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