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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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Thursday, 16 January 20
SUPRAMAX: INDO/CHINA ROUND VOYAGE FIXING AROUND LOW/MID USD 6,000 BSS APS INDO - FEARNLEYS
Capesize
Still very rough seas for the big ships, with the majority of the fleet trading Far East or fronthaul and consequently earning far les ...
Wednesday, 15 January 20
ASIA PACIFIC GAS AND LNG - 6 THEMES TO WATCH IN 2020 - WOOD MACKENZIE
NEWS RELEASE
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Asian LNG spot pr ...
Wednesday, 15 January 20
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Wednesday, 15 January 20
SHIPPING MARKET INSIGHT - INERMODAL
Happy New Year and all the best for IMO 2020 !!
The early days of IMO 2020 coming into force have certainly had an impact on the indus ...
Tuesday, 14 January 20
SOLAS AMENDMENTS ENTERING INTO FORCE 1 JANUARY 2020 - STANDARD CLUB
While the latest amendments to MARPOL annex VI which entered into force on 1 January 2020 limiting the SOx emissions from ships has been the centre ...
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- Gujarat Mineral Development Corp Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Anglo American - United Kingdom
- Samtan Co., Ltd - South Korea
- Edison Trading Spa - Italy
- CNBM International Corporation - China
- International Coal Ventures Pvt Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- GVK Power & Infra Limited - India
- European Bulk Services B.V. - Netherlands
- Kaltim Prima Coal - Indonesia
- Riau Bara Harum - Indonesia
- Coal and Oil Company - UAE
- Bhoruka Overseas - Indonesia
- Interocean Group of Companies - India
- Mjunction Services Limited - India
- Central Java Power - Indonesia
- Pendopo Energi Batubara - Indonesia
- SMC Global Power, Philippines
- Kobexindo Tractors - Indoneisa
- Kumho Petrochemical, South Korea
- Meenaskhi Energy Private Limited - India
- Savvy Resources Ltd - HongKong
- Vizag Seaport Private Limited - India
- Economic Council, Georgia
- Jindal Steel & Power Ltd - India
- Central Electricity Authority - India
- Makarim & Taira - Indonesia
- Parry Sugars Refinery, India
- Vedanta Resources Plc - India
- Bulk Trading Sa - Switzerland
- Indian Oil Corporation Limited
- Simpson Spence & Young - Indonesia
- Bayan Resources Tbk. - Indonesia
- Medco Energi Mining Internasional
- Wood Mackenzie - Singapore
- London Commodity Brokers - England
- Global Business Power Corporation, Philippines
- Gujarat Electricity Regulatory Commission - India
- Coalindo Energy - Indonesia
- Orica Mining Services - Indonesia
- Marubeni Corporation - India
- Bhushan Steel Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Australian Commodity Traders Exchange
- Timah Investasi Mineral - Indoneisa
- Tata Chemicals Ltd - India
- Antam Resourcindo - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Carbofer General Trading SA - India
- Planning Commission, India
- Africa Commodities Group - South Africa
- Bukit Makmur.PT - Indonesia
- Chamber of Mines of South Africa
- Ministry of Finance - Indonesia
- The State Trading Corporation of India Ltd
- Thai Mozambique Logistica
- PowerSource Philippines DevCo
- Parliament of New Zealand
- Altura Mining Limited, Indonesia
- ICICI Bank Limited - India
- SMG Consultants - Indonesia
- Ministry of Transport, Egypt
- Uttam Galva Steels Limited - India
- Karaikal Port Pvt Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Tamil Nadu electricity Board
- Energy Development Corp, Philippines
- Energy Link Ltd, New Zealand
- Orica Australia Pty. Ltd.
