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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, 19 December 18
GLOBAL COAL DEMAND SET TO REMAIN STABLE THROUGH 2023, DESPITE HEADWINDS - IEA
While global coal demand looks set to rise for the second year in a row in 2018, it is forecast to remain stable over the next five years, as decli ...
Wednesday, 19 December 18
GLOBAL SHIPPING SCOUTS FOR FUTURE GROWTH - PETER SAND, BIMCO
Where do we go to find economic growth that spurs shipping demand in the next five years? According to the International Monetary Fund (IMF), we sh ...
Wednesday, 19 December 18
SHIPPING MARKET INSIGHT - INTERMODAL
As another year is coming to an end, it is interesting to look at the main shipping markets and how these performed compared to 2017.
&nb ...
Tuesday, 18 December 18
COAL DEMAND WILL REMAIN STEADY THROUGH 2023, INTERNATIONAL ENERGY AGENCY SAYS - TOM DICHRISTOPHER, CNBC
Coal consumption is on the rise but will remain roughly stable over the next five years, the International Energy Agency forecasts.
...
Tuesday, 18 December 18
DRY BULK: IN ABSOLUTE TERMS, ALL MAIN SIZE SEGMENTS SAW THEIR ACTUAL VOLATILITY FIGURES DECREASE - ALLIED
Since the beginning of 2016, when the dry bulk market reached its absolute bottom, freight rates have been ever since on an upward trajectory. Taki ...
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- Binh Thuan Hamico - Vietnam
- Port Waratah Coal Services - Australia
- Ind-Barath Power Infra Limited - India
- Central Electricity Authority - India
- Neyveli Lignite Corporation Ltd, - India
- Medco Energi Mining Internasional
- Renaissance Capital - South Africa
- Indogreen Group - Indonesia
- Parry Sugars Refinery, India
- SN Aboitiz Power Inc, Philippines
- Gujarat Electricity Regulatory Commission - India
- Semirara Mining Corp, Philippines
- International Coal Ventures Pvt Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Xindia Steels Limited - India
- Therma Luzon, Inc, Philippines
- Coastal Gujarat Power Limited - India
- Wood Mackenzie - Singapore
- Price Waterhouse Coopers - Russia
- Straits Asia Resources Limited - Singapore
- Electricity Authority, New Zealand
- Coalindo Energy - Indonesia
- Central Java Power - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Energy Link Ltd, New Zealand
- Goldman Sachs - Singapore
- Kapuas Tunggal Persada - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Indika Energy - Indonesia
- LBH Netherlands Bv - Netherlands
- Meralco Power Generation, Philippines
- Malabar Cements Ltd - India
- Jaiprakash Power Ventures ltd
- Carbofer General Trading SA - India
- Baramulti Group, Indonesia
- ASAPP Information Group - India
- Salva Resources Pvt Ltd - India
- Chettinad Cement Corporation Ltd - India
- Eastern Coal Council - USA
- Krishnapatnam Port Company Ltd. - India
- Georgia Ports Authority, United States
- Sree Jayajothi Cements Limited - India
- PowerSource Philippines DevCo
- India Bulls Power Limited - India
- GMR Energy Limited - India
- Intertek Mineral Services - Indonesia
- Ministry of Transport, Egypt
- Mercuria Energy - Indonesia
- Indian Energy Exchange, India
- Eastern Energy - Thailand
- Globalindo Alam Lestari - Indonesia
- London Commodity Brokers - England
- Borneo Indobara - Indonesia
- Indo Tambangraya Megah - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- CNBM International Corporation - China
- Global Coal Blending Company Limited - Australia
- Bulk Trading Sa - Switzerland
- Latin American Coal - Colombia
- Directorate General of MIneral and Coal - Indonesia
- Minerals Council of Australia
- Sarangani Energy Corporation, Philippines
- Ministry of Mines - Canada
- Riau Bara Harum - Indonesia
- CIMB Investment Bank - Malaysia
- Singapore Mercantile Exchange
- Marubeni Corporation - India
- TeaM Sual Corporation - Philippines
- South Luzon Thermal Energy Corporation
- Global Business Power Corporation, Philippines
- PNOC Exploration Corporation - Philippines
- GVK Power & Infra Limited - India
- Bukit Makmur.PT - Indonesia
- Bangladesh Power Developement Board
- Kumho Petrochemical, South Korea
- Independent Power Producers Association of India
- PTC India Limited - India
- Kartika Selabumi Mining - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Africa Commodities Group - South Africa
- Orica Mining Services - Indonesia
- Kepco SPC Power Corporation, Philippines
- Rio Tinto Coal - Australia
- Wilmar Investment Holdings
- Power Finance Corporation Ltd., India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Coal and Oil Company - UAE
