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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, 25 July 18
TANKER MARKET INSIGHT - DIMITRIS KOURTESIS
We are now into the second half of 2018, which so far has not been a fruitful year for tankers. With 2020 quickly approaching we need to consider t ...
Tuesday, 24 July 18
TANKER MARKET : IN TERMS OF TRADE, THE STEPS THAT WERE SLOWLY BEING TAKEN BY OPEC AND RUSSIA - GEORGE LAZARIDIS
Despite the fact that the tanker market still seems to be in the midst of a perfect storm, there are still strong indicators that better sailing da ...
Thursday, 19 July 18
VINACOMIN PRODUCES OVER 20 MLN TONNES OF RAW COAL FROM YEAR'S START - VNA
The Vietnam National Coal and Mineral Industries Group (Vinacomin) has produced over 20 million tonnes of raw coal and 19.3 million of clean coal f ...
Wednesday, 18 July 18
INDONESIA TO AUCTION 16 MINING SITES - JP
Indonesia will soon auction 16 mining sites as no proposal submissions have been submitted by state-owned enterprises (BUMN) and regional administr ...
Wednesday, 18 July 18
SHIPPING MARKET INSIGHT - VASILIS MOIRIS
The new regulations for Chinese flag restricting import of Tier I ships have dominated market sentiment during the past days as buyers have been tr ...
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- Samtan Co., Ltd - South Korea
- Marubeni Corporation - India
- Bukit Makmur.PT - Indonesia
- Energy Link Ltd, New Zealand
- Thai Mozambique Logistica
- Anglo American - United Kingdom
- Coal and Oil Company - UAE
- Parliament of New Zealand
- ICICI Bank Limited - India
- PNOC Exploration Corporation - Philippines
- Wood Mackenzie - Singapore
- Electricity Generating Authority of Thailand
- New Zealand Coal & Carbon
- Malabar Cements Ltd - India
- Barasentosa Lestari - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- VISA Power Limited - India
- Australian Coal Association
- Mjunction Services Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Georgia Ports Authority, United States
- Coastal Gujarat Power Limited - India
- TeaM Sual Corporation - Philippines
- ASAPP Information Group - India
- Sinarmas Energy and Mining - Indonesia
- The Treasury - Australian Government
- Miang Besar Coal Terminal - Indonesia
- Formosa Plastics Group - Taiwan
- Cement Manufacturers Association - India
- Bulk Trading Sa - Switzerland
- Australian Commodity Traders Exchange
- Grasim Industreis Ltd - India
- Aditya Birla Group - India
- Toyota Tsusho Corporation, Japan
- Leighton Contractors Pty Ltd - Australia
- Commonwealth Bank - Australia
- Indian Oil Corporation Limited
- Kapuas Tunggal Persada - Indonesia
- GAC Shipping (India) Pvt Ltd
- San Jose City I Power Corp, Philippines
- Iligan Light & Power Inc, Philippines
- Vedanta Resources Plc - India
- Bangladesh Power Developement Board
- Gujarat Electricity Regulatory Commission - India
- Sree Jayajothi Cements Limited - India
- Independent Power Producers Association of India
- Ind-Barath Power Infra Limited - India
- Oldendorff Carriers - Singapore
- IHS Mccloskey Coal Group - USA
- Vijayanagar Sugar Pvt Ltd - India
- Global Business Power Corporation, Philippines
- Riau Bara Harum - Indonesia
- Antam Resourcindo - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Siam City Cement PLC, Thailand
- GN Power Mariveles Coal Plant, Philippines
- Indogreen Group - Indonesia
- Salva Resources Pvt Ltd - India
- Merrill Lynch Commodities Europe
- Karbindo Abesyapradhi - Indoneisa
- Ambuja Cements Ltd - India
- Price Waterhouse Coopers - Russia
- Pipit Mutiara Jaya. PT, Indonesia
- Semirara Mining and Power Corporation, Philippines
- Bhatia International Limited - India
- Sarangani Energy Corporation, Philippines
- Petron Corporation, Philippines
- Siam City Cement - Thailand
- Coalindo Energy - Indonesia
- Lanco Infratech Ltd - India
- Posco Energy - South Korea
- Indika Energy - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Ministry of Mines - Canada
- Trasteel International SA, Italy
- SN Aboitiz Power Inc, Philippines
- Kaltim Prima Coal - Indonesia
- Tamil Nadu electricity Board
- Neyveli Lignite Corporation Ltd, - India
- McConnell Dowell - Australia
- Larsen & Toubro Limited - India
- Bharathi Cement Corporation - India
- London Commodity Brokers - England
- GMR Energy Limited - India
- Uttam Galva Steels Limited - India
- Sojitz Corporation - Japan
- Orica Australia Pty. Ltd.
