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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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Saturday, 09 May 20
ANGLO AMERICAN CONSIDERS SPINNING OFF SOUTH AFRICAN COAL OPERATIONS - REUTERS
Diversified miner Anglo American said on Thursday it prefers unbundling and listing its thermal coal operations in South Africa on the Johannesburg ...
Friday, 08 May 20
THE COLLAPSE OF THE OIL AND BUNKER FUEL MARKETS IN EARLY 2020 - PETER SAND
The sulphur regulation from the International Maritime Organization (IMO) that came into force on 1 January 2020 took the centre stage in the shipp ...
Friday, 08 May 20
LNG DEMAND FACED SEVERAL HEADWINDS IN THE FIRST QUARTER OF 2020 - GASLOG
LNG demand faced several headwinds in the first quarter of 2020 including a warmer than average winter in the northern hemisphere, high inventory l ...
Thursday, 07 May 20
IEEFA UPDATE: THE OUTLOOK FOR THERMAL COAL IN SOUTHEAST ASIA AND SOUTH ASIA
Seven headwinds are building to sustained growth in coal in Asia
The medium term outlook for thermal coal in Southeast Asia is posit ...
Thursday, 07 May 20
IMO 2020: BUNKER CLAIMS HANDLING GUIDE FOR A NEW DECADE - THE STANDARD CLUB
KNOWLEDGE TO ELEVATE
IMO 2020 is the term generally used to describe the following regulations under Annex VI of the International Convention ...
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- Indogreen Group - Indonesia
- Romanian Commodities Exchange
- Indika Energy - Indonesia
- CIMB Investment Bank - Malaysia
- Straits Asia Resources Limited - Singapore
- Sarangani Energy Corporation, Philippines
- Africa Commodities Group - South Africa
- Sojitz Corporation - Japan
- Coal and Oil Company - UAE
- Indonesian Coal Mining Association
- Indian Oil Corporation Limited
- Aboitiz Power Corporation - Philippines
- Videocon Industries ltd - India
- OPG Power Generation Pvt Ltd - India
- Antam Resourcindo - Indonesia
- Global Green Power PLC Corporation, Philippines
- Global Business Power Corporation, Philippines
- Parliament of New Zealand
- Mintek Dendrill Indonesia
- Latin American Coal - Colombia
- Energy Development Corp, Philippines
- Metalloyd Limited - United Kingdom
- Thiess Contractors Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Riau Bara Harum - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Anglo American - United Kingdom
- Meenaskhi Energy Private Limited - India
- Maharashtra Electricity Regulatory Commission - India
- IHS Mccloskey Coal Group - USA
- Interocean Group of Companies - India
- Simpson Spence & Young - Indonesia
- Commonwealth Bank - Australia
- LBH Netherlands Bv - Netherlands
- Mercuria Energy - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Oldendorff Carriers - Singapore
- Eastern Energy - Thailand
- Ambuja Cements Ltd - India
- Kideco Jaya Agung - Indonesia
- GMR Energy Limited - India
- Star Paper Mills Limited - India
- Carbofer General Trading SA - India
- Ind-Barath Power Infra Limited - India
- Xindia Steels Limited - India
- Kepco SPC Power Corporation, Philippines
- The State Trading Corporation of India Ltd
- Posco Energy - South Korea
- Kohat Cement Company Ltd. - Pakistan
- Aditya Birla Group - India
- Bukit Asam (Persero) Tbk - Indonesia
- Kartika Selabumi Mining - Indonesia
- IEA Clean Coal Centre - UK
- Electricity Authority, New Zealand
- Wood Mackenzie - Singapore
- Asia Pacific Energy Resources Ventures Inc, Philippines
- MS Steel International - UAE
- Goldman Sachs - Singapore
- Intertek Mineral Services - Indonesia
- Cement Manufacturers Association - India
- PowerSource Philippines DevCo
- Merrill Lynch Commodities Europe
- TeaM Sual Corporation - Philippines
- Ceylon Electricity Board - Sri Lanka
- Binh Thuan Hamico - Vietnam
- Indo Tambangraya Megah - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Banpu Public Company Limited - Thailand
- Asmin Koalindo Tuhup - Indonesia
- Therma Luzon, Inc, Philippines
- Port Waratah Coal Services - Australia
- Globalindo Alam Lestari - Indonesia
- Karaikal Port Pvt Ltd - India
- Marubeni Corporation - India
- GN Power Mariveles Coal Plant, Philippines
- Toyota Tsusho Corporation, Japan
- Attock Cement Pakistan Limited
- Dalmia Cement Bharat India
- ASAPP Information Group - India
- Meralco Power Generation, Philippines
- AsiaOL BioFuels Corp., Philippines
- Lanco Infratech Ltd - India
- Grasim Industreis Ltd - India
- Central Electricity Authority - India
- Savvy Resources Ltd - HongKong
- Ministry of Mines - Canada
- Deloitte Consulting - India
- TNB Fuel Sdn Bhd - Malaysia
- Siam City Cement PLC, Thailand
- Kapuas Tunggal Persada - Indonesia
