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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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- Chamber of Mines of South Africa
- Indogreen Group - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Formosa Plastics Group - Taiwan
- Bhushan Steel Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- GAC Shipping (India) Pvt Ltd
- Edison Trading Spa - Italy
- SMG Consultants - Indonesia
- Orica Mining Services - Indonesia
- Orica Australia Pty. Ltd.
- Electricity Authority, New Zealand
- International Coal Ventures Pvt Ltd - India
- Ind-Barath Power Infra Limited - India
- Bukit Baiduri Energy - Indonesia
- Dalmia Cement Bharat India
- Energy Development Corp, Philippines
- Latin American Coal - Colombia
- Anglo American - United Kingdom
- Madhucon Powers Ltd - India
- Binh Thuan Hamico - Vietnam
- Barasentosa Lestari - Indonesia
- VISA Power Limited - India
- The University of Queensland
- Bhatia International Limited - India
- Minerals Council of Australia
- South Luzon Thermal Energy Corporation
- Vizag Seaport Private Limited - India
- Ministry of Transport, Egypt
- European Bulk Services B.V. - Netherlands
- Makarim & Taira - Indonesia
- Baramulti Group, Indonesia
- Global Business Power Corporation, Philippines
- Savvy Resources Ltd - HongKong
- Indo Tambangraya Megah - Indonesia
- Toyota Tsusho Corporation, Japan
- San Jose City I Power Corp, Philippines
- Marubeni Corporation - India
- TNB Fuel Sdn Bhd - Malaysia
- Sojitz Corporation - Japan
- Globalindo Alam Lestari - Indonesia
- ASAPP Information Group - India
- Krishnapatnam Port Company Ltd. - India
- Meralco Power Generation, Philippines
- Grasim Industreis Ltd - India
- Chettinad Cement Corporation Ltd - India
- Semirara Mining Corp, Philippines
- Borneo Indobara - Indonesia
- Intertek Mineral Services - Indonesia
- Carbofer General Trading SA - India
- Maharashtra Electricity Regulatory Commission - India
- Pipit Mutiara Jaya. PT, Indonesia
- Kepco SPC Power Corporation, Philippines
- Eastern Coal Council - USA
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Parliament of New Zealand
- Singapore Mercantile Exchange
- Alfred C Toepfer International GmbH - Germany
- Leighton Contractors Pty Ltd - Australia
- Bhoruka Overseas - Indonesia
- The State Trading Corporation of India Ltd
- PetroVietnam Power Coal Import and Supply Company
- IHS Mccloskey Coal Group - USA
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Australian Commodity Traders Exchange
- Bulk Trading Sa - Switzerland
- Karaikal Port Pvt Ltd - India
- Mercuria Energy - Indonesia
- Independent Power Producers Association of India
- Power Finance Corporation Ltd., India
- Romanian Commodities Exchange
- Renaissance Capital - South Africa
- Coalindo Energy - Indonesia
- Bukit Makmur.PT - Indonesia
- PTC India Limited - India
- Essar Steel Hazira Ltd - India
- Simpson Spence & Young - Indonesia
- Kobexindo Tractors - Indoneisa
- Tamil Nadu electricity Board
- Siam City Cement - Thailand
- Antam Resourcindo - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Global Green Power PLC Corporation, Philippines
- Aditya Birla Group - India
- Malabar Cements Ltd - India
- Wilmar Investment Holdings
- ICICI Bank Limited - India
- GVK Power & Infra Limited - India
- Samtan Co., Ltd - South Korea
- Asmin Koalindo Tuhup - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Bharathi Cement Corporation - India
- Altura Mining Limited, Indonesia
- Price Waterhouse Coopers - Russia
- Ambuja Cements Ltd - India
- Aboitiz Power Corporation - Philippines
- Pendopo Energi Batubara - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Uttam Galva Steels Limited - India
- Indian Energy Exchange, India
- Siam City Cement PLC, Thailand
- Kideco Jaya Agung - Indonesia
- Australian Coal Association
- Mintek Dendrill Indonesia
- Jaiprakash Power Ventures ltd
- Directorate Of Revenue Intelligence - India
- AsiaOL BioFuels Corp., Philippines
