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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, 26 January 20
SUPRAMAX: THE ASIAN BASIN SAW A 56,000DWT SHIP FIXING DELIVERY SAMARINDA TRIP TO WEST COAST INDIA AT $4,750 - BALTIC BRIEFING
Capesize
The market endured heavy losses throughout the past week, with the Capesize 5TC dropping from $8,352 to $4,772. In the lead up to Chin ...
Sunday, 26 January 20
SHIPPING NEEDS TO PREPARE FOR CORONAVIRUS RESTRICTIONS WARNS HILL DICKINSON
The shipping industry needs to be prepared for potential restrictions in order to prevent the further spread of the ‘Wuhan’ coronavirus ...
Friday, 24 January 20
LOW-SULPHUR FUEL OIL PRICES DROP USD 99 PER MT IN SINGAPORE - BIMCO
Singapore has seen one of the largest drops in the price of Very Low Sulphur Fuel Oil (VLSFO), which peaked on 7 January 2020 at USD 740 per metric ...
Friday, 24 January 20
CHINA'S BENCHMARK POWER COAL PRICE REMAINED FLAT DURING THE PAST WEEK - XINHUA
The Bohai-Rim Steam-Coal Price Index (BSPI), a gauge of coal prices in north China’s major ports, stood at 553 yuan (about 80.1 U.S. dollars) ...
Thursday, 23 January 20
PANAMAX: ANOTHER DISAPPOINTING WEEK IN BOTH THE ATLANTIC AND THE PACIFIC BASIN - FEARNLEYS
Cape Size
From bad to worse for the biggest ships as prices for low-sulphur fuel oil remain high whilst freight rates deteriorate further. Aver ...
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- Pendopo Energi Batubara - Indonesia
- Bukit Makmur.PT - Indonesia
- GAC Shipping (India) Pvt Ltd
- Ministry of Finance - Indonesia
- GMR Energy Limited - India
- Videocon Industries ltd - India
- Minerals Council of Australia
- Metalloyd Limited - United Kingdom
- Leighton Contractors Pty Ltd - Australia
- European Bulk Services B.V. - Netherlands
- Ambuja Cements Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Carbofer General Trading SA - India
- Standard Chartered Bank - UAE
- Renaissance Capital - South Africa
- Riau Bara Harum - Indonesia
- PNOC Exploration Corporation - Philippines
- Commonwealth Bank - Australia
- Eastern Coal Council - USA
- Meenaskhi Energy Private Limited - India
- Vizag Seaport Private Limited - India
- Simpson Spence & Young - Indonesia
- Indika Energy - Indonesia
- Sindya Power Generating Company Private Ltd
- Agrawal Coal Company - India
- International Coal Ventures Pvt Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Toyota Tsusho Corporation, Japan
- Australian Commodity Traders Exchange
- Manunggal Multi Energi - Indonesia
- Coastal Gujarat Power Limited - India
- Global Green Power PLC Corporation, Philippines
- Ministry of Mines - Canada
- Samtan Co., Ltd - South Korea
- Africa Commodities Group - South Africa
- Trasteel International SA, Italy
- Rio Tinto Coal - Australia
- Binh Thuan Hamico - Vietnam
- TNB Fuel Sdn Bhd - Malaysia
- Edison Trading Spa - Italy
- GVK Power & Infra Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Iligan Light & Power Inc, Philippines
- Electricity Generating Authority of Thailand
- Dalmia Cement Bharat India
- Attock Cement Pakistan Limited
- Bhushan Steel Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Kartika Selabumi Mining - Indonesia
- ICICI Bank Limited - India
- Baramulti Group, Indonesia
- Tata Chemicals Ltd - India
- ASAPP Information Group - India
- San Jose City I Power Corp, Philippines
- Bhoruka Overseas - Indonesia
- Ind-Barath Power Infra Limited - India
- Indian Energy Exchange, India
- Sakthi Sugars Limited - India
- Kapuas Tunggal Persada - Indonesia
- Xindia Steels Limited - India
- The University of Queensland
- Cigading International Bulk Terminal - Indonesia
- Romanian Commodities Exchange
- Chettinad Cement Corporation Ltd - India
- Banpu Public Company Limited - Thailand
- Bayan Resources Tbk. - Indonesia
- Port Waratah Coal Services - Australia
- Bangladesh Power Developement Board
- Energy Link Ltd, New Zealand
- Kalimantan Lumbung Energi - Indonesia
- Marubeni Corporation - India
- Thiess Contractors Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Grasim Industreis Ltd - India
- Bhatia International Limited - India
- Semirara Mining and Power Corporation, Philippines
- Planning Commission, India
- Singapore Mercantile Exchange
- IEA Clean Coal Centre - UK
- Billiton Holdings Pty Ltd - Australia
- Posco Energy - South Korea
- SN Aboitiz Power Inc, Philippines
- Bulk Trading Sa - Switzerland
- Central Electricity Authority - India
- Central Java Power - Indonesia
- Kideco Jaya Agung - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- VISA Power Limited - India
