cements Limited - India
- Baramulti Group, Indonesia
- Kumho Petrochemical, South Korea
- Oldendorff Carriers - Singapore
- Medco Energi Mining Internasional
- Formosa Plastics Group - Taiwan
- Energy Link Ltd, New Zealand
- Australian Coal Association
- Merrill Lynch Commodities Europe
- Antam Resourcindo - Indonesia
- Coastal Gujarat Power Limited - India
- Bhatia International Limited - India
- Barasentosa Lestari - Indonesia
- Intertek Mineral Services - Indonesia
- Attock Cement Pakistan Limited
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Romanian Commodities Exchange
- Global Green Power PLC Corporation, Philippines
- Africa Commodities Group - South Africa
- The University of Queensland
- Asmin Koalindo Tuhup - Indonesia
- IEA Clean Coal Centre - UK
- Goldman Sachs - Singapore
- The State Trading Corporation of India Ltd
- Power Finance Corporation Ltd., India
- Bharathi Cement Corporation - India
- Heidelberg Cement - Germany
- India Bulls Power Limited - India
- Star Paper Mills Limited - India
- International Coal Ventures Pvt Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Savvy Resources Ltd - HongKong
- Karaikal Port Pvt Ltd - India
- Pendopo Energi Batubara - Indonesia
- Tata Chemicals Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kalimantan Lumbung Energi - Indonesia
- Essar Steel Hazira Ltd - India
- Makarim & Taira - Indonesia
- Coal and Oil Company - UAE
- VISA Power Limited - India
- Semirara Mining Corp, Philippines
- SMG Consultants - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Mercator Lines Limited - India
- Maheswari Brothers Coal Limited - India
- Wilmar Investment Holdings
- Indian Energy Exchange, India
- CIMB Investment Bank - Malaysia
- Pipit Mutiara Jaya. PT, Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Ceylon Electricity Board - Sri Lanka
- South Luzon Thermal Energy Corporation
- Global Business Power Corporation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bayan Resources Tbk. - Indonesia
- Sindya Power Generating Company Private Ltd
- ICICI Bank Limited - India
- Ministry of Transport, Egypt
- Coalindo Energy - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Parliament of New Zealand
- Gujarat Mineral Development Corp Ltd - India
- Borneo Indobara - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bhushan Steel Limited - India
- Agrawal Coal Company - India
- Sojitz Corporation - Japan
- PetroVietnam Power Coal Import and Supply Company
- Leighton Contractors Pty Ltd - Australia
- SMC Global Power, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Sical Logistics Limited - India
- Global Coal Blending Company Limited - Australia
- Electricity Generating Authority of Thailand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Singapore Mercantile Exchange
- GAC Shipping (India) Pvt Ltd
- Binh Thuan Hamico - Vietnam
- Kartika Selabumi Mining - Indonesia
- Edison Trading Spa - Italy
- Bhoruka Overseas - Indonesia
- Globalindo Alam Lestari - Indonesia
- TeaM Sual Corporation - Philippines
- Sinarmas Energy and Mining - Indonesia
- European Bulk Services B.V. - Netherlands
- Renaissance Capital - South Africa
- Neyveli Lignite Corporation Ltd, - India
- Wood Mackenzie - Singapore
- Grasim Industreis Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Holcim Trading Pte Ltd - Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- San Jose City I Power Corp, Philippines
- MS Steel International - UAE
- Uttam Galva Steels Limited - India
- Minerals Council of Australia
- Samtan Co., Ltd - South Korea
- GVK Power & Infra Limited - India
- London Commodity Brokers - England
- Price Waterhouse Coopers - Russia
- Sarangani Energy Corporation, Philippines
- Indika Energy - Indonesia
- Ministry of Mines - Canada
- Lanco Infratech Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Planning Commission, India
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