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