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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, 15 July 20
CHINA'S JUNE COAL IMPORTS FALL 6.7% Y/Y ON PORT CURBS - REUTERS
China’s coal imports dropped 6.7% in June from the same period last year, as stringent import restrictions at ports impeded purchases by trad ...
Wednesday, 15 July 20
MARKET INSIGHT - INTERMODAL
The Covid-19 virus spread around the world has obviously impacted the global oil demand while the situation remains fluid. The overall constraint ...
Tuesday, 14 July 20
CHINA TAIYUAN COAL TRANSACTION PRICE INDEX UP 0.75 PCT - XINHUA
China Taiyuan coal transaction price index stood at 126.01 points Monday, up 0.75 percent week on week.
The index, released by China ...
Tuesday, 14 July 20
TURKEY - A CASE OF UNDECLARED BUNKER - GARD
KNOWLEDGE TO ELEVATE
Undeclared/excess bunkers can be considered a criminal act by Turkish customs officials with the ship's crew being ac ...
Monday, 13 July 20
PANAMAX: A TUMULTUOUS WEEK IN THE PANAMAX MARKET ENSURED ALL MARKETS GAINED VALUE ON THE WEEK - BALTIC BRIEFING
Capesize
This week witnessed the dreaded correction in the Capesize market, with the time charter average shedding almost 18 per cent to close ...
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- Toyota Tsusho Corporation, Japan
- McConnell Dowell - Australia
- Rio Tinto Coal - Australia
- Bharathi Cement Corporation - India
- Ceylon Electricity Board - Sri Lanka
- Maheswari Brothers Coal Limited - India
- Makarim & Taira - Indonesia
- Manunggal Multi Energi - Indonesia
- Samtan Co., Ltd - South Korea
- LBH Netherlands Bv - Netherlands
- Intertek Mineral Services - Indonesia
- Mjunction Services Limited - India
- PowerSource Philippines DevCo
- Wood Mackenzie - Singapore
- Salva Resources Pvt Ltd - India
- Dalmia Cement Bharat India
- Orica Australia Pty. Ltd.
- Bangladesh Power Developement Board
- Cement Manufacturers Association - India
- Malabar Cements Ltd - India
- Coalindo Energy - Indonesia
- Sojitz Corporation - Japan
- Indo Tambangraya Megah - Indonesia
- GAC Shipping (India) Pvt Ltd
- Eastern Coal Council - USA
- Vedanta Resources Plc - India
- Oldendorff Carriers - Singapore
- Pipit Mutiara Jaya. PT, Indonesia
- Tamil Nadu electricity Board
- Parliament of New Zealand
- Indonesian Coal Mining Association
- PNOC Exploration Corporation - Philippines
- Bhoruka Overseas - Indonesia
- Aditya Birla Group - India
- Lanco Infratech Ltd - India
- Minerals Council of Australia
- Kalimantan Lumbung Energi - Indonesia
- Semirara Mining Corp, Philippines
- Energy Development Corp, Philippines
- Africa Commodities Group - South Africa
- Coastal Gujarat Power Limited - India
- Electricity Generating Authority of Thailand
- Thai Mozambique Logistica
- Barasentosa Lestari - Indonesia
- Meenaskhi Energy Private Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- New Zealand Coal & Carbon
- San Jose City I Power Corp, Philippines
- Mercator Lines Limited - India
- Rashtriya Ispat Nigam Limited - India
- Interocean Group of Companies - India
- GMR Energy Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Goldman Sachs - Singapore
- Marubeni Corporation - India
- Coal and Oil Company - UAE
- Ambuja Cements Ltd - India
- Chamber of Mines of South Africa
- SMG Consultants - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Georgia Ports Authority, United States
- ASAPP Information Group - India
- Gujarat Mineral Development Corp Ltd - India
- IHS Mccloskey Coal Group - USA
- Indogreen Group - Indonesia
- VISA Power Limited - India
- Borneo Indobara - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Kideco Jaya Agung - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Siam City Cement PLC, Thailand
- Semirara Mining and Power Corporation, Philippines
- Mercuria Energy - Indonesia
- Singapore Mercantile Exchange
- Jindal Steel & Power Ltd - India
- Wilmar Investment Holdings
- Thiess Contractors Indonesia
- Latin American Coal - Colombia
- Kumho Petrochemical, South Korea
- Orica Mining Services - Indonesia
- Agrawal Coal Company - India
- Kobexindo Tractors - Indoneisa
- Port Waratah Coal Services - Australia
- Commonwealth Bank - Australia
- Bulk Trading Sa - Switzerland
- Banpu Public Company Limited - Thailand
- Heidelberg Cement - Germany
- Ind-Barath Power Infra Limited - India
- Global Coal Blending Company Limited - Australia
- Central Electricity Authority - India
- Price Waterhouse Coopers - Russia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bank of Tokyo Mitsubishi UFJ Ltd
