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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, 25 December 18
FUEL QUALITY AND SAFETY IN IMO CONVENTIONS: A GROWING CHALLENGE, EVEN PRIOR TO 1 JANUARY 2020 - IUMI
At the 100th session of the International Maritime Organization’s (IMO) Maritime Safety Committee (MSC) meeting discussions on fuel quality a ...
Monday, 24 December 18
DRY BULK MARKET: CAPESIZE MARKET ON BACKFOOT AS 2018'S END DRAWS NEAR - THE BALTIC BRIEFING
Capesize
Panic set in in the East as the holiday season approaches, with owners chasing rates lower. Rates on the key West Australia/China route ...
Friday, 21 December 18
4.2 MILLION DWT OF DRY BULK SHIPS SCRAPPED UNTIL 17 DEC, DOWN 71.6% Y/Y - BIMCO
2018 has been a slow year for dry bulk demolitions, with only 4.2 million DWT scrapped (as of 17 December), down 71.6% compared to last year. An al ...
Thursday, 20 December 18
INDONESIAN COAL PRICES DIVERGE FROM KEY BENCHMARK - FITCH RATINGS
The Newcastle 6,000kcal coal price benchmark that is widely used to determine most coal price estimates for Indonesian coal miners has increasingly ...
Wednesday, 19 December 18
CHINA'S IMPORT RESTRICTIONS ON COAL SPOILS THE PARTY FOR PANAMAXES - DREWRY
The Chinese government’s objective of suppressing coal and lignite imports in November and December 2018 is adversely impacting demand for Pa ...
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- Mintek Dendrill Indonesia
- Dalmia Cement Bharat India
- Bukit Asam (Persero) Tbk - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Energy Link Ltd, New Zealand
- Kartika Selabumi Mining - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- SMC Global Power, Philippines
- Sindya Power Generating Company Private Ltd
- CIMB Investment Bank - Malaysia
- SMG Consultants - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bangladesh Power Developement Board
- Orica Australia Pty. Ltd.
- Banpu Public Company Limited - Thailand
- TeaM Sual Corporation - Philippines
- Tata Chemicals Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Indogreen Group - Indonesia
- Eastern Coal Council - USA
- Parliament of New Zealand
- Aditya Birla Group - India
- Xindia Steels Limited - India
- The State Trading Corporation of India Ltd
- South Luzon Thermal Energy Corporation
- Indonesian Coal Mining Association
- Pipit Mutiara Jaya. PT, Indonesia
- Mercator Lines Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Electricity Generating Authority of Thailand
- Borneo Indobara - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- IHS Mccloskey Coal Group - USA
- The Treasury - Australian Government
- LBH Netherlands Bv - Netherlands
- Gujarat Sidhee Cement - India
- Goldman Sachs - Singapore
- Trasteel International SA, Italy
- Directorate Of Revenue Intelligence - India
- Timah Investasi Mineral - Indoneisa
- Ambuja Cements Ltd - India
- New Zealand Coal & Carbon
- Savvy Resources Ltd - HongKong
- Vijayanagar Sugar Pvt Ltd - India
- Port Waratah Coal Services - Australia
- Samtan Co., Ltd - South Korea
- Kaltim Prima Coal - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- McConnell Dowell - Australia
- Sarangani Energy Corporation, Philippines
- Chettinad Cement Corporation Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kapuas Tunggal Persada - Indonesia
- Intertek Mineral Services - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Chamber of Mines of South Africa
- Global Coal Blending Company Limited - Australia
- SN Aboitiz Power Inc, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Jaiprakash Power Ventures ltd
- San Jose City I Power Corp, Philippines
- Baramulti Group, Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Manunggal Multi Energi - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Coal and Oil Company - UAE
- Cement Manufacturers Association - India
- Thiess Contractors Indonesia
- Uttam Galva Steels Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Georgia Ports Authority, United States
- Indian Oil Corporation Limited
- Kobexindo Tractors - Indoneisa
- White Energy Company Limited
- Formosa Plastics Group - Taiwan
- Wilmar Investment Holdings
- Sinarmas Energy and Mining - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Star Paper Mills Limited - India
- Petron Corporation, Philippines
- Commonwealth Bank - Australia
- Australian Coal Association
- Thai Mozambique Logistica
- Videocon Industries ltd - India
- MS Steel International - UAE
- Indika Energy - Indonesia
- Madhucon Powers Ltd - India
- Grasim Industreis Ltd - India