- International Coal Ventures Pvt Ltd - India
- White Energy Company Limited
- Rashtriya Ispat Nigam Limited - India
- Maheswari Brothers Coal Limited - India
- Power Finance Corporation Ltd., India
- Directorate Of Revenue Intelligence - India
- Eastern Coal Council - USA
- Karbindo Abesyapradhi - Indoneisa
- Indian Energy Exchange, India
- Malabar Cements Ltd - India
- Agrawal Coal Company - India
- Vedanta Resources Plc - India
- Jaiprakash Power Ventures ltd
- Energy Link Ltd, New Zealand
- Medco Energi Mining Internasional
- Kalimantan Lumbung Energi - Indonesia
- SMG Consultants - Indonesia
- San Jose City I Power Corp, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Iligan Light & Power Inc, Philippines
- GAC Shipping (India) Pvt Ltd
- Petrochimia International Co. Ltd.- Taiwan
- PetroVietnam Power Coal Import and Supply Company
- Georgia Ports Authority, United States
- London Commodity Brokers - England
- New Zealand Coal & Carbon
- Mercator Lines Limited - India
- Independent Power Producers Association of India
- The University of Queensland
- Bhoruka Overseas - Indonesia
- Sindya Power Generating Company Private Ltd
- Bharathi Cement Corporation - India
- Bulk Trading Sa - Switzerland
- Makarim & Taira - Indonesia
- Wilmar Investment Holdings
- Kaltim Prima Coal - Indonesia
- Bangladesh Power Developement Board
- Sakthi Sugars Limited - India
- Tata Chemicals Ltd - India
- Samtan Co., Ltd - South Korea
- Petron Corporation, Philippines
- Ministry of Finance - Indonesia
- Kumho Petrochemical, South Korea
- Global Coal Blending Company Limited - Australia
- Vizag Seaport Private Limited - India
- Salva Resources Pvt Ltd - India
- India Bulls Power Limited - India
- CNBM International Corporation - China
- Minerals Council of Australia
- Edison Trading Spa - Italy
- PNOC Exploration Corporation - Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Alfred C Toepfer International GmbH - Germany
- Bhatia International Limited - India
- Coalindo Energy - Indonesia
- South Luzon Thermal Energy Corporation
- Billiton Holdings Pty Ltd - Australia
- Standard Chartered Bank - UAE
- Larsen & Toubro Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Rio Tinto Coal - Australia
- Heidelberg Cement - Germany
- Semirara Mining and Power Corporation, Philippines
- Holcim Trading Pte Ltd - Singapore
- Manunggal Multi Energi - Indonesia
- Gujarat Sidhee Cement - India
- Essar Steel Hazira Ltd - India
- GVK Power & Infra Limited - India
- Coastal Gujarat Power Limited - India
- Uttam Galva Steels Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Borneo Indobara - Indonesia
- Parry Sugars Refinery, India
- Sical Logistics Limited - India
- Madhucon Powers Ltd - India
- Bhushan Steel Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Barasentosa Lestari - Indonesia
- Kobexindo Tractors - Indoneisa
- Altura Mining Limited, Indonesia
- Orica Australia Pty. Ltd.
- Central Java Power - Indonesia
- Planning Commission, India
- Trasteel International SA, Italy
- Ministry of Transport, Egypt
- Price Waterhouse Coopers - Russia
- Leighton Contractors Pty Ltd - Australia
- Australian Commodity Traders Exchange
- Bukit Makmur.PT - Indonesia
- Sree Jayajothi Cements Limited - India
- Singapore Mercantile Exchange
- Bukit Baiduri Energy - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Chettinad Cement Corporation Ltd - India
- Thai Mozambique Logistica
- Electricity Generating Authority of Thailand
- Pendopo Energi Batubara - Indonesia
- Siam City Cement - Thailand
- Bayan Resources Tbk. - Indonesia
- Tamil Nadu electricity Board
- ICICI Bank Limited - India
- Neyveli Lignite Corporation Ltd, - India
- McConnell Dowell - Australia
- Semirara Mining Corp, Philippines
- SN Aboitiz Power Inc, Philippines
- Formosa Plastics Group - Taiwan
- Cigading International Bulk Terminal - Indonesia
- Mjunction Services Limited - India
- The Treasury - Australian Government
- Orica Mining Services - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Jindal Steel & Power Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- SMC Global Power, Philippines
- Timah Investasi Mineral - Indoneisa
- VISA Power Limited - India
- Australian Coal Association
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- European Bulk Services B.V. - Netherlands
- Baramulti Group, Indonesia
- Chamber of Mines of South Africa
- Economic Council, Georgia
- Miang Besar Coal Terminal - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Renaissance Capital - South Africa
- Jorong Barutama Greston.PT - Indonesia
- PTC India Limited - India
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