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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, 03 March 20
IMPORTANCE OF MASTER'S CARGO CHECKS - BALTIC EXCHANGE
KNOWLEDGE TO ELEVATE
Adecision in recent High Court case has made it clear that there is no implied indemnity from a charterer to their counte ...
Tuesday, 03 March 20
COAL'S SHARE OF CHINA ENERGY MIX FALLS IN 2019 BUT CONSUMPTION STILL RISING - REUTERS
Coal accounted for 57.7% of China’s primary energy consumption in 2019, the National Bureau of Statistics said on Friday, down 1.5 percentage ...
Monday, 02 March 20
SHIPOWNERS AND OPERATORS COULD FACE DETENTION OF SHIPS FROM 1ST MARCH UNDER IMO RULE - ICS
Port state control authorities will begin to enforce the IMO’s Sulphur 2020 from 1st March, making it an offense for ships to carry fuel that ...
Saturday, 29 February 20
SUPRAMAX SENTIMENT WAS UP IN A FEW KEY AREAS OVER THE LAST WEEK - BALTIC BRIEFING
Capesize
The Capesize market woes related to Coronavirus have now spread through the wider global markets like wildfire. The wider supply and d ...
Thursday, 27 February 20
FOREIGN COMPANIES LIKELY TO SKIP COMMERCIAL COAL BLOCK AUCTIONS - ECONOMIC TIMES
The Centre is in the process of inviting global players for commercial mining, following 100% foreign direct investment in the sector. However, giv ...
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- Rashtriya Ispat Nigam Limited - India
- Baramulti Group, Indonesia
- Independent Power Producers Association of India
- Central Java Power - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Maharashtra Electricity Regulatory Commission - India
- Borneo Indobara - Indonesia
- International Coal Ventures Pvt Ltd - India
- Salva Resources Pvt Ltd - India
- Deloitte Consulting - India
- Simpson Spence & Young - Indonesia
- Electricity Generating Authority of Thailand
- GN Power Mariveles Coal Plant, Philippines
- Orica Mining Services - Indonesia
- Meralco Power Generation, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Anglo American - United Kingdom
- Attock Cement Pakistan Limited
- Indogreen Group - Indonesia
- GMR Energy Limited - India
- Global Coal Blending Company Limited - Australia
- Merrill Lynch Commodities Europe
- Sinarmas Energy and Mining - Indonesia
- Star Paper Mills Limited - India
- Indian Oil Corporation Limited
- Wood Mackenzie - Singapore
- Lanco Infratech Ltd - India
- Indian Energy Exchange, India
- Coal and Oil Company - UAE
- Vedanta Resources Plc - India
- Bangladesh Power Developement Board
- Maheswari Brothers Coal Limited - India
- SMG Consultants - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Riau Bara Harum - Indonesia
- Mintek Dendrill Indonesia
- Ministry of Transport, Egypt
- Sree Jayajothi Cements Limited - India
- Goldman Sachs - Singapore
- Global Business Power Corporation, Philippines
- Bhushan Steel Limited - India
- GAC Shipping (India) Pvt Ltd
- Price Waterhouse Coopers - Russia
- Petrochimia International Co. Ltd.- Taiwan
- Makarim & Taira - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Aboitiz Power Corporation - Philippines
- Wilmar Investment Holdings
- New Zealand Coal & Carbon
- Eastern Coal Council - USA
- London Commodity Brokers - England
- Edison Trading Spa - Italy
- Manunggal Multi Energi - Indonesia
- Coalindo Energy - Indonesia
- GVK Power & Infra Limited - India
- Vizag Seaport Private Limited - India
- The Treasury - Australian Government
- Asia Pacific Energy Resources Ventures Inc, Philippines
- The University of Queensland
- Dalmia Cement Bharat India
- Central Electricity Authority - India
- McConnell Dowell - Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Indo Tambangraya Megah - Indonesia
- Power Finance Corporation Ltd., India
- Bukit Baiduri Energy - Indonesia
- Mercuria Energy - Indonesia
- Marubeni Corporation - India
- Bhatia International Limited - India
- Directorate Of Revenue Intelligence - India
- Kideco Jaya Agung - Indonesia
- Rio Tinto Coal - Australia
- PNOC Exploration Corporation - Philippines
- Karbindo Abesyapradhi - Indoneisa
- Ambuja Cements Ltd - India
- IEA Clean Coal Centre - UK
- Tata Chemicals Ltd - India
- San Jose City I Power Corp, Philippines
- Uttam Galva Steels Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Trasteel International SA, Italy
- Medco Energi Mining Internasional
- Ministry of Mines - Canada
- Metalloyd Limited - United Kingdom
- Bharathi Cement Corporation - India
- Commonwealth Bank - Australia
- The State Trading Corporation of India Ltd
- Thiess Contractors Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- LBH Netherlands Bv - Netherlands
- Jaiprakash Power Ventures ltd
- India Bulls Power Limited - India
- Bayan Resources Tbk. - Indonesia
- Kumho Petrochemical, South Korea
- Bhoruka Overseas - Indonesia
- Port Waratah Coal Services - Australia
- Holcim Trading Pte Ltd - Singapore
- CIMB Investment Bank - Malaysia
- OPG Power Generation Pvt Ltd - India
- Orica Australia Pty. Ltd.
