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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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Sunday, 09 February 20
SUPRAMAX: THE ASIAN ARENA STRUGGLED, A 50,000DWT SHIP FIXING A COAL RUN FROM EAST KALIMANTAN TO INDIA AT $2,000 - THE BALTIC BRIEFING
Capesize
The Capesize market endured another dreadful week of calamitous rate level falls, as the usual season low Q1 period combined with rece ...
Friday, 07 February 20
CIL LOOKING TO TAP NON-POWER SECTORS FOR INCREMENTAL COAL, PTI REPORTED
The miner is looking to ramp up production to meet its targets for the current fiscal at a time when the economic slowdown is impacting demand for ...
Friday, 07 February 20
VIRUS - HIT CHINA MAY NEED MORE IMPORTS OF COAL. NOW COMES THE TRICKY PART - SHIPPING IT THERE: REUTERS
China’s domestic coal mines are struggling to ramp up production in the face of the ongoing coronavirus epidemic. That’s a situation th ...
Friday, 07 February 20
CORONAVIRUS IMPACTING THE GLOBAL SHIPPING INDUSTRY - BIMCO
The outbreak of the novel Coronavirus has dented market sentiment and spooked markets around the globe. When China sneezes, we all catch the flu. T ...
Thursday, 06 February 20
CAPE: WEAK SUPPLY/DEMAND RATIO THE STREETS REMAIN BLOODY FOR THE BIG SHIPS - FEARNLEYS
Cape: With still a weak supply/demand ratio the streets remain bloody for the big ships, and actual spot earnings are close to zero on main short-h ...
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- The State Trading Corporation of India Ltd
- Deloitte Consulting - India
- Africa Commodities Group - South Africa
- Mintek Dendrill Indonesia
- Kartika Selabumi Mining - Indonesia
- GVK Power & Infra Limited - India
- Therma Luzon, Inc, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- IHS Mccloskey Coal Group - USA
- Semirara Mining and Power Corporation, Philippines
- Mercator Lines Limited - India
- Dalmia Cement Bharat India
- Leighton Contractors Pty Ltd - Australia
- Rashtriya Ispat Nigam Limited - India
- Madhucon Powers Ltd - India
- Globalindo Alam Lestari - Indonesia
- LBH Netherlands Bv - Netherlands
- Chamber of Mines of South Africa
- McConnell Dowell - Australia
- London Commodity Brokers - England
- Pipit Mutiara Jaya. PT, Indonesia
- Samtan Co., Ltd - South Korea
- SMC Global Power, Philippines
- Xindia Steels Limited - India
- Thiess Contractors Indonesia
- Larsen & Toubro Limited - India
- Global Business Power Corporation, Philippines
- Antam Resourcindo - Indonesia
- India Bulls Power Limited - India
- Bukit Baiduri Energy - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Chettinad Cement Corporation Ltd - India
- Uttam Galva Steels Limited - India
- Lanco Infratech Ltd - India
- Sojitz Corporation - Japan
- Interocean Group of Companies - India
- Siam City Cement PLC, Thailand
- Standard Chartered Bank - UAE
- Kepco SPC Power Corporation, Philippines
- Ceylon Electricity Board - Sri Lanka
- Kobexindo Tractors - Indoneisa
- Global Green Power PLC Corporation, Philippines
- Karaikal Port Pvt Ltd - India
- Gujarat Sidhee Cement - India
- Semirara Mining Corp, Philippines
- Formosa Plastics Group - Taiwan
- Ministry of Transport, Egypt
- CNBM International Corporation - China
- Baramulti Group, Indonesia
- Energy Link Ltd, New Zealand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bharathi Cement Corporation - India
- Latin American Coal - Colombia
- Edison Trading Spa - Italy
- New Zealand Coal & Carbon
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Pendopo Energi Batubara - Indonesia
- Bhushan Steel Limited - India
- Straits Asia Resources Limited - Singapore
- Rio Tinto Coal - Australia
- White Energy Company Limited
- Indonesian Coal Mining Association
- Coalindo Energy - Indonesia
- Malabar Cements Ltd - India
- Planning Commission, India
- Karbindo Abesyapradhi - Indoneisa
- Aboitiz Power Corporation - Philippines
- Ministry of Finance - Indonesia
- Indo Tambangraya Megah - Indonesia
- Agrawal Coal Company - India
- PTC India Limited - India
- Banpu Public Company Limited - Thailand
- Eastern Energy - Thailand
- PNOC Exploration Corporation - Philippines
- PetroVietnam Power Coal Import and Supply Company
- Star Paper Mills Limited - India
- Bhoruka Overseas - Indonesia
- International Coal Ventures Pvt Ltd - India
- OPG Power Generation Pvt Ltd - India
- SN Aboitiz Power Inc, Philippines
- Timah Investasi Mineral - Indoneisa
- Romanian Commodities Exchange
- MS Steel International - UAE
- Riau Bara Harum - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Heidelberg Cement - Germany
- Orica Australia Pty. Ltd.
