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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, 05 May 20
SUPRAMAXES: YTD SLIDE HAS BEEN 45%, WITH THE AVERAGE FOR 2020 TCA HOLDING AT US$5,793 - ALLIED
It has been almost three months since the WHO officially categorized the current coronavirus outbreak as a global pandemic, an outbreak that has br ...
Monday, 04 May 20
U.S. ESTIMATED COAL PRODUCTION FALL 39.4% YEAR ON YEAR IN THE WEEK ENDED APRIL 25 - EIA
Estimated U.S. coal production totaled about 8.6 million short tons (MMst) For the week ended April 25, 2020, says EIA in its latest report.
E ...
Saturday, 02 May 20
SUPRAMAX: ASIA, STRONGER NUMBERS - A 55.000-DWT WAS FIXED FROM INDONESIA TO CHINA IN THE MID $6,000S - BALTIC BRIEFING
Capesize
A tepid week for the big ships, as macro concerns continued to weigh heavily on the index. All of the major voyage routes lost value, ...
Friday, 01 May 20
KOSPO INVITED OFFER FOR 5600 NCV COAL FOR Q3 2020 LOADING
COALspot.com: Korea Southern Power Co., Ltd. (KOSPO) has issued an International tender for 260,000 Metric Tons (MT) steam coal for Boryeong Power ...
Friday, 01 May 20
GLOBAL COAL DEMAND TO FALL BY ABOUT 8% IN 2020,THE LARGEST DROP SINCE WORLD WAR II - IEA
We expect global coal demand to fall by about 8% in 2020, the largest drop since World War II, with coal use declining in virtually every sector of ...
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- Samtan Co., Ltd - South Korea
- IHS Mccloskey Coal Group - USA
- Rashtriya Ispat Nigam Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Coal and Oil Company - UAE
- Power Finance Corporation Ltd., India
- Heidelberg Cement - Germany
- Wilmar Investment Holdings
- Timah Investasi Mineral - Indoneisa
- ICICI Bank Limited - India
- Maheswari Brothers Coal Limited - India
- CNBM International Corporation - China
- Oldendorff Carriers - Singapore
- Rio Tinto Coal - Australia
- Bayan Resources Tbk. - Indonesia
- Central Java Power - Indonesia
- Meenaskhi Energy Private Limited - India
- Dalmia Cement Bharat India
- Pendopo Energi Batubara - Indonesia
- The Treasury - Australian Government
- Kartika Selabumi Mining - Indonesia
- PowerSource Philippines DevCo
- Larsen & Toubro Limited - India
- Ambuja Cements Ltd - India
- MS Steel International - UAE
- Neyveli Lignite Corporation Ltd, - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bahari Cakrawala Sebuku - Indonesia
- Jaiprakash Power Ventures ltd
- Asmin Koalindo Tuhup - Indonesia
- Orica Australia Pty. Ltd.
- Sakthi Sugars Limited - India
- Global Green Power PLC Corporation, Philippines
- Thai Mozambique Logistica
- Posco Energy - South Korea
- Georgia Ports Authority, United States
- LBH Netherlands Bv - Netherlands
- Orica Mining Services - Indonesia
- Altura Mining Limited, Indonesia
- Aditya Birla Group - India
- Iligan Light & Power Inc, Philippines
- Directorate Of Revenue Intelligence - India
- Semirara Mining and Power Corporation, Philippines
- Kohat Cement Company Ltd. - Pakistan
- International Coal Ventures Pvt Ltd - India
- Edison Trading Spa - Italy
- Star Paper Mills Limited - India
- Vedanta Resources Plc - India
- Coastal Gujarat Power Limited - India
- Xindia Steels Limited - India
- Deloitte Consulting - India
- Simpson Spence & Young - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Indo Tambangraya Megah - Indonesia
- Straits Asia Resources Limited - Singapore
- Ceylon Electricity Board - Sri Lanka
- Sarangani Energy Corporation, Philippines
- GAC Shipping (India) Pvt Ltd
- Banpu Public Company Limited - Thailand
- Wood Mackenzie - Singapore
- Mintek Dendrill Indonesia
- OPG Power Generation Pvt Ltd - India
- SN Aboitiz Power Inc, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Baramulti Group, Indonesia
- Intertek Mineral Services - Indonesia
- Parliament of New Zealand
- Jorong Barutama Greston.PT - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Latin American Coal - Colombia
- TeaM Sual Corporation - Philippines
- Siam City Cement PLC, Thailand
- Electricity Generating Authority of Thailand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Siam City Cement - Thailand
- Maharashtra Electricity Regulatory Commission - India
- Indogreen Group - Indonesia
- SMC Global Power, Philippines
- Energy Development Corp, Philippines
- Vizag Seaport Private Limited - India
- Meralco Power Generation, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Mercuria Energy - Indonesia
- Attock Cement Pakistan Limited
- White Energy Company Limited
- Renaissance Capital - South Africa
- The University of Queensland
