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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, 13 June 18
SHIPPING MARKET INSIGHT - SOPHIE COTZIAS
2018 marks quite a few milestones for Greek Shipping. No need to detail again the greatness of Greek Shipping or the singular position that Greek s ...
Monday, 11 June 18
AUSTRALIAN COAL PRICES HIT 6-YEAR HIGH AS ASIA DEMAND SPIKES - REUTERS
Australian thermal coal prices have risen to their highest level since 2012 as hot weather across North Asia spurs buying ahead of the peak summer ...
Monday, 11 June 18
ANALYSING A NEW AGE OF AUTONOMOUS VESSELS - IMO
The International Maritime Organization answers the questions of Government Europa on how the next generation of autonomous vessels can be regulate ...
Friday, 08 June 18
AUSTRALIAN THERMAL COAL PRICES SURGE AS ASIA DEMAND HEATS UP - REUTERS
Australian thermal coal prices have hit their highest level since late 2016 as the market heats up on strong demand across North Asia and China in ...
Wednesday, 06 June 18
SHIPPING MARKET INSIGHT - KATERINA RESTIS
As observed last month the price of oil hit its highest level since November 2014 reaching $80 per barrel. Global oil demand growth for 2018 was sl ...
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- Toyota Tsusho Corporation, Japan
- Anglo American - United Kingdom
- Electricity Authority, New Zealand
- IEA Clean Coal Centre - UK
- Attock Cement Pakistan Limited
- London Commodity Brokers - England
- Manunggal Multi Energi - Indonesia
- South Luzon Thermal Energy Corporation
- Tamil Nadu electricity Board
- Makarim & Taira - Indonesia
- Straits Asia Resources Limited - Singapore
- Minerals Council of Australia
- Electricity Generating Authority of Thailand
- Indogreen Group - Indonesia
- Indo Tambangraya Megah - Indonesia
- Bayan Resources Tbk. - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sree Jayajothi Cements Limited - India
- Madhucon Powers Ltd - India
- Heidelberg Cement - Germany
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- SMC Global Power, Philippines
- McConnell Dowell - Australia
- Neyveli Lignite Corporation Ltd, - India
- Intertek Mineral Services - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Gujarat Electricity Regulatory Commission - India
- Meenaskhi Energy Private Limited - India
- White Energy Company Limited
- Samtan Co., Ltd - South Korea
- Therma Luzon, Inc, Philippines
- Indika Energy - Indonesia
- Star Paper Mills Limited - India
- Semirara Mining and Power Corporation, Philippines
- Timah Investasi Mineral - Indoneisa
- IHS Mccloskey Coal Group - USA
- Bukit Makmur.PT - Indonesia
- Pendopo Energi Batubara - Indonesia
- PowerSource Philippines DevCo
- Directorate General of MIneral and Coal - Indonesia
- Deloitte Consulting - India
- Indian Energy Exchange, India
- Price Waterhouse Coopers - Russia
- Baramulti Group, Indonesia
- Aditya Birla Group - India
- Mercator Lines Limited - India
- Parry Sugars Refinery, India
- Alfred C Toepfer International GmbH - Germany
- Kaltim Prima Coal - Indonesia
- SN Aboitiz Power Inc, Philippines
- Barasentosa Lestari - Indonesia
- CIMB Investment Bank - Malaysia
- Coal and Oil Company - UAE
- Kumho Petrochemical, South Korea
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Australian Coal Association
- Jorong Barutama Greston.PT - Indonesia
- The Treasury - Australian Government
- Mercuria Energy - Indonesia
- Essar Steel Hazira Ltd - India
- Bharathi Cement Corporation - India
- GN Power Mariveles Coal Plant, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Global Coal Blending Company Limited - Australia
- Karbindo Abesyapradhi - Indoneisa
- Semirara Mining Corp, Philippines
- Siam City Cement - Thailand
- Renaissance Capital - South Africa
- Wilmar Investment Holdings
- Karaikal Port Pvt Ltd - India
- India Bulls Power Limited - India
- MS Steel International - UAE
- Kideco Jaya Agung - Indonesia
- Jindal Steel & Power Ltd - India
- Dalmia Cement Bharat India
- Bhatia International Limited - India
- Billiton Holdings Pty Ltd - Australia
- Wood Mackenzie - Singapore
- Central Electricity Authority - India
- Chamber of Mines of South Africa
- Agrawal Coal Company - India
- Globalindo Alam Lestari - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Iligan Light & Power Inc, Philippines
- Chettinad Cement Corporation Ltd - India
- Ministry of Mines - Canada
- Orica Australia Pty. Ltd.