- MS Steel International - UAE
- Vizag Seaport Private Limited - India
- Formosa Plastics Group - Taiwan
- Barasentosa Lestari - Indonesia
- Romanian Commodities Exchange
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Aditya Birla Group - India
- Iligan Light & Power Inc, Philippines
- Siam City Cement - Thailand
- Indonesian Coal Mining Association
- Madhucon Powers Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Kohat Cement Company Ltd. - Pakistan
- Mercator Lines Limited - India
- Simpson Spence & Young - Indonesia
- Essar Steel Hazira Ltd - India
- SMG Consultants - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Mjunction Services Limited - India
- Semirara Mining and Power Corporation, Philippines
- Kobexindo Tractors - Indoneisa
- Australian Commodity Traders Exchange
- Uttam Galva Steels Limited - India
- Electricity Generating Authority of Thailand
- Bhushan Steel Limited - India
- Grasim Industreis Ltd - India
- Thiess Contractors Indonesia
- The Treasury - Australian Government
- Timah Investasi Mineral - Indoneisa
- Maheswari Brothers Coal Limited - India
- Siam City Cement PLC, Thailand
- Standard Chartered Bank - UAE
- Pipit Mutiara Jaya. PT, Indonesia
- Makarim & Taira - Indonesia
- Kaltim Prima Coal - Indonesia
- Posco Energy - South Korea
- Planning Commission, India
- European Bulk Services B.V. - Netherlands
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Attock Cement Pakistan Limited
- OPG Power Generation Pvt Ltd - India
- New Zealand Coal & Carbon
- VISA Power Limited - India
- Energy Development Corp, Philippines
- Sinarmas Energy and Mining - Indonesia
- Tata Chemicals Ltd - India
- Commonwealth Bank - Australia
- Agrawal Coal Company - India
- Bhoruka Overseas - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Australian Coal Association
- Altura Mining Limited, Indonesia
- IHS Mccloskey Coal Group - USA
- The University of Queensland
- San Jose City I Power Corp, Philippines
- Meenaskhi Energy Private Limited - India
- Trasteel International SA, Italy
- Antam Resourcindo - Indonesia
- Anglo American - United Kingdom
- Interocean Group of Companies - India
- Bayan Resources Tbk. - Indonesia
- Sakthi Sugars Limited - India
- The State Trading Corporation of India Ltd
- Petron Corporation, Philippines
- Samtan Co., Ltd - South Korea
- Deloitte Consulting - India
- Orica Australia Pty. Ltd.
- Oldendorff Carriers - Singapore
- Leighton Contractors Pty Ltd - Australia
- Bukit Baiduri Energy - Indonesia
- SMC Global Power, Philippines
- Cement Manufacturers Association - India
- Edison Trading Spa - Italy
- Gujarat Sidhee Cement - India
- Chamber of Mines of South Africa
- Star Paper Mills Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Jorong Barutama Greston.PT - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Asmin Koalindo Tuhup - Indonesia
- Global Green Power PLC Corporation, Philippines
- Toyota Tsusho Corporation, Japan
- Banpu Public Company Limited - Thailand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Vijayanagar Sugar Pvt Ltd - India
- Merrill Lynch Commodities Europe
- McConnell Dowell - Australia
- Tamil Nadu electricity Board
- Metalloyd Limited - United Kingdom
- Videocon Industries ltd - India
- Manunggal Multi Energi - Indonesia
- Ministry of Finance - Indonesia
- Bhatia International Limited - India
- Pendopo Energi Batubara - Indonesia
- ICICI Bank Limited - India
- GAC Shipping (India) Pvt Ltd
- Bahari Cakrawala Sebuku - Indonesia
- Vedanta Resources Plc - India
- Bharathi Cement Corporation - India
- Parliament of New Zealand
- Kalimantan Lumbung Energi - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Economic Council, Georgia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Aboitiz Power Corporation - Philippines
- Holcim Trading Pte Ltd - Singapore
- Heidelberg Cement - Germany
- Ambuja Cements Ltd - India
- Lanco Infratech Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Directorate Of Revenue Intelligence - India
- Sical Logistics Limited - India
- Dalmia Cement Bharat India
- Cigading International Bulk Terminal - Indonesia
- IEA Clean Coal Centre - UK
- Karaikal Port Pvt Ltd - India
- Savvy Resources Ltd - HongKong
- Jindal Steel & Power Ltd - India
- White Energy Company Limited
- Kideco Jaya Agung - Indonesia
- Thai Mozambique Logistica
- Larsen & Toubro Limited - India
- AsiaOL BioFuels Corp., Philippines
- Sindya Power Generating Company Private Ltd
- Mintek Dendrill Indonesia
- Indian Oil Corporation Limited
- Sojitz Corporation - Japan
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