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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, 18 March 20
SHIPPING MARKET INSIGHT - INTERMODAL
Despite we all knew about the Covid-19 weeks ago, few could realize the size of the thread until the last few days. The examples of China and Italy ...
Tuesday, 17 March 20
IT IS NOW UNQUESTIONABLE THAT 2020 WILL BE A MILESTONE YEAR FOR THE OIL MARKET, AS WELL AS THE WHOLE GLOBAL ECONOMY - ALLIED
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Tuesday, 17 March 20
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It is now more than two months since the 0.5% sulphur cap entered into force, which have affected the operation of more than 70,000 vessels. As ant ...
Monday, 16 March 20
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Capesize
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Sunday, 15 March 20
CAPTIVE COAL OUTPUT RISES 19% IN APRIL-FEBRUARY - FINANCIAL EXPRESS
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- Essar Steel Hazira Ltd - India
- Gujarat Sidhee Cement - India
- Barasentosa Lestari - Indonesia
- Independent Power Producers Association of India
- Aboitiz Power Corporation - Philippines
- Trasteel International SA, Italy
- Star Paper Mills Limited - India
- Global Coal Blending Company Limited - Australia
- Africa Commodities Group - South Africa
- Salva Resources Pvt Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Coal and Oil Company - UAE
- Malabar Cements Ltd - India
- Sree Jayajothi Cements Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Singapore Mercantile Exchange
- Bank of Tokyo Mitsubishi UFJ Ltd
- Anglo American - United Kingdom
- Chamber of Mines of South Africa
- Offshore Bulk Terminal Pte Ltd, Singapore
- ICICI Bank Limited - India
- Deloitte Consulting - India
- Australian Commodity Traders Exchange
- Jindal Steel & Power Ltd - India
- Vedanta Resources Plc - India
- Metalloyd Limited - United Kingdom
- Coastal Gujarat Power Limited - India
- ASAPP Information Group - India
- Australian Coal Association
- Riau Bara Harum - Indonesia
- Makarim & Taira - Indonesia
- Straits Asia Resources Limited - Singapore
- Bayan Resources Tbk. - Indonesia
- Jaiprakash Power Ventures ltd
- Bharathi Cement Corporation - India
- Ceylon Electricity Board - Sri Lanka
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Ministry of Finance - Indonesia
- Edison Trading Spa - Italy
- Indogreen Group - Indonesia
- Sinarmas Energy and Mining - Indonesia
- International Coal Ventures Pvt Ltd - India
- South Luzon Thermal Energy Corporation
- Ministry of Mines - Canada
- PNOC Exploration Corporation - Philippines
- Cement Manufacturers Association - India
- Bukit Makmur.PT - Indonesia
- Ministry of Transport, Egypt
- Petrochimia International Co. Ltd.- Taiwan
- Kumho Petrochemical, South Korea
- AsiaOL BioFuels Corp., Philippines
- Lanco Infratech Ltd - India
- Indian Oil Corporation Limited
- Energy Link Ltd, New Zealand
- Goldman Sachs - Singapore
- Price Waterhouse Coopers - Russia
- Parliament of New Zealand
- GVK Power & Infra Limited - India
- Binh Thuan Hamico - Vietnam
- McConnell Dowell - Australia
- Kobexindo Tractors - Indoneisa
- Borneo Indobara - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Energy Development Corp, Philippines
- Gujarat Electricity Regulatory Commission - India
- Rio Tinto Coal - Australia
- Minerals Council of Australia
- LBH Netherlands Bv - Netherlands
- Romanian Commodities Exchange
- Kepco SPC Power Corporation, Philippines
- Timah Investasi Mineral - Indoneisa
- PTC India Limited - India
- Marubeni Corporation - India
- VISA Power Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Electricity Authority, New Zealand
- Mercuria Energy - Indonesia
- Thai Mozambique Logistica
- Savvy Resources Ltd - HongKong
- Directorate General of MIneral and Coal - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Tamil Nadu electricity Board
- Leighton Contractors Pty Ltd - Australia
- Chettinad Cement Corporation Ltd - India
- Formosa Plastics Group - Taiwan
- The University of Queensland
- Wilmar Investment Holdings
- Bahari Cakrawala Sebuku - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Attock Cement Pakistan Limited
- Larsen & Toubro Limited - India
- Eastern Energy - Thailand
- Petron Corporation, Philippines
