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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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- Coal and Oil Company - UAE
- Directorate General of MIneral and Coal - Indonesia
- Gujarat Electricity Regulatory Commission - India
- SMG Consultants - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Electricity Generating Authority of Thailand
- Lanco Infratech Ltd - India
- Planning Commission, India
- Vizag Seaport Private Limited - India
- Global Green Power PLC Corporation, Philippines
- Standard Chartered Bank - UAE
- Central Java Power - Indonesia
- Dalmia Cement Bharat India
- PTC India Limited - India
- Karbindo Abesyapradhi - Indoneisa
- AsiaOL BioFuels Corp., Philippines
- TeaM Sual Corporation - Philippines
- Banpu Public Company Limited - Thailand
- Mjunction Services Limited - India
- Sree Jayajothi Cements Limited - India
- The University of Queensland
- Independent Power Producers Association of India
- Bharathi Cement Corporation - India
- Indo Tambangraya Megah - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Madhucon Powers Ltd - India
- Oldendorff Carriers - Singapore
- Indogreen Group - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- MS Steel International - UAE
- Minerals Council of Australia
- Miang Besar Coal Terminal - Indonesia
- Jaiprakash Power Ventures ltd
- Chamber of Mines of South Africa
- India Bulls Power Limited - India
- Cement Manufacturers Association - India
- Aditya Birla Group - India
- Meralco Power Generation, Philippines
- Bukit Baiduri Energy - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Ceylon Electricity Board - Sri Lanka
- Jorong Barutama Greston.PT - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Makarim & Taira - Indonesia
- White Energy Company Limited
- Antam Resourcindo - Indonesia
- Singapore Mercantile Exchange
- Karaikal Port Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- Essar Steel Hazira Ltd - India
- CNBM International Corporation - China
- OPG Power Generation Pvt Ltd - India
- Central Electricity Authority - India
- Indika Energy - Indonesia
- Xindia Steels Limited - India
- Orica Mining Services - Indonesia
- Toyota Tsusho Corporation, Japan
- San Jose City I Power Corp, Philippines
- Videocon Industries ltd - India
- Kideco Jaya Agung - Indonesia
- Larsen & Toubro Limited - India
- Salva Resources Pvt Ltd - India
- Agrawal Coal Company - India
- Ministry of Finance - Indonesia
- Interocean Group of Companies - India
- Sindya Power Generating Company Private Ltd
- Star Paper Mills Limited - India
- Meenaskhi Energy Private Limited - India
- Coalindo Energy - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- IEA Clean Coal Centre - UK
- Energy Link Ltd, New Zealand
- Timah Investasi Mineral - Indoneisa
- Bank of Tokyo Mitsubishi UFJ Ltd
- Parry Sugars Refinery, India
- Price Waterhouse Coopers - Russia
- ICICI Bank Limited - India
- Kobexindo Tractors - Indoneisa
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Goldman Sachs - Singapore
- Kohat Cement Company Ltd. - Pakistan
- Kapuas Tunggal Persada - Indonesia
- Leighton Contractors Pty Ltd - Australia
- IHS Mccloskey Coal Group - USA
- Baramulti Group, Indonesia
- Global Business Power Corporation, Philippines
- Marubeni Corporation - India
- Jindal Steel & Power Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Thiess Contractors Indonesia
- Renaissance Capital - South Africa
- Global Coal Blending Company Limited - Australia
- Electricity Authority, New Zealand
- Merrill Lynch Commodities Europe
- Semirara Mining Corp, Philippines
- Ministry of Transport, Egypt
- LBH Netherlands Bv - Netherlands
- Sakthi Sugars Limited - India
- Power Finance Corporation Ltd., India
- Kumho Petrochemical, South Korea
- Indonesian Coal Mining Association
- Indian Energy Exchange, India
- Simpson Spence & Young - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Kartika Selabumi Mining - Indonesia