- Thiess Contractors Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Uttam Galva Steels Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Aboitiz Power Corporation - Philippines
- Meralco Power Generation, Philippines
- PNOC Exploration Corporation - Philippines
- Marubeni Corporation - India
- Bahari Cakrawala Sebuku - Indonesia
- Borneo Indobara - Indonesia
- European Bulk Services B.V. - Netherlands
- Kalimantan Lumbung Energi - Indonesia
- Ambuja Cements Ltd - India
- Ministry of Finance - Indonesia
- Independent Power Producers Association of India
- Singapore Mercantile Exchange
- Edison Trading Spa - Italy
- Antam Resourcindo - Indonesia
- Rio Tinto Coal - Australia
- Bangladesh Power Developement Board
- Rashtriya Ispat Nigam Limited - India
- Directorate Of Revenue Intelligence - India
- Australian Commodity Traders Exchange
- Orica Mining Services - Indonesia
- International Coal Ventures Pvt Ltd - India
- GMR Energy Limited - India
- Grasim Industreis Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- LBH Netherlands Bv - Netherlands
- Power Finance Corporation Ltd., India
- Savvy Resources Ltd - HongKong
- Asmin Koalindo Tuhup - Indonesia
- Bhushan Steel Limited - India
- ASAPP Information Group - India
- Vijayanagar Sugar Pvt Ltd - India
- Kartika Selabumi Mining - Indonesia
- Economic Council, Georgia
- Lanco Infratech Ltd - India
- Sarangani Energy Corporation, Philippines
- Romanian Commodities Exchange
- Latin American Coal - Colombia
- Thai Mozambique Logistica
- Kepco SPC Power Corporation, Philippines
- Indonesian Coal Mining Association
- GAC Shipping (India) Pvt Ltd
- Simpson Spence & Young - Indonesia
- Krishnapatnam Port Company Ltd. - India
- CNBM International Corporation - China
- Malabar Cements Ltd - India
- The State Trading Corporation of India Ltd
- Planning Commission, India
- Standard Chartered Bank - UAE
- Ministry of Transport, Egypt
- Eastern Coal Council - USA
- Maharashtra Electricity Regulatory Commission - India
- Sojitz Corporation - Japan
- Indian Oil Corporation Limited
- VISA Power Limited - India
- Altura Mining Limited, Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Eastern Energy - Thailand
- Tata Chemicals Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Sakthi Sugars Limited - India
- Ceylon Electricity Board - Sri Lanka
- Coalindo Energy - Indonesia
- Posco Energy - South Korea
- Port Waratah Coal Services - Australia
- Banpu Public Company Limited - Thailand
- Sical Logistics Limited - India
- Formosa Plastics Group - Taiwan
- TNB Fuel Sdn Bhd - Malaysia
- Global Business Power Corporation, Philippines
- GVK Power & Infra Limited - India
- Interocean Group of Companies - India
- The University of Queensland
- Xindia Steels Limited - India
- Binh Thuan Hamico - Vietnam
- Merrill Lynch Commodities Europe
- Parliament of New Zealand
- Bukit Baiduri Energy - Indonesia
- Jaiprakash Power Ventures ltd
- Ind-Barath Power Infra Limited - India
- Goldman Sachs - Singapore
- Cement Manufacturers Association - India
- Energy Development Corp, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- San Jose City I Power Corp, Philippines
- Central Java Power - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Petron Corporation, Philippines
- Africa Commodities Group - South Africa
- Vedanta Resources Plc - India
- Videocon Industries ltd - India
- Trasteel International SA, Italy
- Kohat Cement Company Ltd. - Pakistan
- Oldendorff Carriers - Singapore
- Energy Link Ltd, New Zealand
- New Zealand Coal & Carbon
- Larsen & Toubro Limited - India
- Bulk Trading Sa - Switzerland
- Vizag Seaport Private Limited - India
- Georgia Ports Authority, United States
- Salva Resources Pvt Ltd - India
- Siam City Cement PLC, Thailand
- Maheswari Brothers Coal Limited - India
- Riau Bara Harum - Indonesia
- SMG Consultants - Indonesia
- Coastal Gujarat Power Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Holcim Trading Pte Ltd - Singapore
- Kobexindo Tractors - Indoneisa
- TeaM Sual Corporation - Philippines
- Metalloyd Limited - United Kingdom
- AsiaOL BioFuels Corp., Philippines
- Bhoruka Overseas - Indonesia
- ICICI Bank Limited - India
- Medco Energi Mining Internasional
- Pipit Mutiara Jaya. PT, Indonesia
- Commonwealth Bank - Australia
- Gujarat Sidhee Cement - India
- Sindya Power Generating Company Private Ltd
- Miang Besar Coal Terminal - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Mjunction Services Limited - India
- PTC India Limited - India
- Global Green Power PLC Corporation, Philippines
- OPG Power Generation Pvt Ltd - India
- Carbofer General Trading SA - India
- Mintek Dendrill Indonesia
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