- Sindya Power Generating Company Private Ltd
- Cigading International Bulk Terminal - Indonesia
- Attock Cement Pakistan Limited
- India Bulls Power Limited - India
- Thiess Contractors Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Deloitte Consulting - India
- Commonwealth Bank - Australia
- Ceylon Electricity Board - Sri Lanka
- GN Power Mariveles Coal Plant, Philippines
- London Commodity Brokers - England
- Coastal Gujarat Power Limited - India
- Banpu Public Company Limited - Thailand
- Economic Council, Georgia
- Eastern Energy - Thailand
- Ministry of Mines - Canada
- Kalimantan Lumbung Energi - Indonesia
- Coal and Oil Company - UAE
- Merrill Lynch Commodities Europe
- Indonesian Coal Mining Association
- LBH Netherlands Bv - Netherlands
- Petron Corporation, Philippines
- Energy Link Ltd, New Zealand
- Thai Mozambique Logistica
- Electricity Generating Authority of Thailand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Parry Sugars Refinery, India
- Manunggal Multi Energi - Indonesia
- SMC Global Power, Philippines
- Indian Oil Corporation Limited
- Port Waratah Coal Services - Australia
- Sakthi Sugars Limited - India
- Ministry of Finance - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Vedanta Resources Plc - India
- Wood Mackenzie - Singapore
- Metalloyd Limited - United Kingdom
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Interocean Group of Companies - India
- Straits Asia Resources Limited - Singapore
- Standard Chartered Bank - UAE
- Gujarat Sidhee Cement - India
- CNBM International Corporation - China
- Iligan Light & Power Inc, Philippines
- GMR Energy Limited - India
- Sree Jayajothi Cements Limited - India
- Xindia Steels Limited - India
- White Energy Company Limited
- Jindal Steel & Power Ltd - India
- Trasteel International SA, Italy
- Posco Energy - South Korea
- Kaltim Prima Coal - Indonesia
- Timah Investasi Mineral - Indoneisa
- Meenaskhi Energy Private Limited - India
- Maheswari Brothers Coal Limited - India
- Holcim Trading Pte Ltd - Singapore
- Jorong Barutama Greston.PT - Indonesia
- Agrawal Coal Company - India
- Karbindo Abesyapradhi - Indoneisa
- Indika Energy - Indonesia
- Riau Bara Harum - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- PowerSource Philippines DevCo
- Africa Commodities Group - South Africa
- Global Coal Blending Company Limited - Australia
- Videocon Industries ltd - India
- Rashtriya Ispat Nigam Limited - India
- CIMB Investment Bank - Malaysia
- Vijayanagar Sugar Pvt Ltd - India
- Goldman Sachs - Singapore
- Medco Energi Mining Internasional
- Mjunction Services Limited - India
- Salva Resources Pvt Ltd - India
- Kumho Petrochemical, South Korea
- New Zealand Coal & Carbon
- Planning Commission, India
- Bayan Resources Tbk. - Indonesia
- Tata Chemicals Ltd - India
- Oldendorff Carriers - Singapore
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- MS Steel International - UAE
- Sical Logistics Limited - India
- PNOC Exploration Corporation - Philippines
- Central Java Power - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Larsen & Toubro Limited - India
- Semirara Mining and Power Corporation, Philippines
- Billiton Holdings Pty Ltd - Australia
- Cement Manufacturers Association - India
- Petrochimia International Co. Ltd.- Taiwan
- Therma Luzon, Inc, Philippines
- Kartika Selabumi Mining - Indonesia
- OPG Power Generation Pvt Ltd - India
- Bangladesh Power Developement Board
- Rio Tinto Coal - Australia
- TeaM Sual Corporation - Philippines
- Star Paper Mills Limited - India
- Lanco Infratech Ltd - India
- McConnell Dowell - Australia
- Mercator Lines Limited - India
- Kohat Cement Company Ltd. - Pakistan
- The Treasury - Australian Government
- SN Aboitiz Power Inc, Philippines
- Central Electricity Authority - India
- Heidelberg Cement - Germany
- Georgia Ports Authority, United States
- Sinarmas Energy and Mining - Indonesia
- IEA Clean Coal Centre - UK
- Sarangani Energy Corporation, Philippines
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