- PetroVietnam Power Coal Import and Supply Company
- Barasentosa Lestari - Indonesia
- Intertek Mineral Services - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bharathi Cement Corporation - India
- Wilmar Investment Holdings
- Goldman Sachs - Singapore
- Global Green Power PLC Corporation, Philippines
- Iligan Light & Power Inc, Philippines
- The Treasury - Australian Government
- Semirara Mining and Power Corporation, Philippines
- Bangladesh Power Developement Board
- Minerals Council of Australia
- Larsen & Toubro Limited - India
- Baramulti Group, Indonesia
- OPG Power Generation Pvt Ltd - India
- Indonesian Coal Mining Association
- Krishnapatnam Port Company Ltd. - India
- Rashtriya Ispat Nigam Limited - India
- Grasim Industreis Ltd - India
- Toyota Tsusho Corporation, Japan
- Bhatia International Limited - India
- Directorate Of Revenue Intelligence - India
- Xindia Steels Limited - India
- Lanco Infratech Ltd - India
- Essar Steel Hazira Ltd - India
- Trasteel International SA, Italy
- Global Coal Blending Company Limited - Australia
- Sinarmas Energy and Mining - Indonesia
- Electricity Generating Authority of Thailand
- Romanian Commodities Exchange
- Ambuja Cements Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Electricity Authority, New Zealand
- Deloitte Consulting - India
- South Luzon Thermal Energy Corporation
- Kalimantan Lumbung Energi - Indonesia
- Petron Corporation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sindya Power Generating Company Private Ltd
- Power Finance Corporation Ltd., India
- Jaiprakash Power Ventures ltd
- IEA Clean Coal Centre - UK
- Renaissance Capital - South Africa
- San Jose City I Power Corp, Philippines
- Straits Asia Resources Limited - Singapore
- PTC India Limited - India
- Globalindo Alam Lestari - Indonesia
- Oldendorff Carriers - Singapore
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Singapore Mercantile Exchange
- Manunggal Multi Energi - Indonesia
- Commonwealth Bank - Australia
- LBH Netherlands Bv - Netherlands
- Coastal Gujarat Power Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Ministry of Mines - Canada
- Thiess Contractors Indonesia
- Meralco Power Generation, Philippines
- Cement Manufacturers Association - India
- New Zealand Coal & Carbon
- Salva Resources Pvt Ltd - India
- Price Waterhouse Coopers - Russia
- Directorate General of MIneral and Coal - Indonesia
- CIMB Investment Bank - Malaysia
- Agrawal Coal Company - India
- Kartika Selabumi Mining - Indonesia
- Ind-Barath Power Infra Limited - India
- Mercator Lines Limited - India
- Sree Jayajothi Cements Limited - India
- Binh Thuan Hamico - Vietnam
- Holcim Trading Pte Ltd - Singapore
- Neyveli Lignite Corporation Ltd, - India
- Borneo Indobara - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Billiton Holdings Pty Ltd - Australia
- GN Power Mariveles Coal Plant, Philippines
- Sarangani Energy Corporation, Philippines
- Madhucon Powers Ltd - India
- Heidelberg Cement - Germany
- Karbindo Abesyapradhi - Indoneisa
- Independent Power Producers Association of India
- Pipit Mutiara Jaya. PT, Indonesia
- Eastern Coal Council - USA
- Aboitiz Power Corporation - Philippines
- Dalmia Cement Bharat India
- Sakthi Sugars Limited - India
- Indian Energy Exchange, India
- Siam City Cement PLC, Thailand
- Standard Chartered Bank - UAE
- Petrochimia International Co. Ltd.- Taiwan
- GMR Energy Limited - India
- Therma Luzon, Inc, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Formosa Plastics Group - Taiwan
- Australian Coal Association
- Ceylon Electricity Board - Sri Lanka
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Gujarat Sidhee Cement - India
- Leighton Contractors Pty Ltd - Australia
- Mercuria Energy - Indonesia
- ASAPP Information Group - India
- Kideco Jaya Agung - Indonesia
- IHS Mccloskey Coal Group - USA
- White Energy Company Limited
- Latin American Coal - Colombia
- SN Aboitiz Power Inc, Philippines
- Sical Logistics Limited - India
- Alfred C Toepfer International GmbH - Germany
- Indo Tambangraya Megah - Indonesia
- Eastern Energy - Thailand
- Bukit Baiduri Energy - Indonesia
- Banpu Public Company Limited - Thailand
- Aditya Birla Group - India
- India Bulls Power Limited - India
- Port Waratah Coal Services - Australia
- Jorong Barutama Greston.PT - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- PNOC Exploration Corporation - Philippines
- Videocon Industries ltd - India
- Malabar Cements Ltd - India
- Rio Tinto Coal - Australia
- Attock Cement Pakistan Limited
- TeaM Sual Corporation - Philippines
- Semirara Mining Corp, Philippines
- Indika Energy - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Metalloyd Limited - United Kingdom
- Cigading International Bulk Terminal - Indonesia
- Sojitz Corporation - Japan
- McConnell Dowell - Australia
- Mintek Dendrill Indonesia
- Maheswari Brothers Coal Limited - India
- Kepco SPC Power Corporation, Philippines
- GAC Shipping (India) Pvt Ltd
- The University of Queensland
- Star Paper Mills Limited - India
- VISA Power Limited - India
- Merrill Lynch Commodities Europe
- Chettinad Cement Corporation Ltd - India
- MS Steel International - UAE
- Indogreen Group - Indonesia
- Siam City Cement - Thailand
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Georgia Ports Authority, United States
- Posco Energy - South Korea
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