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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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Thursday, 30 March 17
WHERE AN AGREEMENT FAILS TO DELIVER - WATSON FARLEY & WILLIAMS
KNOWLEDGE TO ELEVATE
Watson Farley & Williams acted for MRI Trading AG in a leading case on ‘agreements to agree’ that was fin ...
Thursday, 30 March 17
PANAMAX : ACTIVITY IN THE PANAMAX MARKET HAS INCREASED SUBSTANTIALLY IN BOTH HEMISPHERES - FEARNLEYS
Supramax
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Thursday, 30 March 17
THE ROLE OF COAL IN THE ENERGY SUPPLY OF THE EU-28: HANS-WILHELM SCHIFFER
The European Union (EU-28) is one of the largest economies in the world, with a gross domestic product (GDP) of €14,635 billion in 2015. It ha ...
Wednesday, 29 March 17
MARKET INSIGHT - NASOS SOULAKIS
Shipowners will always look for market signals in order to gauge market perception and decide upon which strategy to follow next. And while owners ...
Monday, 27 March 17
THE FREIGHT MARKET CONTINUED TO FIRM WEEK OVER WEEK
COALspot.com: The Freight market was continuing to firming up.
The Baltic Exchange, tracking rates for ships carrying dry bulk commodities ros ...
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- Jorong Barutama Greston.PT - Indonesia
- Global Green Power PLC Corporation, Philippines
- White Energy Company Limited
- Parliament of New Zealand
- Kepco SPC Power Corporation, Philippines
- Baramulti Group, Indonesia
- Intertek Mineral Services - Indonesia
- The State Trading Corporation of India Ltd
- Neyveli Lignite Corporation Ltd, - India
- Therma Luzon, Inc, Philippines
- Petron Corporation, Philippines
- Independent Power Producers Association of India
- ICICI Bank Limited - India
- Romanian Commodities Exchange
- Offshore Bulk Terminal Pte Ltd, Singapore
- Trasteel International SA, Italy
- Binh Thuan Hamico - Vietnam
- ASAPP Information Group - India
- Merrill Lynch Commodities Europe
- Krishnapatnam Port Company Ltd. - India
- Star Paper Mills Limited - India
- Deloitte Consulting - India
- Global Business Power Corporation, Philippines
- Sical Logistics Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Leighton Contractors Pty Ltd - Australia
- Sakthi Sugars Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Banpu Public Company Limited - Thailand
- Indian Energy Exchange, India
- Samtan Co., Ltd - South Korea
- Xindia Steels Limited - India
- GAC Shipping (India) Pvt Ltd
- VISA Power Limited - India
- AsiaOL BioFuels Corp., Philippines
- PowerSource Philippines DevCo
- Bayan Resources Tbk. - Indonesia
- Mjunction Services Limited - India
- Eastern Coal Council - USA
- European Bulk Services B.V. - Netherlands
- Interocean Group of Companies - India
- Electricity Generating Authority of Thailand
- SMG Consultants - Indonesia
- Coastal Gujarat Power Limited - India
- Vedanta Resources Plc - India
- Ministry of Finance - Indonesia
- Meenaskhi Energy Private Limited - India
- Miang Besar Coal Terminal - Indonesia
- Bhoruka Overseas - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- LBH Netherlands Bv - Netherlands
- International Coal Ventures Pvt Ltd - India
- Singapore Mercantile Exchange
- Tata Chemicals Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Aditya Birla Group - India
- Holcim Trading Pte Ltd - Singapore
- Maheswari Brothers Coal Limited - India
- Economic Council, Georgia
- SN Aboitiz Power Inc, Philippines
- Bukit Baiduri Energy - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Indogreen Group - Indonesia
- Semirara Mining and Power Corporation, Philippines
- GMR Energy Limited - India
- Rio Tinto Coal - Australia
- India Bulls Power Limited - India
- Ministry of Transport, Egypt
- Tamil Nadu electricity Board
- Asmin Koalindo Tuhup - Indonesia
- Gujarat Electricity Regulatory Commission - India
- PNOC Exploration Corporation - Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Sindya Power Generating Company Private Ltd
- Energy Development Corp, Philippines
- Mercuria Energy - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Altura Mining Limited, Indonesia
- Uttam Galva Steels Limited - India
- Grasim Industreis Ltd - India
- Chamber of Mines of South Africa
- Attock Cement Pakistan Limited
- Karaikal Port Pvt Ltd - India
- TeaM Sual Corporation - Philippines
- Kohat Cement Company Ltd. - Pakistan
- Coal and Oil Company - UAE
- Heidelberg Cement - Germany
- OPG Power Generation Pvt Ltd - India
- Eastern Energy - Thailand
- Wood Mackenzie - Singapore
- CNBM International Corporation - China
- Posco Energy - South Korea
- Electricity Authority, New Zealand
- Pendopo Energi Batubara - Indonesia
- Bhushan Steel Limited - India
- Antam Resourcindo - Indonesia
- Lanco Infratech Ltd - India
- Sree Jayajothi Cements Limited - India
- Aboitiz Power Corporation - Philippines
- Orica Mining Services - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Timah Investasi Mineral - Indoneisa
- Simpson Spence & Young - Indonesia
- Mintek Dendrill Indonesia
- Billiton Holdings Pty Ltd - Australia
- Ind-Barath Power Infra Limited - India
- Sojitz Corporation - Japan
- Anglo American - United Kingdom
- Ceylon Electricity Board - Sri Lanka
- Agrawal Coal Company - India
- Cigading International Bulk Terminal - Indonesia
- Port Waratah Coal Services - Australia
- Global Coal Blending Company Limited - Australia
- Kaltim Prima Coal - Indonesia
- Malabar Cements Ltd - India
- PTC India Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Minerals Council of Australia
- Carbofer General Trading SA - India
- Mercator Lines Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Edison Trading Spa - Italy
- Bahari Cakrawala Sebuku - Indonesia
- Kobexindo Tractors - Indoneisa
- Karbindo Abesyapradhi - Indoneisa
- Orica Australia Pty. Ltd.
