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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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Monday, 04 March 24
IS YOUR GUARANTEE A GUARANTEE? NOTE TO SHIPOWNERS - GARD
KNOWLEDGE TO ELEVATE
The law of guarantees is not always obvious or easy to understand without proper guidance. This article clarifies the dif ...
Friday, 23 February 24
STRONG OUTLOOK FOR THE TANKER MARKET IN 2024 AND BEYOND - DNV
Several factors have aligned over the past two years to create a robust and profitable market for tanker owners, which is expected to drive newbuil ...
Friday, 23 February 24
AUSTRALIAN COAL FLOWS TO ASIA HOVER ABOVE LAST YEAR’S VOLUME TONNES - SIGNAL GROUP
In the final days of February, the dry bulk freight market appeared to maintain a relatively stable momentum, particularly evident in the large ves ...
Friday, 23 February 24
RUSSIAN COAL SHIPMENTS FALL 14% AS SANCTIONS BITE - BIMCO
During the first seven weeks of 2024, Russian coal shipments have fallen 14% y/y. Volumes have gradually declined since October 2023 when logistica ...
Thursday, 22 February 24
BIMCO PUBLISHES SHIP FINANCING FORMS TO ENSURE UNINTERRUPTED USE OF SHIPS
BIMCO has published two standard Quiet Enjoyment Letters (QELs), the first standard form QELs available to the industry, to offer a tool that can e ...
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- India Bulls Power Limited - India
- Merrill Lynch Commodities Europe
- Billiton Holdings Pty Ltd - Australia
- Ministry of Finance - Indonesia
- Wood Mackenzie - Singapore
- Pipit Mutiara Jaya. PT, Indonesia
- Edison Trading Spa - Italy
- Antam Resourcindo - Indonesia
- Miang Besar Coal Terminal - Indonesia
- European Bulk Services B.V. - Netherlands
- Medco Energi Mining Internasional
- Bangladesh Power Developement Board
- Kapuas Tunggal Persada - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Rio Tinto Coal - Australia
- Bharathi Cement Corporation - India
- Madhucon Powers Ltd - India
- Agrawal Coal Company - India
- Mintek Dendrill Indonesia
- Binh Thuan Hamico - Vietnam
- Directorate Of Revenue Intelligence - India
- LBH Netherlands Bv - Netherlands
- Kepco SPC Power Corporation, Philippines
- SN Aboitiz Power Inc, Philippines
- Minerals Council of Australia
- The State Trading Corporation of India Ltd
- PowerSource Philippines DevCo
- GAC Shipping (India) Pvt Ltd
- Asia Pacific Energy Resources Ventures Inc, Philippines
- ICICI Bank Limited - India
- Kalimantan Lumbung Energi - Indonesia
- GMR Energy Limited - India
- Bhoruka Overseas - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Semirara Mining and Power Corporation, Philippines
- Essar Steel Hazira Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Mjunction Services Limited - India
- Kobexindo Tractors - Indoneisa
- GVK Power & Infra Limited - India
- Baramulti Group, Indonesia
- Electricity Authority, New Zealand
- Lanco Infratech Ltd - India
- Singapore Mercantile Exchange
- Uttam Galva Steels Limited - India
- Barasentosa Lestari - Indonesia
- Semirara Mining Corp, Philippines
- Karaikal Port Pvt Ltd - India
- Anglo American - United Kingdom
- Borneo Indobara - Indonesia
- Indika Energy - Indonesia
- Romanian Commodities Exchange
- Jorong Barutama Greston.PT - Indonesia
- Kumho Petrochemical, South Korea
- South Luzon Thermal Energy Corporation
- Ceylon Electricity Board - Sri Lanka
- Metalloyd Limited - United Kingdom
- Interocean Group of Companies - India
- Bhatia International Limited - India
- Indo Tambangraya Megah - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- PNOC Exploration Corporation - Philippines
- Star Paper Mills Limited - India
- Ministry of Mines - Canada
- SMC Global Power, Philippines
- Africa Commodities Group - South Africa
- Central Java Power - Indonesia
- Vizag Seaport Private Limited - India
- White Energy Company Limited
- AsiaOL BioFuels Corp., Philippines
- Standard Chartered Bank - UAE
- Orica Australia Pty. Ltd.