- The University of Queensland
- Carbofer General Trading SA - India
- The Treasury - Australian Government
- Simpson Spence & Young - Indonesia
- Parry Sugars Refinery, India
- Bangladesh Power Developement Board
- Oldendorff Carriers - Singapore
- VISA Power Limited - India
- Siam City Cement - Thailand
- Krishnapatnam Port Company Ltd. - India
- Jaiprakash Power Ventures ltd
- Petron Corporation, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- PowerSource Philippines DevCo
- Power Finance Corporation Ltd., India
- Meralco Power Generation, Philippines
- Posco Energy - South Korea
- SMG Consultants - Indonesia
- Minerals Council of Australia
- Marubeni Corporation - India
- Toyota Tsusho Corporation, Japan
- Directorate Of Revenue Intelligence - India
- GN Power Mariveles Coal Plant, Philippines
- Manunggal Multi Energi - Indonesia
- Sinarmas Energy and Mining - Indonesia
- South Luzon Thermal Energy Corporation
- Intertek Mineral Services - Indonesia
- Essar Steel Hazira Ltd - India
- Coal and Oil Company - UAE
- Kalimantan Lumbung Energi - Indonesia
- Medco Energi Mining Internasional
- TNB Fuel Sdn Bhd - Malaysia
- Anglo American - United Kingdom
- Bulk Trading Sa - Switzerland
- Renaissance Capital - South Africa
- Bank of Tokyo Mitsubishi UFJ Ltd
- Sical Logistics Limited - India
- Vizag Seaport Private Limited - India
- Trasteel International SA, Italy
- Cigading International Bulk Terminal - Indonesia
- Barasentosa Lestari - Indonesia
- Ambuja Cements Ltd - India
- Meenaskhi Energy Private Limited - India
- CIMB Investment Bank - Malaysia
- Iligan Light & Power Inc, Philippines
- Mercuria Energy - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Australian Commodity Traders Exchange
- Jorong Barutama Greston.PT - Indonesia
- GMR Energy Limited - India
- Orica Mining Services - Indonesia
- Thai Mozambique Logistica
- AsiaOL BioFuels Corp., Philippines
- Ind-Barath Power Infra Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Wilmar Investment Holdings
- Vedanta Resources Plc - India
- Indian Oil Corporation Limited
- Attock Cement Pakistan Limited
- Economic Council, Georgia
- Bukit Makmur.PT - Indonesia
- Independent Power Producers Association of India
- Neyveli Lignite Corporation Ltd, - India
- Maheswari Brothers Coal Limited - India
- IEA Clean Coal Centre - UK
- Singapore Mercantile Exchange
- Binh Thuan Hamico - Vietnam
- Indogreen Group - Indonesia
- Kaltim Prima Coal - Indonesia
- Tamil Nadu electricity Board
- Maharashtra Electricity Regulatory Commission - India
- Goldman Sachs - Singapore
- Savvy Resources Ltd - HongKong
- Electricity Authority, New Zealand
- Altura Mining Limited, Indonesia
- Wood Mackenzie - Singapore
- Alfred C Toepfer International GmbH - Germany
- Commonwealth Bank - Australia
- GAC Shipping (India) Pvt Ltd
- Metalloyd Limited - United Kingdom
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kideco Jaya Agung - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Sindya Power Generating Company Private Ltd
- Eastern Coal Council - USA
- Coastal Gujarat Power Limited - India
- Bhatia International Limited - India
- Central Java Power - Indonesia
- Parliament of New Zealand
- ICICI Bank Limited - India
- Cement Manufacturers Association - India
- Kapuas Tunggal Persada - Indonesia
- Price Waterhouse Coopers - Russia
- Electricity Generating Authority of Thailand
- Mjunction Services Limited - India
- Makarim & Taira - Indonesia
- European Bulk Services B.V. - Netherlands
- Videocon Industries ltd - India
- Merrill Lynch Commodities Europe
- Offshore Bulk Terminal Pte Ltd, Singapore
- Indian Energy Exchange, India
- Central Electricity Authority - India
- Global Coal Blending Company Limited - Australia
- Asmin Koalindo Tuhup - Indonesia
- Australian Coal Association
- Bayan Resources Tbk. - Indonesia
- Tata Chemicals Ltd - India
- Aditya Birla Group - India
- Gujarat Electricity Regulatory Commission - India
- Grasim Industreis Ltd - India
- Ministry of Mines - Canada
- Salva Resources Pvt Ltd - India
- Sarangani Energy Corporation, Philippines
- Sakthi Sugars Limited - India
- Kumho Petrochemical, South Korea
- Energy Development Corp, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Borneo Indobara - Indonesia
- ASAPP Information Group - India
- Indika Energy - Indonesia
- San Jose City I Power Corp, Philippines
- Holcim Trading Pte Ltd - Singapore
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Port Waratah Coal Services - Australia
- TeaM Sual Corporation - Philippines
- Sree Jayajothi Cements Limited - India
- Jindal Steel & Power Ltd - India
- Georgia Ports Authority, United States
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