- Price Waterhouse Coopers - Russia
- Renaissance Capital - South Africa
- Energy Link Ltd, New Zealand
- Toyota Tsusho Corporation, Japan
- Riau Bara Harum - Indonesia
- Straits Asia Resources Limited - Singapore
- Central Electricity Authority - India
- Parry Sugars Refinery, India
- Sarangani Energy Corporation, Philippines
- Cement Manufacturers Association - India
- GVK Power & Infra Limited - India
- Jindal Steel & Power Ltd - India
- San Jose City I Power Corp, Philippines
- Australian Coal Association
- Gujarat Sidhee Cement - India
- New Zealand Coal & Carbon
- Metalloyd Limited - United Kingdom
- Indian Oil Corporation Limited
- TNB Fuel Sdn Bhd - Malaysia
- SMC Global Power, Philippines
- CIMB Investment Bank - Malaysia
- Dalmia Cement Bharat India
- Georgia Ports Authority, United States
- IHS Mccloskey Coal Group - USA
- Larsen & Toubro Limited - India
- The Treasury - Australian Government
- IEA Clean Coal Centre - UK
- Bukit Makmur.PT - Indonesia
- Savvy Resources Ltd - HongKong
- Indika Energy - Indonesia
- Directorate Of Revenue Intelligence - India
- London Commodity Brokers - England
- South Luzon Thermal Energy Corporation
- Formosa Plastics Group - Taiwan
- Latin American Coal - Colombia
- Coalindo Energy - Indonesia
- Planning Commission, India
- Ministry of Mines - Canada
- Petrochimia International Co. Ltd.- Taiwan
- Indonesian Coal Mining Association
- Central Java Power - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Thai Mozambique Logistica
- Commonwealth Bank - Australia
- Iligan Light & Power Inc, Philippines
- Siam City Cement PLC, Thailand
- Wilmar Investment Holdings
- Bharathi Cement Corporation - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Oldendorff Carriers - Singapore
- MS Steel International - UAE
- Bangladesh Power Developement Board
- Power Finance Corporation Ltd., India
- Indo Tambangraya Megah - Indonesia
- Goldman Sachs - Singapore
- Medco Energi Mining Internasional
- Bukit Asam (Persero) Tbk - Indonesia
- The University of Queensland
- Directorate General of MIneral and Coal - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Africa Commodities Group - South Africa
- Jaiprakash Power Ventures ltd
- Essar Steel Hazira Ltd - India
- Meralco Power Generation, Philippines
- Makarim & Taira - Indonesia
- Globalindo Alam Lestari - Indonesia
- Manunggal Multi Energi - Indonesia
- Bulk Trading Sa - Switzerland
- Vizag Seaport Private Limited - India
- Marubeni Corporation - India
- Kartika Selabumi Mining - Indonesia
- Salva Resources Pvt Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Thiess Contractors Indonesia
- Standard Chartered Bank - UAE
- Kumho Petrochemical, South Korea
- Barasentosa Lestari - Indonesia
- Borneo Indobara - Indonesia
- Madhucon Powers Ltd - India
- Semirara Mining Corp, Philippines
- Bhatia International Limited - India
- Australian Commodity Traders Exchange
- Videocon Industries ltd - India
- Siam City Cement - Thailand
- Alfred C Toepfer International GmbH - Germany
- McConnell Dowell - Australia
- Kideco Jaya Agung - Indonesia
- Ambuja Cements Ltd - India
- Chettinad Cement Corporation Ltd - India
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