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