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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, 21 March 20
PANAMAX: 82,000DWT SHIP AGREED $4,250 FOR A COAL TRIP VIA INDONESIA REDELIVERY SOUTH CHINA - BALTIC BRIEFING
Capesize
The Capesize market made some headway this past week despite being buffeted by the global pandemic storm. With the market in a constan ...
Friday, 20 March 20
VOLATILITY TO INCREASE IN TANKER MARKET FOLLOWING OIL PRICE WAR - DREWRY
Crude oil prices plunged by more than a third in the past week after OPEC+ failed to agree on production cut as demand softened in the aftermath of ...
Friday, 20 March 20
CHINA'S BENCHMARK POWER COAL PRICE DROPS SLIGHTLY - XINHUA
China’s benchmark power coal price dropped slightly during the past week.
The Bohai-Rim Steam-Coal Price Index (BSPI), a gauge ...
Friday, 20 March 20
OIL PRICES COULD FALL BELOW ZERO: ANALYST - FOX BUSINESS
Plunging oil prices could be headed a lot lower – possibly below zero, according to one Wall Street analyst.
West Texas Interm ...
Friday, 20 March 20
84% OF FEBRUARY BUNKER SALES IN SINGAPORE ARE LOW-SULPHUR FUELS - BIMCO
Low-sulphur fuels accounted for 84% of total February sales in Singapore, slightly up from 83% in January. The sale of low-sulphur fuel oil (LSFO) ...
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- Sree Jayajothi Cements Limited - India
- Edison Trading Spa - Italy
- Eastern Coal Council - USA
- Parry Sugars Refinery, India
- Singapore Mercantile Exchange
- Riau Bara Harum - Indonesia
- Bayan Resources Tbk. - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Essar Steel Hazira Ltd - India
- Tamil Nadu electricity Board
- Karbindo Abesyapradhi - Indoneisa
- CIMB Investment Bank - Malaysia
- Timah Investasi Mineral - Indoneisa
- Meralco Power Generation, Philippines
- Antam Resourcindo - Indonesia
- Sindya Power Generating Company Private Ltd
- Therma Luzon, Inc, Philippines
- Wilmar Investment Holdings
- White Energy Company Limited
- Directorate General of MIneral and Coal - Indonesia
- Global Coal Blending Company Limited - Australia
- India Bulls Power Limited - India
- GAC Shipping (India) Pvt Ltd
- Deloitte Consulting - India
- Central Java Power - Indonesia
- Indogreen Group - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Savvy Resources Ltd - HongKong
- Coastal Gujarat Power Limited - India
- Bulk Trading Sa - Switzerland
- Mintek Dendrill Indonesia
- Indika Energy - Indonesia
- Planning Commission, India
- Ambuja Cements Ltd - India
- The University of Queensland
- Ind-Barath Power Infra Limited - India
- Makarim & Taira - Indonesia
- Banpu Public Company Limited - Thailand
- Energy Link Ltd, New Zealand
- TNB Fuel Sdn Bhd - Malaysia
- Jorong Barutama Greston.PT - Indonesia
- Directorate Of Revenue Intelligence - India
- Larsen & Toubro Limited - India
- Coal and Oil Company - UAE
- VISA Power Limited - India
- Gujarat Sidhee Cement - India
- Kobexindo Tractors - Indoneisa
- Gujarat Mineral Development Corp Ltd - India
- Vizag Seaport Private Limited - India
- LBH Netherlands Bv - Netherlands
- Manunggal Multi Energi - Indonesia
- Lanco Infratech Ltd - India
- Mercator Lines Limited - India
- Ministry of Finance - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- PowerSource Philippines DevCo
- Videocon Industries ltd - India
- Latin American Coal - Colombia
- SN Aboitiz Power Inc, Philippines
- Barasentosa Lestari - Indonesia
- Price Waterhouse Coopers - Russia
- Iligan Light & Power Inc, Philippines
- Merrill Lynch Commodities Europe
- Chettinad Cement Corporation Ltd - India
- Bukit Baiduri Energy - Indonesia
- Independent Power Producers Association of India
- Metalloyd Limited - United Kingdom
- South Luzon Thermal Energy Corporation
- CNBM International Corporation - China
- Mjunction Services Limited - India
- Electricity Generating Authority of Thailand
- GMR Energy Limited - India
- Sarangani Energy Corporation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Globalindo Alam Lestari - Indonesia
- Maheswari Brothers Coal Limited - India
- Australian Coal Association
- London Commodity Brokers - England
- Altura Mining Limited, Indonesia
- SMC Global Power, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Commonwealth Bank - Australia
- Thai Mozambique Logistica
- Kalimantan Lumbung Energi - Indonesia
- Bhushan Steel Limited - India
- Aditya Birla Group - India
- Vijayanagar Sugar Pvt Ltd - India
- Orica Australia Pty. Ltd.