- Kapuas Tunggal Persada - Indonesia
- Economic Council, Georgia
- Petron Corporation, Philippines
- Bulk Trading Sa - Switzerland
- London Commodity Brokers - England
- Energy Link Ltd, New Zealand
- Agrawal Coal Company - India
- IEA Clean Coal Centre - UK
- Interocean Group of Companies - India
- Antam Resourcindo - Indonesia
- Australian Commodity Traders Exchange
- Sical Logistics Limited - India
- Carbofer General Trading SA - India
- Bhoruka Overseas - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Bhatia International Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Singapore Mercantile Exchange
- Sree Jayajothi Cements Limited - India
- Sojitz Corporation - Japan
- Australian Coal Association
- Kalimantan Lumbung Energi - Indonesia
- Jindal Steel & Power Ltd - India
- Ministry of Mines - Canada
- GVK Power & Infra Limited - India
- Makarim & Taira - Indonesia
- Malabar Cements Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Grasim Industreis Ltd - India
- Planning Commission, India
- CIMB Investment Bank - Malaysia
- Tamil Nadu electricity Board
- VISA Power Limited - India
- Trasteel International SA, Italy
- Electricity Authority, New Zealand
- Leighton Contractors Pty Ltd - Australia
- Karbindo Abesyapradhi - Indoneisa
- European Bulk Services B.V. - Netherlands
- Commonwealth Bank - Australia
- Port Waratah Coal Services - Australia
- GMR Energy Limited - India
- Sindya Power Generating Company Private Ltd
- India Bulls Power Limited - India
- Marubeni Corporation - India
- Romanian Commodities Exchange
- Globalindo Alam Lestari - Indonesia
- Independent Power Producers Association of India
- Binh Thuan Hamico - Vietnam
- New Zealand Coal & Carbon
- Savvy Resources Ltd - HongKong
- Minerals Council of Australia
- Riau Bara Harum - Indonesia
- Thiess Contractors Indonesia
- Chettinad Cement Corporation Ltd - India
- Indika Energy - Indonesia
- Mercator Lines Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Gujarat Sidhee Cement - India
- Vijayanagar Sugar Pvt Ltd - India
- Essar Steel Hazira Ltd - India
- Cement Manufacturers Association - India
- Bangladesh Power Developement Board
- Ministry of Transport, Egypt
- Kobexindo Tractors - Indoneisa
- Gujarat Electricity Regulatory Commission - India
- Indian Oil Corporation Limited
- Cigading International Bulk Terminal - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- South Luzon Thermal Energy Corporation
- Price Waterhouse Coopers - Russia
- Sinarmas Energy and Mining - Indonesia
- The State Trading Corporation of India Ltd
- Global Coal Blending Company Limited - Australia
- Indonesian Coal Mining Association
- PNOC Exploration Corporation - Philippines
- Kideco Jaya Agung - Indonesia
- Metalloyd Limited - United Kingdom
- Uttam Galva Steels Limited - India
- Borneo Indobara - Indonesia
- Bukit Makmur.PT - Indonesia
- Semirara Mining Corp, Philippines
- Lanco Infratech Ltd - India
- Kumho Petrochemical, South Korea
- PTC India Limited - India
- San Jose City I Power Corp, Philippines
- Goldman Sachs - Singapore
- Salva Resources Pvt Ltd - India
- Parry Sugars Refinery, India
- Petrochimia International Co. Ltd.- Taiwan
- Eastern Coal Council - USA
- Formosa Plastics Group - Taiwan
- Krishnapatnam Port Company Ltd. - India
- Madhucon Powers Ltd - India
- Anglo American - United Kingdom
- Tata Chemicals Ltd - India
- Bukit Baiduri Energy - Indonesia
- SMG Consultants - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Videocon Industries ltd - India
- Alfred C Toepfer International GmbH - Germany
- Aboitiz Power Corporation - Philippines
- Kepco SPC Power Corporation, Philippines
- Merrill Lynch Commodities Europe
- Global Business Power Corporation, Philippines
- Ministry of Finance - Indonesia
- McConnell Dowell - Australia
- Bhushan Steel Limited - India
- ASAPP Information Group - India
- Chamber of Mines of South Africa
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Indian Energy Exchange, India
- Ind-Barath Power Infra Limited - India
- Eastern Energy - Thailand
- Standard Chartered Bank - UAE
- Karaikal Port Pvt Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Mjunction Services Limited - India
- Central Electricity Authority - India
- Bharathi Cement Corporation - India
- Medco Energi Mining Internasional
- Barasentosa Lestari - Indonesia
- Coalindo Energy - Indonesia
- Therma Luzon, Inc, Philippines
- Kaltim Prima Coal - Indonesia
- Toyota Tsusho Corporation, Japan
- Holcim Trading Pte Ltd - Singapore
- Africa Commodities Group - South Africa
- Manunggal Multi Energi - Indonesia
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