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