- Malabar Cements Ltd - India
- Uttam Galva Steels Limited - India
- Australian Commodity Traders Exchange
- Ministry of Transport, Egypt
- Trasteel International SA, Italy
- Holcim Trading Pte Ltd - Singapore
- MS Steel International - UAE
- Standard Chartered Bank - UAE
- Port Waratah Coal Services - Australia
- Bahari Cakrawala Sebuku - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Ceylon Electricity Board - Sri Lanka
- New Zealand Coal & Carbon
- Pipit Mutiara Jaya. PT, Indonesia
- Parliament of New Zealand
- TeaM Sual Corporation - Philippines
- Kepco SPC Power Corporation, Philippines
- AsiaOL BioFuels Corp., Philippines
- Heidelberg Cement - Germany
- European Bulk Services B.V. - Netherlands
- Alfred C Toepfer International GmbH - Germany
- GVK Power & Infra Limited - India
- Jindal Steel & Power Ltd - India
- Madhucon Powers Ltd - India
- Coalindo Energy - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Jaiprakash Power Ventures ltd
- Wood Mackenzie - Singapore
- Electricity Authority, New Zealand
- Maharashtra Electricity Regulatory Commission - India
- Marubeni Corporation - India
- Dalmia Cement Bharat India
- Agrawal Coal Company - India
- Eastern Energy - Thailand
- Africa Commodities Group - South Africa
- Cigading International Bulk Terminal - Indonesia
- Tata Chemicals Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Mercuria Energy - Indonesia
- Kaltim Prima Coal - Indonesia
- ASAPP Information Group - India
- Sical Logistics Limited - India
- Binh Thuan Hamico - Vietnam
- Billiton Holdings Pty Ltd - Australia
- Leighton Contractors Pty Ltd - Australia
- Grasim Industreis Ltd - India
- McConnell Dowell - Australia
- Global Green Power PLC Corporation, Philippines
- Sojitz Corporation - Japan
- Attock Cement Pakistan Limited
- Siam City Cement PLC, Thailand
- Goldman Sachs - Singapore
- Romanian Commodities Exchange
- Petron Corporation, Philippines
- Cement Manufacturers Association - India
- Kartika Selabumi Mining - Indonesia
- Toyota Tsusho Corporation, Japan
- Pendopo Energi Batubara - Indonesia
- Energy Development Corp, Philippines
- Bhatia International Limited - India
- Semirara Mining and Power Corporation, Philippines
- The Treasury - Australian Government
- Central Electricity Authority - India
- Sakthi Sugars Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Star Paper Mills Limited - India
- Oldendorff Carriers - Singapore
- Chamber of Mines of South Africa
- Miang Besar Coal Terminal - Indonesia
- Baramulti Group, Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Thiess Contractors Indonesia
- Siam City Cement - Thailand
- Kapuas Tunggal Persada - Indonesia
- Carbofer General Trading SA - India
- Vedanta Resources Plc - India
- GN Power Mariveles Coal Plant, Philippines
- Renaissance Capital - South Africa
- Xindia Steels Limited - India
- Samtan Co., Ltd - South Korea
- Anglo American - United Kingdom
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- PNOC Exploration Corporation - Philippines
- Bukit Makmur.PT - Indonesia
- San Jose City I Power Corp, Philippines
- Power Finance Corporation Ltd., India
- Georgia Ports Authority, United States
- Interocean Group of Companies - India
- International Coal Ventures Pvt Ltd - India
- IEA Clean Coal Centre - UK
- ICICI Bank Limited - India
- Semirara Mining Corp, Philippines
- Orica Mining Services - Indonesia
- Bangladesh Power Developement Board
- Gujarat Electricity Regulatory Commission - India
- Rio Tinto Coal - Australia
- Indonesian Coal Mining Association
- Indo Tambangraya Megah - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Intertek Mineral Services - Indonesia
- Borneo Indobara - Indonesia
- Bharathi Cement Corporation - India
- Formosa Plastics Group - Taiwan
- Indian Energy Exchange, India
- Economic Council, Georgia
- Karaikal Port Pvt Ltd - India
- Meenaskhi Energy Private Limited - India
- Aboitiz Power Corporation - Philippines
- Krishnapatnam Port Company Ltd. - India
- The State Trading Corporation of India Ltd
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- SMG Consultants - Indonesia
- Bhoruka Overseas - Indonesia
- IHS Mccloskey Coal Group - USA
- Kumho Petrochemical, South Korea
- Medco Energi Mining Internasional
- Kideco Jaya Agung - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- OPG Power Generation Pvt Ltd - India
- Salva Resources Pvt Ltd - India
- Global Business Power Corporation, Philippines
- Ministry of Mines - Canada
- Minerals Council of Australia
- Simpson Spence & Young - Indonesia
- Posco Energy - South Korea
- PTC India Limited - India
- Straits Asia Resources Limited - Singapore
- Indian Oil Corporation Limited
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