- SMC Global Power, Philippines
- Mercator Lines Limited - India
- IHS Mccloskey Coal Group - USA
- Kalimantan Lumbung Energi - Indonesia
- Indo Tambangraya Megah - Indonesia
- Ambuja Cements Ltd - India
- Coalindo Energy - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Alfred C Toepfer International GmbH - Germany
- Baramulti Group, Indonesia
- Global Green Power PLC Corporation, Philippines
- India Bulls Power Limited - India
- Heidelberg Cement - Germany
- Sarangani Energy Corporation, Philippines
- Madhucon Powers Ltd - India
- Toyota Tsusho Corporation, Japan
- White Energy Company Limited
- Intertek Mineral Services - Indonesia
- Agrawal Coal Company - India
- PowerSource Philippines DevCo
- Merrill Lynch Commodities Europe
- CNBM International Corporation - China
- Planning Commission, India
- Directorate Of Revenue Intelligence - India
- TeaM Sual Corporation - Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Globalindo Alam Lestari - Indonesia
- Xindia Steels Limited - India
- Kideco Jaya Agung - Indonesia
- Interocean Group of Companies - India
- Indian Energy Exchange, India
- Uttam Galva Steels Limited - India
- Commonwealth Bank - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Orica Mining Services - Indonesia
- GAC Shipping (India) Pvt Ltd
- Sindya Power Generating Company Private Ltd
- Manunggal Multi Energi - Indonesia
- Semirara Mining Corp, Philippines
- CIMB Investment Bank - Malaysia
- OPG Power Generation Pvt Ltd - India
- Bhatia International Limited - India
- Banpu Public Company Limited - Thailand
- Eastern Coal Council - USA
- Asmin Koalindo Tuhup - Indonesia
- Iligan Light & Power Inc, Philippines
- Economic Council, Georgia
- The State Trading Corporation of India Ltd
- Thiess Contractors Indonesia
- Mjunction Services Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Power Finance Corporation Ltd., India
- Siam City Cement - Thailand
- Siam City Cement PLC, Thailand
- Standard Chartered Bank - UAE
- Samtan Co., Ltd - South Korea
- Indika Energy - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Krishnapatnam Port Company Ltd. - India
- Sakthi Sugars Limited - India
- Meenaskhi Energy Private Limited - India
- Posco Energy - South Korea
- Simpson Spence & Young - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Carbofer General Trading SA - India
- Bhoruka Overseas - Indonesia
- Dalmia Cement Bharat India
- GMR Energy Limited - India
- Tata Chemicals Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Pendopo Energi Batubara - Indonesia
- San Jose City I Power Corp, Philippines
- Georgia Ports Authority, United States
- Orica Australia Pty. Ltd.
- Bhushan Steel Limited - India
- SN Aboitiz Power Inc, Philippines
- Kartika Selabumi Mining - Indonesia
- Oldendorff Carriers - Singapore
- SMG Consultants - Indonesia
- Renaissance Capital - South Africa
- Sojitz Corporation - Japan
- Meralco Power Generation, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Kaltim Prima Coal - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Electricity Generating Authority of Thailand
- Global Business Power Corporation, Philippines
- Indonesian Coal Mining Association
- New Zealand Coal & Carbon
- Antam Resourcindo - Indonesia
- Central Java Power - Indonesia
- European Bulk Services B.V. - Netherlands
- Kapuas Tunggal Persada - Indonesia
- Mintek Dendrill Indonesia
- Maheswari Brothers Coal Limited - India
- Bulk Trading Sa - Switzerland
- Karbindo Abesyapradhi - Indoneisa
- Bukit Baiduri Energy - Indonesia
- Karaikal Port Pvt Ltd - India
- Vizag Seaport Private Limited - India
- Central Electricity Authority - India
- Bangladesh Power Developement Board
- Aditya Birla Group - India
- Therma Luzon, Inc, Philippines
- Medco Energi Mining Internasional
- Videocon Industries ltd - India
- Holcim Trading Pte Ltd - Singapore
- Wood Mackenzie - Singapore
- Ind-Barath Power Infra Limited - India
- Sical Logistics Limited - India
- Semirara Mining and Power Corporation, Philippines
- MS Steel International - UAE
- Altura Mining Limited, Indonesia
- Latin American Coal - Colombia
- IEA Clean Coal Centre - UK
- Port Waratah Coal Services - Australia
- The Treasury - Australian Government
- London Commodity Brokers - England
- Parry Sugars Refinery, India
- Grasim Industreis Ltd - India
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