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