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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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Sunday, 02 December 18
TRADE WAR LEADING TO HEADWINDS FOR THE FRAGILE DRY BULK RECOVERY - PETER SAND, BIMCO
The first twelve weeks of the 2018/19 marketing year, which started on 1 September 2018, have painted a dire picture for US soya bean exports which ...
Friday, 30 November 18
GOVT MULLS REQUIRING MINERS TO TURN COAL INTO GAS - THE JAKARTA POST
The government is considering requiring all coal miners to turn the raw commodity into dimethylether (DME) as a substitute for liquefied petroleum ...
Friday, 30 November 18
SUPRAMAX: N. CHINA TO INDIA OR SE ASIA SUPRAS ARE GETTING PAID AROUND US$ 6000 - FEARNLEYS
Capesize
Sharp rise in spot activity and income, admittedly from very low levels, for the big ships. West Australia/China and Brazil/Far East b ...
Thursday, 29 November 18
NEW IMSBC CODE REQUIREMENTS AIM TO CONTROL LIQUEFACTION OF COAL CARGOES - GARD
KNOWLEDGE TO ELEVATE
The International Maritime Solid Bulk Cargoes (IMSBC) Code describes coal as a natural, solid, combustible material consi ...
Wednesday, 28 November 18
SHIPPING MARKET INSIGHT - GEORGE LAIOS
Last week I had the privilege to attend the SingularityU Greece Summit, in Athens. It was a privilege because you do not often have the chance to s ...
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- Attock Cement Pakistan Limited
- Toyota Tsusho Corporation, Japan
- Samtan Co., Ltd - South Korea
- The State Trading Corporation of India Ltd
- Kobexindo Tractors - Indoneisa
- LBH Netherlands Bv - Netherlands
- Karaikal Port Pvt Ltd - India
- PNOC Exploration Corporation - Philippines
- Iligan Light & Power Inc, Philippines
- Bhatia International Limited - India
- Semirara Mining and Power Corporation, Philippines
- Marubeni Corporation - India
- Posco Energy - South Korea
- Sakthi Sugars Limited - India
- Indogreen Group - Indonesia
- McConnell Dowell - Australia
- VISA Power Limited - India
- Kideco Jaya Agung - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Xindia Steels Limited - India
- Medco Energi Mining Internasional
- Gujarat Sidhee Cement - India
- Oldendorff Carriers - Singapore
- Meralco Power Generation, Philippines
- Bhushan Steel Limited - India
- Maheswari Brothers Coal Limited - India
- Tamil Nadu electricity Board
- Simpson Spence & Young - Indonesia
- Ind-Barath Power Infra Limited - India
- IHS Mccloskey Coal Group - USA
- Ambuja Cements Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Sical Logistics Limited - India
- Aditya Birla Group - India
- Indonesian Coal Mining Association
- Banpu Public Company Limited - Thailand
- Mercator Lines Limited - India
- Anglo American - United Kingdom
- AsiaOL BioFuels Corp., Philippines
- Deloitte Consulting - India
- PetroVietnam Power Coal Import and Supply Company
- IEA Clean Coal Centre - UK
- Siam City Cement - Thailand
- Grasim Industreis Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Straits Asia Resources Limited - Singapore
- Salva Resources Pvt Ltd - India
- Georgia Ports Authority, United States
- Standard Chartered Bank - UAE
- Sarangani Energy Corporation, Philippines
- Edison Trading Spa - Italy
- SMG Consultants - Indonesia
- Coal and Oil Company - UAE
- SN Aboitiz Power Inc, Philippines
- Africa Commodities Group - South Africa
- Makarim & Taira - Indonesia
- Sree Jayajothi Cements Limited - India
- Power Finance Corporation Ltd., India
- Lanco Infratech Ltd - India
- India Bulls Power Limited - India
- Central Java Power - Indonesia
- Metalloyd Limited - United Kingdom
- Dalmia Cement Bharat India
- Pipit Mutiara Jaya. PT, Indonesia
- Australian Commodity Traders Exchange
- Thiess Contractors Indonesia
- London Commodity Brokers - England
- Trasteel International SA, Italy
- Sindya Power Generating Company Private Ltd
- Australian Coal Association
- Wilmar Investment Holdings
- Siam City Cement PLC, Thailand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Carbofer General Trading SA - India
- Indika Energy - Indonesia
- Goldman Sachs - Singapore
- South Luzon Thermal Energy Corporation
- OPG Power Generation Pvt Ltd - India
- Timah Investasi Mineral - Indoneisa
- Jindal Steel & Power Ltd - India
- Directorate Of Revenue Intelligence - India
- Vedanta Resources Plc - India
- Directorate General of MIneral and Coal - Indonesia
- Baramulti Group, Indonesia
- San Jose City I Power Corp, Philippines
- Alfred C Toepfer International GmbH - Germany
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bahari Cakrawala Sebuku - Indonesia
- GMR Energy Limited - India
- Formosa Plastics Group - Taiwan
- Therma Luzon, Inc, Philippines
- Coalindo Energy - Indonesia
- Orica Australia Pty. Ltd.