- Gujarat Electricity Regulatory Commission - India
- Mercuria Energy - Indonesia
- Mercator Lines Limited - India
- Oldendorff Carriers - Singapore
- Independent Power Producers Association of India
- Indonesian Coal Mining Association
- Heidelberg Cement - Germany
- Gujarat Sidhee Cement - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Petron Corporation, Philippines
- Rashtriya Ispat Nigam Limited - India
- PowerSource Philippines DevCo
- Offshore Bulk Terminal Pte Ltd, Singapore
- Deloitte Consulting - India
- Parliament of New Zealand
- MS Steel International - UAE
- GN Power Mariveles Coal Plant, Philippines
- Karaikal Port Pvt Ltd - India
- Indogreen Group - Indonesia
- SMC Global Power, Philippines
- London Commodity Brokers - England
- The Treasury - Australian Government
- Kobexindo Tractors - Indoneisa
- Georgia Ports Authority, United States
- LBH Netherlands Bv - Netherlands
- Karbindo Abesyapradhi - Indoneisa
- Sojitz Corporation - Japan
- Bharathi Cement Corporation - India
- Maharashtra Electricity Regulatory Commission - India
- Indo Tambangraya Megah - Indonesia
- Star Paper Mills Limited - India
- Electricity Authority, New Zealand
- Larsen & Toubro Limited - India
- Economic Council, Georgia
- Price Waterhouse Coopers - Russia
- Cement Manufacturers Association - India
- SMG Consultants - Indonesia
- Interocean Group of Companies - India
- Holcim Trading Pte Ltd - Singapore
- Wilmar Investment Holdings
- Salva Resources Pvt Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Thai Mozambique Logistica
- CIMB Investment Bank - Malaysia
- Sical Logistics Limited - India
- Wood Mackenzie - Singapore
- Jorong Barutama Greston.PT - Indonesia
- Timah Investasi Mineral - Indoneisa
- Asmin Koalindo Tuhup - Indonesia
- OPG Power Generation Pvt Ltd - India
- Straits Asia Resources Limited - Singapore
- Energy Development Corp, Philippines
- Kaltim Prima Coal - Indonesia
- Siam City Cement - Thailand
- Eastern Energy - Thailand
- Borneo Indobara - Indonesia
- Coalindo Energy - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Jindal Steel & Power Ltd - India
- India Bulls Power Limited - India
- Essar Steel Hazira Ltd - India
- The State Trading Corporation of India Ltd
- Gujarat Mineral Development Corp Ltd - India
- Mintek Dendrill Indonesia
- Chamber of Mines of South Africa
- Goldman Sachs - Singapore
- Latin American Coal - Colombia
- Tamil Nadu electricity Board
- TeaM Sual Corporation - Philippines
- Savvy Resources Ltd - HongKong
- PTC India Limited - India
- Lanco Infratech Ltd - India
- Global Business Power Corporation, Philippines
- Australian Coal Association
- Orica Mining Services - Indonesia
- Global Coal Blending Company Limited - Australia
- Globalindo Alam Lestari - Indonesia
- South Luzon Thermal Energy Corporation
- Sree Jayajothi Cements Limited - India
- McConnell Dowell - Australia
- Uttam Galva Steels Limited - India
- Ministry of Transport, Egypt
- Jaiprakash Power Ventures ltd
- New Zealand Coal & Carbon
- Intertek Mineral Services - Indonesia
- Aboitiz Power Corporation - Philippines
- Directorate Of Revenue Intelligence - India
- PetroVietnam Power Coal Import and Supply Company
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Semirara Mining Corp, Philippines
- Anglo American - United Kingdom
- Antam Resourcindo - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Formosa Plastics Group - Taiwan
- Mjunction Services Limited - India
- Merrill Lynch Commodities Europe
- Madhucon Powers Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- CNBM International Corporation - China
- Maheswari Brothers Coal Limited - India
- Barasentosa Lestari - Indonesia
- Aditya Birla Group - India
- Therma Luzon, Inc, Philippines
- Vedanta Resources Plc - India
- IHS Mccloskey Coal Group - USA
- Coal and Oil Company - UAE
- Meralco Power Generation, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Makarim & Taira - Indonesia
- Indian Oil Corporation Limited
- Sarangani Energy Corporation, Philippines
- Kumho Petrochemical, South Korea
- Medco Energi Mining Internasional
- Siam City Cement PLC, Thailand
- Bahari Cakrawala Sebuku - Indonesia
- Malabar Cements Ltd - India
- Orica Australia Pty. Ltd.
- Power Finance Corporation Ltd., India
- Parry Sugars Refinery, India
- Ceylon Electricity Board - Sri Lanka
- Kepco SPC Power Corporation, Philippines
- White Energy Company Limited
- Miang Besar Coal Terminal - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Altura Mining Limited, Indonesia
- Bukit Baiduri Energy - Indonesia
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