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Timah Investasi Mineral - Indoneisa
- Thiess Contractors Indonesia
- Straits Asia Resources Limited - Singapore
- Eastern Coal Council - USA
- Electricity Authority, New Zealand
- Rio Tinto Coal - Australia
- Mercuria Energy - Indonesia
- Indonesian Coal Mining Association
- Eastern Energy - Thailand
- Metalloyd Limited - United Kingdom
- Goldman Sachs - Singapore
- PowerSource Philippines DevCo
- Global Coal Blending Company Limited - Australia
- Madhucon Powers Ltd - India
- Meenaskhi Energy Private Limited - India
- Latin American Coal - Colombia
- India Bulls Power Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Maheswari Brothers Coal Limited - India
- Bhoruka Overseas - Indonesia
- Makarim & Taira - Indonesia
- Directorate Of Revenue Intelligence - India
- PTC India Limited - India
- Indian Energy Exchange, India
- Borneo Indobara - Indonesia
- Kideco Jaya Agung - Indonesia
- Vizag Seaport Private Limited - India
- Orica Mining Services - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Bhushan Steel Limited - India
- The State Trading Corporation of India Ltd
- Kartika Selabumi Mining - Indonesia
- White Energy Company Limited
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Heidelberg Cement - Germany
- Manunggal Multi Energi - Indonesia
- Kepco SPC Power Corporation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Binh Thuan Hamico - Vietnam
- Attock Cement Pakistan Limited
- Asmin Koalindo Tuhup - Indonesia
- Planning Commission, India
- Singapore Mercantile Exchange
- Interocean Group of Companies - India
- Wilmar Investment Holdings
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Sindya Power Generating Company Private Ltd
- Renaissance Capital - South Africa
- Africa Commodities Group - South Africa
- European Bulk Services B.V. - Netherlands
- Agrawal Coal Company - India
- Aboitiz Power Corporation - Philippines
- Jindal Steel & Power Ltd - India
- Mercator Lines Limited - India
- Economic Council, Georgia
- Petrochimia International Co. Ltd.- Taiwan
- Star Paper Mills Limited - India
- MS Steel International - UAE
- Sakthi Sugars Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Billiton Holdings Pty Ltd - Australia
- South Luzon Thermal Energy Corporation
- Port Waratah Coal Services - Australia
- Bukit Baiduri Energy - Indonesia
- Semirara Mining Corp, Philippines
- CIMB Investment Bank - Malaysia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Krishnapatnam Port Company Ltd. - India
- Holcim Trading Pte Ltd - Singapore
- Meralco Power Generation, Philippines
- Globalindo Alam Lestari - Indonesia
- Bayan Resources Tbk. - Indonesia
- Parry Sugars Refinery, India
- Chettinad Cement Corporation Ltd - India
- Carbofer General Trading SA - India
- CNBM International Corporation - China
- Chamber of Mines of South Africa
- Rashtriya Ispat Nigam Limited - India
- IEA Clean Coal Centre - UK
- Mintek Dendrill Indonesia
- Jaiprakash Power Ventures ltd
- Sical Logistics Limited - India
- Dalmia Cement Bharat India
- Global Green Power PLC Corporation, Philippines
- SMC Global Power, Philippines
- Pendopo Energi Batubara - Indonesia
- Central Electricity Authority - India
- Power Finance Corporation Ltd., India
- GVK Power & Infra Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Baramulti Group, Indonesia
- OPG Power Generation Pvt Ltd - India
- Altura Mining Limited, Indonesia
- Kumho Petrochemical, South Korea
- International Coal Ventures Pvt Ltd - India
- Energy Development Corp, Philippines
- Romanian Commodities Exchange
- Banpu Public Company Limited - Thailand
- Kalimantan Lumbung Energi - Indonesia
- Simpson Spence & Young - Indonesia
- LBH Netherlands Bv - Netherlands
- Essar Steel Hazira Ltd - India
- Kobexindo Tractors - Indoneisa
- Alfred C Toepfer International GmbH - Germany
- The University of Queensland
- Ministry of Transport, Egypt
- Ceylon Electricity Board - Sri Lanka
- Tata Chemicals Ltd - India
- Deloitte Consulting - India
- Gujarat Sidhee Cement - India
- Maharashtra Electricity Regulatory Commission - India
- Xindia Steels Limited - India
- Ministry of Finance - Indonesia
- Medco Energi Mining Internasional
- Central Java Power - Indonesia
- Intertek Mineral Services - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Videocon Industries ltd - India
- Savvy Resources Ltd - HongKong
- Minerals Council of Australia
- Jorong Barutama Greston.PT - Indonesia
- Indo Tambangraya Megah - Indonesia
- Standard Chartered Bank - UAE
- Therma Luzon, Inc, Philippines
- Edison Trading Spa - Italy
- Karaikal Port Pvt Ltd - India
- Cigading International Bulk Terminal - Indonesia
- SMG Consultants - Indonesia
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