- ASAPP Information Group - India
- GVK Power & Infra Limited - India
- Madhucon Powers Ltd - India
- Ministry of Transport, Egypt
- Uttam Galva Steels Limited - India
- Ministry of Finance - Indonesia
- Interocean Group of Companies - India
- Energy Development Corp, Philippines
- Global Coal Blending Company Limited - Australia
- Bukit Makmur.PT - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Tata Chemicals Ltd - India
- Antam Resourcindo - Indonesia
- Mercuria Energy - Indonesia
- Electricity Authority, New Zealand
- PTC India Limited - India
- Bayan Resources Tbk. - Indonesia
- Jaiprakash Power Ventures ltd
- Vizag Seaport Private Limited - India
- Billiton Holdings Pty Ltd - Australia
- Globalindo Alam Lestari - Indonesia
- Kumho Petrochemical, South Korea
- GN Power Mariveles Coal Plant, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kapuas Tunggal Persada - Indonesia
- Central Electricity Authority - India
- Heidelberg Cement - Germany
- Kaltim Prima Coal - Indonesia
- Chamber of Mines of South Africa
- Savvy Resources Ltd - HongKong
- Petron Corporation, Philippines
- Intertek Mineral Services - Indonesia
- PowerSource Philippines DevCo
- Karbindo Abesyapradhi - Indoneisa
- Sinarmas Energy and Mining - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Manunggal Multi Energi - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Indian Oil Corporation Limited
- Thai Mozambique Logistica
- ICICI Bank Limited - India
- Barasentosa Lestari - Indonesia
- Pendopo Energi Batubara - Indonesia
- Coastal Gujarat Power Limited - India
- Wood Mackenzie - Singapore
- Eastern Energy - Thailand
- SMC Global Power, Philippines
- White Energy Company Limited
- Binh Thuan Hamico - Vietnam
- Global Green Power PLC Corporation, Philippines
- Riau Bara Harum - Indonesia
- Singapore Mercantile Exchange
- Gujarat Electricity Regulatory Commission - India
- MS Steel International - UAE
- Indo Tambangraya Megah - Indonesia
- Parry Sugars Refinery, India
- The Treasury - Australian Government
- Videocon Industries ltd - India
- Economic Council, Georgia
- Orica Mining Services - Indonesia
- Aboitiz Power Corporation - Philippines
- New Zealand Coal & Carbon
- Chettinad Cement Corporation Ltd - India
- Electricity Generating Authority of Thailand
- Kalimantan Lumbung Energi - Indonesia
- Rio Tinto Coal - Australia
- Parliament of New Zealand
- Kartika Selabumi Mining - Indonesia
- Ministry of Mines - Canada
- Larsen & Toubro Limited - India
- Indian Energy Exchange, India
- Commonwealth Bank - Australia
- Semirara Mining Corp, Philippines
- Agrawal Coal Company - India
- Star Paper Mills Limited - India
- Meenaskhi Energy Private Limited - India
- Sojitz Corporation - Japan
- Renaissance Capital - South Africa
- Petrochimia International Co. Ltd.- Taiwan
- Bharathi Cement Corporation - India
- Cigading International Bulk Terminal - Indonesia
- Holcim Trading Pte Ltd - Singapore
- The University of Queensland
- Altura Mining Limited, Indonesia
- Mjunction Services Limited - India
- Port Waratah Coal Services - Australia
- Cement Manufacturers Association - India
- International Coal Ventures Pvt Ltd - India
- CNBM International Corporation - China
- Bhoruka Overseas - Indonesia
- Merrill Lynch Commodities Europe
- European Bulk Services B.V. - Netherlands
- Krishnapatnam Port Company Ltd. - India
- Leighton Contractors Pty Ltd - Australia
- Malabar Cements Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Ceylon Electricity Board - Sri Lanka
- Bukit Baiduri Energy - Indonesia
- GAC Shipping (India) Pvt Ltd
- Bank of Tokyo Mitsubishi UFJ Ltd
- Energy Link Ltd, New Zealand
- Kohat Cement Company Ltd. - Pakistan
- Miang Besar Coal Terminal - Indonesia
- Kepco SPC Power Corporation, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Independent Power Producers Association of India
- Bangladesh Power Developement Board
- Planning Commission, India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Eastern Coal Council - USA
- Gujarat Mineral Development Corp Ltd - India
- TeaM Sual Corporation - Philippines
- Romanian Commodities Exchange
- Global Business Power Corporation, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Minerals Council of Australia
- CIMB Investment Bank - Malaysia
- Latin American Coal - Colombia
- Borneo Indobara - Indonesia
- Essar Steel Hazira Ltd - India
- Price Waterhouse Coopers - Russia
- Bulk Trading Sa - Switzerland
- Mintek Dendrill Indonesia
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