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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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Saturday, 30 November 19
IMO2020 GLOBAL SULPHUR CUT: GERMAN SHIPPING TO USE NEW TYPE OF FUEL VDR SURVEY
IMO2020 Global sulphur cut: German shipping to use new type of fuel VDR survey: Technical issues and costs are the biggest challenges - VDR
&nb ...
Saturday, 30 November 19
PANAMAX: LEVELS IMPROVED IN THE PACIFIC MARKET TOO WITH $11,000 BEING CONCLUDED ON AN 81,000DWT SHIP FOR AN INDONESIA TO CHINA COAL TRIP - BALTIC BRIEFING
Capesize
The market has been well supported over the past week, led primarily by the Atlantic Basin. After bottoming last week, sentiment was s ...
Friday, 29 November 19
FITCHRATINGS MAINTAINS NEGATIVE 2020 OUTLOOK ON SHIPPING, AS TIGHTER SUPPLY HELPS, BUT SOFTER DEMAND DRAGS
Fitch’s Sector Outlook: Negative
We maintain a negative sector outlook for global shipping because of the forecast slowdown of ...
Friday, 29 November 19
INDONESIA PRODUCES 390 MLN TONNES OF COAL IN JAN-SEPT: MINISTER - REUTERS
Indonesia’s production of coal for the January-September period was 390 million tonnes, Energy and Mineral Resources Minister Arifin Tasrif s ...
Wednesday, 27 November 19
SHIPPING MARKET INSIGHT - INTERMODAL
As the end of the fourth quarter is approaching, one could say that the wet market has maintained the strong pace observed during the third qu ...
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- Global Business Power Corporation, Philippines
- Sojitz Corporation - Japan
- Vizag Seaport Private Limited - India
- Baramulti Group, Indonesia
- GAC Shipping (India) Pvt Ltd
- London Commodity Brokers - England
- Port Waratah Coal Services - Australia
- Dalmia Cement Bharat India
- Commonwealth Bank - Australia
- Ind-Barath Power Infra Limited - India
- Karaikal Port Pvt Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- India Bulls Power Limited - India
- Makarim & Taira - Indonesia
- Economic Council, Georgia
- Bhatia International Limited - India
- Ministry of Mines - Canada
- Indian Energy Exchange, India
- Coastal Gujarat Power Limited - India
- Siam City Cement - Thailand
- Manunggal Multi Energi - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Iligan Light & Power Inc, Philippines
- LBH Netherlands Bv - Netherlands
- Independent Power Producers Association of India
- Grasim Industreis Ltd - India
- OPG Power Generation Pvt Ltd - India
- Gujarat Sidhee Cement - India
- Aditya Birla Group - India
- Bahari Cakrawala Sebuku - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Timah Investasi Mineral - Indoneisa
- Central Electricity Authority - India
- PNOC Exploration Corporation - Philippines
- San Jose City I Power Corp, Philippines
- Orica Mining Services - Indonesia
- Essar Steel Hazira Ltd - India
- Banpu Public Company Limited - Thailand
- AsiaOL BioFuels Corp., Philippines
- Toyota Tsusho Corporation, Japan
- Kumho Petrochemical, South Korea
- Indika Energy - Indonesia
- Videocon Industries ltd - India
- Romanian Commodities Exchange
- Central Java Power - Indonesia
- TeaM Sual Corporation - Philippines
- Larsen & Toubro Limited - India
- Oldendorff Carriers - Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- GVK Power & Infra Limited - India
- Siam City Cement PLC, Thailand
- Goldman Sachs - Singapore
- Cement Manufacturers Association - India
- Kaltim Prima Coal - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Indonesian Coal Mining Association
- Deloitte Consulting - India
- Mintek Dendrill Indonesia
- Energy Link Ltd, New Zealand
- Petron Corporation, Philippines
- Meenaskhi Energy Private Limited - India
- Trasteel International SA, Italy
- Marubeni Corporation - India
- Africa Commodities Group - South Africa
- Ministry of Finance - Indonesia
- Antam Resourcindo - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Bulk Trading Sa - Switzerland
- Sakthi Sugars Limited - India
- Semirara Mining and Power Corporation, Philippines
- Kepco SPC Power Corporation, Philippines
- Mercuria Energy - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Madhucon Powers Ltd - India
- Singapore Mercantile Exchange
- Lanco Infratech Ltd - India
- Simpson Spence & Young - Indonesia
- Bukit Baiduri Energy - Indonesia
- Renaissance Capital - South Africa
- Tamil Nadu electricity Board
- Interocean Group of Companies - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Binh Thuan Hamico - Vietnam
- Altura Mining Limited, Indonesia
- Metalloyd Limited - United Kingdom
- MS Steel International - UAE
- PTC India Limited - India
- Jindal Steel & Power Ltd - India
