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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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Tuesday, 19 July 22
DRY BULK MARKET: CAPESIZE MARKET FIRMS THIS WEEK - BALTIC EXCHANGE
Capesize
Firmer sentiment across both basins pushed the Capesize 5TC route average above the $20,000 threshold this week, closing at $24,209. A ...
Tuesday, 19 July 22
WHY SHIPPING MIGHT BE ABOUT TO GET A LITTLE BIT SLOWER - WORLD ECONOMIC FORUM
If shipping is the beating heart of global trade, its pulse is about to get slower.
Faced with uncertainty about which fuels to use in the long ...
Tuesday, 19 July 22
GERMANY'S INCREASED COAL, OIL USE WILL BE TEMPORARY, SCHOLZ SAYS - CNBC
Chancellor Olaf Scholz says Germany’s decision to reactivate coal and oil-fired power plants to relieve energy shortages because of the war i ...
Tuesday, 19 July 22
INDONESIA REMOVES PALM OIL EXPORT LEVY UNTIL AUG. 31 - REUTERS
Indonesia has scrapped its export levy for all palm oil products until Aug. 31 in a fresh attempt to boost exports and ease high inventories, finan ...
Tuesday, 19 July 22
CHINA'S JUNE DAILY COAL OUTPUT JUMPS ON PEAK SUMMER DEMAND - REUTERS
China’s daily coal output in June rose 6.6 per cent from a month earlier as miners cranked up output ahead of peak summer temperatures, when ...
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- Binh Thuan Hamico - Vietnam
- Medco Energi Mining Internasional
- Aditya Birla Group - India
- IHS Mccloskey Coal Group - USA
- Petron Corporation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- International Coal Ventures Pvt Ltd - India
- Mjunction Services Limited - India
- Altura Mining Limited, Indonesia
- Anglo American - United Kingdom
- GMR Energy Limited - India
- Price Waterhouse Coopers - Russia
- Kalimantan Lumbung Energi - Indonesia
- Kaltim Prima Coal - Indonesia
- Miang Besar Coal Terminal - Indonesia
- PowerSource Philippines DevCo
- Rashtriya Ispat Nigam Limited - India
- The University of Queensland
- Electricity Authority, New Zealand
- Cement Manufacturers Association - India
- TNB Fuel Sdn Bhd - Malaysia
- Formosa Plastics Group - Taiwan
- Edison Trading Spa - Italy
- Deloitte Consulting - India
- Ambuja Cements Ltd - India
- Kepco SPC Power Corporation, Philippines
- Port Waratah Coal Services - Australia
- PetroVietnam Power Coal Import and Supply Company
- Pipit Mutiara Jaya. PT, Indonesia
- Agrawal Coal Company - India
- Sarangani Energy Corporation, Philippines
- Planning Commission, India
- Kapuas Tunggal Persada - Indonesia
- ICICI Bank Limited - India
- Global Green Power PLC Corporation, Philippines
- Straits Asia Resources Limited - Singapore
- PNOC Exploration Corporation - Philippines
- Intertek Mineral Services - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Energy Link Ltd, New Zealand
- Karbindo Abesyapradhi - Indoneisa
- Africa Commodities Group - South Africa
- Pendopo Energi Batubara - Indonesia
- Kideco Jaya Agung - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Makarim & Taira - Indonesia
- Parliament of New Zealand
- Australian Coal Association
- OPG Power Generation Pvt Ltd - India
- Vedanta Resources Plc - India
- Meralco Power Generation, Philippines
- Siam City Cement PLC, Thailand
- Jorong Barutama Greston.PT - Indonesia
- Kumho Petrochemical, South Korea
- Power Finance Corporation Ltd., India
- Goldman Sachs - Singapore
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Vizag Seaport Private Limited - India
- Trasteel International SA, Italy
- Coastal Gujarat Power Limited - India
- Romanian Commodities Exchange
- Krishnapatnam Port Company Ltd. - India
- London Commodity Brokers - England
- Georgia Ports Authority, United States
- Heidelberg Cement - Germany
- Minerals Council of Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Metalloyd Limited - United Kingdom
- Mintek Dendrill Indonesia
- Grasim Industreis Ltd - India
- Coal and Oil Company - UAE
- Simpson Spence & Young - Indonesia
- Merrill Lynch Commodities Europe
- McConnell Dowell - Australia
- European Bulk Services B.V. - Netherlands
- CNBM International Corporation - China
- Chamber of Mines of South Africa
- Dalmia Cement Bharat India
- Iligan Light & Power Inc, Philippines
- Gujarat Electricity Regulatory Commission - India
- Sindya Power Generating Company Private Ltd
- Tamil Nadu electricity Board
- Orica Mining Services - Indonesia
- Bayan Resources Tbk. - Indonesia
- San Jose City I Power Corp, Philippines
- ASAPP Information Group - India
- Videocon Industries ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Bangladesh Power Developement Board