- Kobexindo Tractors - Indoneisa
- Sakthi Sugars Limited - India
- Globalindo Alam Lestari - Indonesia
- Mercator Lines Limited - India
- Savvy Resources Ltd - HongKong
- Gujarat Mineral Development Corp Ltd - India
- Thai Mozambique Logistica
- PowerSource Philippines DevCo
- TeaM Sual Corporation - Philippines
- Essar Steel Hazira Ltd - India
- SMC Global Power, Philippines
- Barasentosa Lestari - Indonesia
- Parliament of New Zealand
- Xindia Steels Limited - India
- Indonesian Coal Mining Association
- Samtan Co., Ltd - South Korea
- South Luzon Thermal Energy Corporation
- Mjunction Services Limited - India
- Parry Sugars Refinery, India
- Krishnapatnam Port Company Ltd. - India
- Bukit Makmur.PT - Indonesia
- Standard Chartered Bank - UAE
- Asmin Koalindo Tuhup - Indonesia
- MS Steel International - UAE
- Electricity Authority, New Zealand
- Interocean Group of Companies - India
- Grasim Industreis Ltd - India
- Sojitz Corporation - Japan
- Kohat Cement Company Ltd. - Pakistan
- Global Green Power PLC Corporation, Philippines
- Malabar Cements Ltd - India
- Intertek Mineral Services - Indonesia
- Gujarat Sidhee Cement - India
- Chettinad Cement Corporation Ltd - India
- Altura Mining Limited, Indonesia
- Toyota Tsusho Corporation, Japan
- Tamil Nadu electricity Board
- Kaltim Prima Coal - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Miang Besar Coal Terminal - Indonesia
- Ministry of Finance - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- White Energy Company Limited
- Videocon Industries ltd - India
- Ind-Barath Power Infra Limited - India
- Cigading International Bulk Terminal - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Semirara Mining and Power Corporation, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Coastal Gujarat Power Limited - India
- Economic Council, Georgia
- Latin American Coal - Colombia
- Energy Link Ltd, New Zealand
- Leighton Contractors Pty Ltd - Australia
- Sical Logistics Limited - India
- Meenaskhi Energy Private Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Chamber of Mines of South Africa
- Cement Manufacturers Association - India
- PTC India Limited - India
- Australian Commodity Traders Exchange
- Banpu Public Company Limited - Thailand
- Petron Corporation, Philippines
- Indika Energy - Indonesia
- Therma Luzon, Inc, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Larsen & Toubro Limited - India
- Kapuas Tunggal Persada - Indonesia
- Sarangani Energy Corporation, Philippines
- Minerals Council of Australia
- Energy Development Corp, Philippines
- Heidelberg Cement - Germany
- Posco Energy - South Korea
- Jindal Steel & Power Ltd - India
- Timah Investasi Mineral - Indoneisa
- Kalimantan Lumbung Energi - Indonesia
- SN Aboitiz Power Inc, Philippines
- Siam City Cement - Thailand
- Romanian Commodities Exchange
- Straits Asia Resources Limited - Singapore
- ASAPP Information Group - India
- Renaissance Capital - South Africa
- Antam Resourcindo - Indonesia
- Australian Coal Association
- Pendopo Energi Batubara - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- VISA Power Limited - India
- Agrawal Coal Company - India
- European Bulk Services B.V. - Netherlands
- Bukit Asam (Persero) Tbk - Indonesia
- Iligan Light & Power Inc, Philippines
- Semirara Mining Corp, Philippines
- ICICI Bank Limited - India
- Singapore Mercantile Exchange
- Kartika Selabumi Mining - Indonesia
- Karaikal Port Pvt Ltd - India
- Oldendorff Carriers - Singapore
- Planning Commission, India
- IHS Mccloskey Coal Group - USA
- AsiaOL BioFuels Corp., Philippines
- Madhucon Powers Ltd - India
- Siam City Cement PLC, Thailand
- Africa Commodities Group - South Africa
- Sindya Power Generating Company Private Ltd
- PetroVietnam Power Coal Import and Supply Company
- Bulk Trading Sa - Switzerland
- Kepco SPC Power Corporation, Philippines
- CNBM International Corporation - China
- Vijayanagar Sugar Pvt Ltd - India
- Carbofer General Trading SA - India
- Binh Thuan Hamico - Vietnam
- Aditya Birla Group - India
- Formosa Plastics Group - Taiwan
- Georgia Ports Authority, United States
- Eastern Energy - Thailand
- Billiton Holdings Pty Ltd - Australia
- Jorong Barutama Greston.PT - Indonesia
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