- The State Trading Corporation of India Ltd
- Bukit Makmur.PT - Indonesia
- Mintek Dendrill Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Electricity Authority, New Zealand
- AsiaOL BioFuels Corp., Philippines
- Holcim Trading Pte Ltd - Singapore
- Carbofer General Trading SA - India
- The University of Queensland
- Australian Commodity Traders Exchange
- Eastern Energy - Thailand
- White Energy Company Limited
- Timah Investasi Mineral - Indoneisa
- South Luzon Thermal Energy Corporation
- Sical Logistics Limited - India
- Alfred C Toepfer International GmbH - Germany
- Vijayanagar Sugar Pvt Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Australian Coal Association
- OPG Power Generation Pvt Ltd - India
- Meralco Power Generation, Philippines
- Savvy Resources Ltd - HongKong
- Sinarmas Energy and Mining - Indonesia
- Sakthi Sugars Limited - India
- Videocon Industries ltd - India
- Attock Cement Pakistan Limited
- Bahari Cakrawala Sebuku - Indonesia
- Central Java Power - Indonesia
- Gujarat Sidhee Cement - India
- Aboitiz Power Corporation - Philippines
- Leighton Contractors Pty Ltd - Australia
- Gujarat Electricity Regulatory Commission - India
- Riau Bara Harum - Indonesia
- Straits Asia Resources Limited - Singapore
- Karbindo Abesyapradhi - Indoneisa
- PetroVietnam Power Coal Import and Supply Company
- Posco Energy - South Korea
- Tata Chemicals Ltd - India
- Binh Thuan Hamico - Vietnam
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- IEA Clean Coal Centre - UK
- Renaissance Capital - South Africa
- Pendopo Energi Batubara - Indonesia
- Billiton Holdings Pty Ltd - Australia
- International Coal Ventures Pvt Ltd - India
- Grasim Industreis Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Parry Sugars Refinery, India
- London Commodity Brokers - England
- Directorate Of Revenue Intelligence - India
- Standard Chartered Bank - UAE
- European Bulk Services B.V. - Netherlands
- Indika Energy - Indonesia
- Economic Council, Georgia
- Bhatia International Limited - India
- Baramulti Group, Indonesia
- Uttam Galva Steels Limited - India
- ICICI Bank Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Xindia Steels Limited - India
- Anglo American - United Kingdom
- Sarangani Energy Corporation, Philippines
- Bhushan Steel Limited - India
- Independent Power Producers Association of India
- Madhucon Powers Ltd - India
- Simpson Spence & Young - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Indian Oil Corporation Limited
- Planning Commission, India
- Asmin Koalindo Tuhup - Indonesia
- Therma Luzon, Inc, Philippines
- Kepco SPC Power Corporation, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Altura Mining Limited, Indonesia
- Indian Energy Exchange, India
- Global Green Power PLC Corporation, Philippines
- Global Business Power Corporation, Philippines
- Bukit Baiduri Energy - Indonesia
- Kaltim Prima Coal - Indonesia
- PTC India Limited - India
- Chettinad Cement Corporation Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Vizag Seaport Private Limited - India
- Bayan Resources Tbk. - Indonesia
- Kartika Selabumi Mining - Indonesia
- Metalloyd Limited - United Kingdom
- Sindya Power Generating Company Private Ltd
- Directorate General of MIneral and Coal - Indonesia
- SMC Global Power, Philippines
- GVK Power & Infra Limited - India
- SN Aboitiz Power Inc, Philippines
- Ministry of Finance - Indonesia
- Trasteel International SA, Italy
- Edison Trading Spa - Italy
- Siam City Cement - Thailand
- Bukit Asam (Persero) Tbk - Indonesia
- Merrill Lynch Commodities Europe
- Iligan Light & Power Inc, Philippines
- The Treasury - Australian Government
- Romanian Commodities Exchange
- Petron Corporation, Philippines
- Ministry of Transport, Egypt
- Essar Steel Hazira Ltd - India
- TeaM Sual Corporation - Philippines
- Energy Link Ltd, New Zealand
- MS Steel International - UAE
- CNBM International Corporation - China
- Deloitte Consulting - India
- Larsen & Toubro Limited - India
- Star Paper Mills Limited - India
- CIMB Investment Bank - Malaysia
- Ministry of Mines - Canada
- Krishnapatnam Port Company Ltd. - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Medco Energi Mining Internasional
- Antam Resourcindo - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Sree Jayajothi Cements Limited - India
- Power Finance Corporation Ltd., India
- Jaiprakash Power Ventures ltd
- Globalindo Alam Lestari - Indonesia
- India Bulls Power Limited - India
- Formosa Plastics Group - Taiwan
- Karaikal Port Pvt Ltd - India
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