- India Bulls Power Limited - India
- Barasentosa Lestari - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bukit Baiduri Energy - Indonesia
- Therma Luzon, Inc, Philippines
- Attock Cement Pakistan Limited
- Posco Energy - South Korea
- Indian Oil Corporation Limited
- Marubeni Corporation - India
- Central Java Power - Indonesia
- Sakthi Sugars Limited - India
- Bhoruka Overseas - Indonesia
- Mercator Lines Limited - India
- Globalindo Alam Lestari - Indonesia
- Samtan Co., Ltd - South Korea
- Cigading International Bulk Terminal - Indonesia
- Xindia Steels Limited - India
- Wood Mackenzie - Singapore
- VISA Power Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Indian Energy Exchange, India
- South Luzon Thermal Energy Corporation
- Toyota Tsusho Corporation, Japan
- Salva Resources Pvt Ltd - India
- Parry Sugars Refinery, India
- GN Power Mariveles Coal Plant, Philippines
- Tata Chemicals Ltd - India
- CIMB Investment Bank - Malaysia
- Madhucon Powers Ltd - India
- New Zealand Coal & Carbon
- Leighton Contractors Pty Ltd - Australia
- Asmin Koalindo Tuhup - Indonesia
- Indika Energy - Indonesia
- Mercuria Energy - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- The Treasury - Australian Government
- Meenaskhi Energy Private Limited - India
- Bhatia International Limited - India
- Sree Jayajothi Cements Limited - India
- Thiess Contractors Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Economic Council, Georgia
- White Energy Company Limited
- Kobexindo Tractors - Indoneisa
- Indonesian Coal Mining Association
- Ministry of Mines - Canada
- Energy Development Corp, Philippines
- Electricity Generating Authority of Thailand
- Star Paper Mills Limited - India
- Ministry of Transport, Egypt
- Bulk Trading Sa - Switzerland
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- GVK Power & Infra Limited - India
- Latin American Coal - Colombia
- Gujarat Sidhee Cement - India
- Alfred C Toepfer International GmbH - Germany
- The State Trading Corporation of India Ltd
- Chettinad Cement Corporation Ltd - India
- SMC Global Power, Philippines
- Ind-Barath Power Infra Limited - India
- Wilmar Investment Holdings
- Savvy Resources Ltd - HongKong
- Antam Resourcindo - Indonesia
- Directorate Of Revenue Intelligence - India
- MS Steel International - UAE
- Singapore Mercantile Exchange
- Holcim Trading Pte Ltd - Singapore
- Ceylon Electricity Board - Sri Lanka
- Jindal Steel & Power Ltd - India
- Karaikal Port Pvt Ltd - India
- Rio Tinto Coal - Australia
- GAC Shipping (India) Pvt Ltd
- Essar Steel Hazira Ltd - India
- Orica Australia Pty. Ltd.
- Sojitz Corporation - Japan
- Baramulti Group, Indonesia
- Siam City Cement - Thailand
- Australian Commodity Traders Exchange
- Directorate General of MIneral and Coal - Indonesia
- Bhushan Steel Limited - India
- Malabar Cements Ltd - India
- Renaissance Capital - South Africa
- Bharathi Cement Corporation - India
- Manunggal Multi Energi - Indonesia
- Lanco Infratech Ltd - India
- Borneo Indobara - Indonesia
- Maheswari Brothers Coal Limited - India
- LBH Netherlands Bv - Netherlands
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Aboitiz Power Corporation - Philippines
- Independent Power Producers Association of India
- Riau Bara Harum - Indonesia
- Carbofer General Trading SA - India
- Oldendorff Carriers - Singapore
- PTC India Limited - India
- Eastern Coal Council - USA
- Larsen & Toubro Limited - India
- Kartika Selabumi Mining - Indonesia
- Semirara Mining Corp, Philippines
- Interocean Group of Companies - India
- Neyveli Lignite Corporation Ltd, - India
- SN Aboitiz Power Inc, Philippines
- Jaiprakash Power Ventures ltd
- Thai Mozambique Logistica
- Global Coal Blending Company Limited - Australia
- Ministry of Finance - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Central Electricity Authority - India
- Eastern Energy - Thailand
- TeaM Sual Corporation - Philippines
- Sical Logistics Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Uttam Galva Steels Limited - India
- Commonwealth Bank - Australia
- Sinarmas Energy and Mining - Indonesia
- Indogreen Group - Indonesia
- Bukit Makmur.PT - Indonesia
- Indo Tambangraya Megah - Indonesia
- IEA Clean Coal Centre - UK
- SMG Consultants - Indonesia
- Coalindo Energy - Indonesia
- Banpu Public Company Limited - Thailand
- Timah Investasi Mineral - Indoneisa
- Petrochimia International Co. Ltd.- Taiwan
- Global Business Power Corporation, Philippines
- Standard Chartered Bank - UAE
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