- International Coal Ventures Pvt Ltd - India
- Eastern Energy - Thailand
- Australian Coal Association
- Timah Investasi Mineral - Indoneisa
- Thiess Contractors Indonesia
- Bukit Makmur.PT - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Jindal Steel & Power Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Sindya Power Generating Company Private Ltd
- Directorate General of MIneral and Coal - Indonesia
- Price Waterhouse Coopers - Russia
- Orica Mining Services - Indonesia
- Pendopo Energi Batubara - Indonesia
- Toyota Tsusho Corporation, Japan
- Videocon Industries ltd - India
- Oldendorff Carriers - Singapore
- Bahari Cakrawala Sebuku - Indonesia
- Planning Commission, India
- Sakthi Sugars Limited - India
- Independent Power Producers Association of India
- Vedanta Resources Plc - India
- London Commodity Brokers - England
- Rashtriya Ispat Nigam Limited - India
- Electricity Generating Authority of Thailand
- Cement Manufacturers Association - India
- GN Power Mariveles Coal Plant, Philippines
- Therma Luzon, Inc, Philippines
- Sarangani Energy Corporation, Philippines
- Economic Council, Georgia
- Salva Resources Pvt Ltd - India
- PTC India Limited - India
- Port Waratah Coal Services - Australia
- Bukit Baiduri Energy - Indonesia
- Heidelberg Cement - Germany
- Banpu Public Company Limited - Thailand
- Thai Mozambique Logistica
- Renaissance Capital - South Africa
- Australian Commodity Traders Exchange
- Aditya Birla Group - India
- Kideco Jaya Agung - Indonesia
- McConnell Dowell - Australia
- Samtan Co., Ltd - South Korea
- Sinarmas Energy and Mining - Indonesia
- Ambuja Cements Ltd - India
- Cigading International Bulk Terminal - Indonesia
- SMG Consultants - Indonesia
- Siam City Cement - Thailand
- New Zealand Coal & Carbon
- PetroVietnam Power Coal Import and Supply Company
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kartika Selabumi Mining - Indonesia
- Jaiprakash Power Ventures ltd
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Indian Energy Exchange, India
- Straits Asia Resources Limited - Singapore
- Bukit Asam (Persero) Tbk - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Parliament of New Zealand
- CNBM International Corporation - China
- Aboitiz Power Corporation - Philippines
- Gujarat Sidhee Cement - India
- Savvy Resources Ltd - HongKong
- Gujarat Electricity Regulatory Commission - India
- Petron Corporation, Philippines
- Ministry of Transport, Egypt
- Bayan Resources Tbk. - Indonesia
- Tamil Nadu electricity Board
- Simpson Spence & Young - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Maheswari Brothers Coal Limited - India
- Chamber of Mines of South Africa
- Goldman Sachs - Singapore
- Power Finance Corporation Ltd., India
- Bulk Trading Sa - Switzerland
- CIMB Investment Bank - Malaysia
- Globalindo Alam Lestari - Indonesia
- Ind-Barath Power Infra Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Mercuria Energy - Indonesia
- Latin American Coal - Colombia
- Attock Cement Pakistan Limited
- Xindia Steels Limited - India
- Trasteel International SA, Italy
- Coal and Oil Company - UAE
- VISA Power Limited - India
- Indonesian Coal Mining Association
- Coalindo Energy - Indonesia
- San Jose City I Power Corp, Philippines
- OPG Power Generation Pvt Ltd - India
- Energy Link Ltd, New Zealand
- Kaltim Prima Coal - Indonesia
- IEA Clean Coal Centre - UK
- Formosa Plastics Group - Taiwan
- Global Coal Blending Company Limited - Australia
- Grasim Industreis Ltd - India
- Marubeni Corporation - India
- Makarim & Taira - Indonesia
- Indogreen Group - Indonesia
- Leighton Contractors Pty Ltd - Australia
- IHS Mccloskey Coal Group - USA
- Sree Jayajothi Cements Limited - India
- Gujarat Mineral Development Corp Ltd - India
- The Treasury - Australian Government
- TeaM Sual Corporation - Philippines
- ASAPP Information Group - India
- Mercator Lines Limited - India
- Sojitz Corporation - Japan
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Siam City Cement PLC, Thailand
- Georgia Ports Authority, United States
- The University of Queensland
- Maharashtra Electricity Regulatory Commission - India
- MS Steel International - UAE
- Alfred C Toepfer International GmbH - Germany
- Meenaskhi Energy Private Limited - India
- Deloitte Consulting - India
- Carbofer General Trading SA - India
- Karbindo Abesyapradhi - Indoneisa
- Sical Logistics Limited - India
- Wilmar Investment Holdings
- Meralco Power Generation, Philippines
- Eastern Coal Council - USA
- Commonwealth Bank - Australia
- Parry Sugars Refinery, India
- Energy Development Corp, Philippines
- Riau Bara Harum - Indonesia
- Malabar Cements Ltd - India
- Central Electricity Authority - India
- Bhushan Steel Limited - India
- Tata Chemicals Ltd - India
- Manunggal Multi Energi - Indonesia
- Larsen & Toubro Limited - India
- Global Green Power PLC Corporation, Philippines
- Intertek Mineral Services - Indonesia
- Coastal Gujarat Power Limited - India
- Iligan Light & Power Inc, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Altura Mining Limited, Indonesia
- Chettinad Cement Corporation Ltd - India
- Indian Oil Corporation Limited
- Dalmia Cement Bharat India
- Global Business Power Corporation, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Posco Energy - South Korea
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