- Bhatia International Limited - India
- Carbofer General Trading SA - India
- Price Waterhouse Coopers - Russia
- Bharathi Cement Corporation - India
- Binh Thuan Hamico - Vietnam
- Ministry of Transport, Egypt
- Bukit Makmur.PT - Indonesia
- Makarim & Taira - Indonesia
- Vedanta Resources Plc - India
- Salva Resources Pvt Ltd - India
- Kideco Jaya Agung - Indonesia
- Merrill Lynch Commodities Europe
- Tamil Nadu electricity Board
- Ind-Barath Power Infra Limited - India
- Coalindo Energy - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- ICICI Bank Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Orica Mining Services - Indonesia
- Global Green Power PLC Corporation, Philippines
- PTC India Limited - India
- Interocean Group of Companies - India
- Lanco Infratech Ltd - India
- Essar Steel Hazira Ltd - India
- Ministry of Finance - Indonesia
- Karaikal Port Pvt Ltd - India
- CNBM International Corporation - China
- Sojitz Corporation - Japan
- Ministry of Mines - Canada
- Riau Bara Harum - Indonesia
- Indian Energy Exchange, India
- Kohat Cement Company Ltd. - Pakistan
- Siam City Cement PLC, Thailand
- Economic Council, Georgia
- PNOC Exploration Corporation - Philippines
- Coastal Gujarat Power Limited - India
- VISA Power Limited - India
- Indo Tambangraya Megah - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Altura Mining Limited, Indonesia
- Mjunction Services Limited - India
- Standard Chartered Bank - UAE
- GAC Shipping (India) Pvt Ltd
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Sree Jayajothi Cements Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Marubeni Corporation - India
- Metalloyd Limited - United Kingdom
- Eastern Energy - Thailand
- Bulk Trading Sa - Switzerland
- Semirara Mining Corp, Philippines
- Renaissance Capital - South Africa
- Bhushan Steel Limited - India
- Oldendorff Carriers - Singapore
- Leighton Contractors Pty Ltd - Australia
- Electricity Authority, New Zealand
- Malabar Cements Ltd - India
- Siam City Cement - Thailand
- Antam Resourcindo - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Energy Development Corp, Philippines
- Australian Commodity Traders Exchange
- Vizag Seaport Private Limited - India
- Kepco SPC Power Corporation, Philippines
- Agrawal Coal Company - India
- Global Business Power Corporation, Philippines
- Deloitte Consulting - India
- Therma Luzon, Inc, Philippines
- Larsen & Toubro Limited - India
- Holcim Trading Pte Ltd - Singapore
- Iligan Light & Power Inc, Philippines
- Mercuria Energy - Indonesia
- Jindal Steel & Power Ltd - India
- Meenaskhi Energy Private Limited - India
- IEA Clean Coal Centre - UK
- ASAPP Information Group - India
- Toyota Tsusho Corporation, Japan
- The University of Queensland
- Rio Tinto Coal - Australia
- Bhoruka Overseas - Indonesia
- Sical Logistics Limited - India
- Wood Mackenzie - Singapore
- Kumho Petrochemical, South Korea
- Africa Commodities Group - South Africa
- Anglo American - United Kingdom
- Central Electricity Authority - India
- GMR Energy Limited - India
- Heidelberg Cement - Germany
- OPG Power Generation Pvt Ltd - India
- Romanian Commodities Exchange
- Rashtriya Ispat Nigam Limited - India
- Barasentosa Lestari - Indonesia
- Globalindo Alam Lestari - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- GVK Power & Infra Limited - India
- Minerals Council of Australia
- Planning Commission, India
- Aboitiz Power Corporation - Philippines
- Maheswari Brothers Coal Limited - India
- London Commodity Brokers - England
- Parry Sugars Refinery, India
- PowerSource Philippines DevCo
- Simpson Spence & Young - Indonesia
- International Coal Ventures Pvt Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Attock Cement Pakistan Limited
- India Bulls Power Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Karbindo Abesyapradhi - Indoneisa
- Asmin Koalindo Tuhup - Indonesia
- Bukit Baiduri Energy - Indonesia
- Latin American Coal - Colombia
- Medco Energi Mining Internasional
- Singapore Mercantile Exchange
- Central Java Power - Indonesia
- Bayan Resources Tbk. - Indonesia
- Posco Energy - South Korea
- European Bulk Services B.V. - Netherlands
- Pendopo Energi Batubara - Indonesia
- Edison Trading Spa - Italy
- Krishnapatnam Port Company Ltd. - India
- Straits Asia Resources Limited - Singapore
- Sakthi Sugars Limited - India
- Independent Power Producers Association of India
- Power Finance Corporation Ltd., India
- Meralco Power Generation, Philippines
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