- Global Coal Blending Company Limited - Australia
- Sarangani Energy Corporation, Philippines
- Eastern Coal Council - USA
- Parliament of New Zealand
- Uttam Galva Steels Limited - India
- Pendopo Energi Batubara - Indonesia
- Energy Development Corp, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Star Paper Mills Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Eastern Energy - Thailand
- Bukit Asam (Persero) Tbk - Indonesia
- Barasentosa Lestari - Indonesia
- Indo Tambangraya Megah - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Wilmar Investment Holdings
- Bukit Makmur.PT - Indonesia
- Heidelberg Cement - Germany
- Aboitiz Power Corporation - Philippines
- Wood Mackenzie - Singapore
- Vedanta Resources Plc - India
- Carbofer General Trading SA - India
- Xindia Steels Limited - India
- Billiton Holdings Pty Ltd - Australia
- Bhushan Steel Limited - India
- Australian Commodity Traders Exchange
- Latin American Coal - Colombia
- McConnell Dowell - Australia
- Krishnapatnam Port Company Ltd. - India
- The Treasury - Australian Government
- VISA Power Limited - India
- Riau Bara Harum - Indonesia
- Salva Resources Pvt Ltd - India
- Maheswari Brothers Coal Limited - India
- Thai Mozambique Logistica
- Chamber of Mines of South Africa
- Coal and Oil Company - UAE
- Kapuas Tunggal Persada - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Anglo American - United Kingdom
- Sree Jayajothi Cements Limited - India
- Karbindo Abesyapradhi - Indoneisa
- GMR Energy Limited - India
- Coalindo Energy - Indonesia
- Electricity Generating Authority of Thailand
- Meralco Power Generation, Philippines
- Bayan Resources Tbk. - Indonesia
- Indogreen Group - Indonesia
- International Coal Ventures Pvt Ltd - India
- Thiess Contractors Indonesia
- Alfred C Toepfer International GmbH - Germany
- Planning Commission, India
- Kideco Jaya Agung - Indonesia
- Ambuja Cements Ltd - India
- Minerals Council of Australia
- The State Trading Corporation of India Ltd
- Samtan Co., Ltd - South Korea
- Savvy Resources Ltd - HongKong
- European Bulk Services B.V. - Netherlands
- Asia Pacific Energy Resources Ventures Inc, Philippines
- White Energy Company Limited
- CIMB Investment Bank - Malaysia
- New Zealand Coal & Carbon
- Rio Tinto Coal - Australia
- Malabar Cements Ltd - India
- Formosa Plastics Group - Taiwan
- PetroVietnam Power Coal Import and Supply Company
- Mjunction Services Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Price Waterhouse Coopers - Russia
- Therma Luzon, Inc, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Standard Chartered Bank - UAE
- Directorate General of MIneral and Coal - Indonesia
- Semirara Mining Corp, Philippines
- Indian Oil Corporation Limited
- Power Finance Corporation Ltd., India
- IHS Mccloskey Coal Group - USA
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Intertek Mineral Services - Indonesia
- Medco Energi Mining Internasional
- Borneo Indobara - Indonesia
- Bhoruka Overseas - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Parry Sugars Refinery, India
- Kartika Selabumi Mining - Indonesia
- SMC Global Power, Philippines
- Merrill Lynch Commodities Europe
- Global Green Power PLC Corporation, Philippines
- CNBM International Corporation - China
- Bangladesh Power Developement Board
- Sinarmas Energy and Mining - Indonesia
- Ministry of Transport, Egypt
- Kohat Cement Company Ltd. - Pakistan
- IEA Clean Coal Centre - UK
- Attock Cement Pakistan Limited
- ASAPP Information Group - India
- SMG Consultants - Indonesia
- PowerSource Philippines DevCo
- Posco Energy - South Korea
- Australian Coal Association
- Cigading International Bulk Terminal - Indonesia
- Bharathi Cement Corporation - India
- Sindya Power Generating Company Private Ltd
- Leighton Contractors Pty Ltd - Australia
- Chettinad Cement Corporation Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Agrawal Coal Company - India
- Miang Besar Coal Terminal - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Georgia Ports Authority, United States
- Mercator Lines Limited - India
- Tata Chemicals Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- South Luzon Thermal Energy Corporation
- SN Aboitiz Power Inc, Philippines
- Ceylon Electricity Board - Sri Lanka
- Sical Logistics Limited - India
- Edison Trading Spa - Italy
- Orica Australia Pty. Ltd.
- Directorate Of Revenue Intelligence - India
- ICICI Bank Limited - India
- Globalindo Alam Lestari - Indonesia
- Straits Asia Resources Limited - Singapore
- Jaiprakash Power Ventures ltd
- Electricity Authority, New Zealand
- The University of Queensland
- Kobexindo Tractors - Indoneisa
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