- Mintek Dendrill Indonesia
- Malabar Cements Ltd - India
- European Bulk Services B.V. - Netherlands
- Uttam Galva Steels Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Coastal Gujarat Power Limited - India
- GAC Shipping (India) Pvt Ltd
- Vijayanagar Sugar Pvt Ltd - India
- Latin American Coal - Colombia
- PNOC Exploration Corporation - Philippines
- Tamil Nadu electricity Board
- Vedanta Resources Plc - India
- Kaltim Prima Coal - Indonesia
- Altura Mining Limited, Indonesia
- Economic Council, Georgia
- London Commodity Brokers - England
- Metalloyd Limited - United Kingdom
- South Luzon Thermal Energy Corporation
- GVK Power & Infra Limited - India
- Rashtriya Ispat Nigam Limited - India
- Wood Mackenzie - Singapore
- Straits Asia Resources Limited - Singapore
- Energy Development Corp, Philippines
- Borneo Indobara - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Port Waratah Coal Services - Australia
- Carbofer General Trading SA - India
- Romanian Commodities Exchange
- Sojitz Corporation - Japan
- Eastern Energy - Thailand
- New Zealand Coal & Carbon
- GN Power Mariveles Coal Plant, Philippines
- Parliament of New Zealand
- Ministry of Mines - Canada
- Mercator Lines Limited - India
- Indian Oil Corporation Limited
- Gujarat Sidhee Cement - India
- Grasim Industreis Ltd - India
- Ambuja Cements Ltd - India
- Georgia Ports Authority, United States
- International Coal Ventures Pvt Ltd - India
- Mercuria Energy - Indonesia
- Ind-Barath Power Infra Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- PetroVietnam Power Coal Import and Supply Company
- Formosa Plastics Group - Taiwan
- Rio Tinto Coal - Australia
- CIMB Investment Bank - Malaysia
- PowerSource Philippines DevCo
- ASAPP Information Group - India
- Eastern Coal Council - USA
- Australian Coal Association
- Iligan Light & Power Inc, Philippines
- Heidelberg Cement - Germany
- Trasteel International SA, Italy
- Tata Chemicals Ltd - India
- Petron Corporation, Philippines
- SN Aboitiz Power Inc, Philippines
- Siam City Cement PLC, Thailand
- Semirara Mining and Power Corporation, Philippines
- Globalindo Alam Lestari - Indonesia
- Bayan Resources Tbk. - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Sarangani Energy Corporation, Philippines
- SMC Global Power, Philippines
- VISA Power Limited - India
- Aboitiz Power Corporation - Philippines
- Riau Bara Harum - Indonesia
- Sical Logistics Limited - India
- Directorate Of Revenue Intelligence - India
- GMR Energy Limited - India
- Bangladesh Power Developement Board
- Bhatia International Limited - India
- Therma Luzon, Inc, Philippines
- Medco Energi Mining Internasional
- Bhushan Steel Limited - India
- Siam City Cement - Thailand
- Chettinad Cement Corporation Ltd - India
- Posco Energy - South Korea
- The Treasury - Australian Government
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Cigading International Bulk Terminal - Indonesia
- Pendopo Energi Batubara - Indonesia
- Bhoruka Overseas - Indonesia
- Savvy Resources Ltd - HongKong
- Orica Australia Pty. Ltd.
- Manunggal Multi Energi - Indonesia
- Maheswari Brothers Coal Limited - India
- Billiton Holdings Pty Ltd - Australia
- Edison Trading Spa - Italy
- Deloitte Consulting - India
- Kepco SPC Power Corporation, Philippines
- Anglo American - United Kingdom
- Intertek Mineral Services - Indonesia
- The State Trading Corporation of India Ltd
- Thai Mozambique Logistica
- Bukit Makmur.PT - Indonesia
- McConnell Dowell - Australia
- Bukit Asam (Persero) Tbk - Indonesia
- Australian Commodity Traders Exchange
- Wilmar Investment Holdings
- Samtan Co., Ltd - South Korea
- Binh Thuan Hamico - Vietnam
- Alfred C Toepfer International GmbH - Germany
- Attock Cement Pakistan Limited
- Asmin Koalindo Tuhup - Indonesia
- Africa Commodities Group - South Africa
- Commonwealth Bank - Australia
- Barasentosa Lestari - Indonesia
- Maharashtra Electricity Regulatory Commission - India
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