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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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Tuesday, 26 November 19
PREPARATIONS INTENSIFY AS 1 JANUARY 2020 GLOBAL CUT IN SULPHUR IN SHIP'S FUEL OIL LOOMS: IMO
“IMO 2020” requirements for ships to cut sulphur oxide emissions enter into effect in just over one month’s time. This will signi ...
Monday, 25 November 19
COAL SUPPLY BY CIL TO POWER SECTOR DROPS OVER 8 PC TO 253 MT IN APRIL-OCTOBER - PTI
Supply of coal by state-owned CIL to the power sector registered a decline of 8.5 per cent to 253 million tonnes in the April-October period of thi ...
Monday, 25 November 19
A 53,000DWT SHIP FIXED AT $9,500 DELIVERY SINGAPORE TRIP, VIA INDONESIA, REDELIVERY VIETNAM - BALTIC BRIEFING
Capesize
After a week of value being eroded on the Capesize market, Friday brought improved sentiment across most of the routes. The 5TC averag ...
Monday, 25 November 19
KOWEPO INVITED 6.79 MILLION TONS OF (SUB)BITUMINOUS STEAM COAL BIDS
COALspot.com: South Korea’s Korea Western Power Co., Ltd. (KOWEPO) has issued an international tender for 6,798,000 tons of coal for 5 years ...
Friday, 22 November 19
CHINA'S BENCHMARK POWER COAL PRICE REMAINS FLAT - XINHUA
China’s benchmark power coal price remained flat during the past week.
The Bohai-Rim Steam-Coal Price Index (BSPI), a gauge of ...
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- Medco Energi Mining Internasional
- Straits Asia Resources Limited - Singapore
- Alfred C Toepfer International GmbH - Germany
- Karaikal Port Pvt Ltd - India
- PowerSource Philippines DevCo
- Offshore Bulk Terminal Pte Ltd, Singapore
- Semirara Mining Corp, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kohat Cement Company Ltd. - Pakistan
- International Coal Ventures Pvt Ltd - India
- Tamil Nadu electricity Board
- Parry Sugars Refinery, India
- Ministry of Mines - Canada
- Carbofer General Trading SA - India
- Australian Coal Association
- Globalindo Alam Lestari - Indonesia
- Bhatia International Limited - India
- Merrill Lynch Commodities Europe
- Rio Tinto Coal - Australia
- TNB Fuel Sdn Bhd - Malaysia
- Mjunction Services Limited - India
- Independent Power Producers Association of India
- Xindia Steels Limited - India
- Chamber of Mines of South Africa
- Mintek Dendrill Indonesia
- Kideco Jaya Agung - Indonesia
- Georgia Ports Authority, United States
- PTC India Limited - India
- Oldendorff Carriers - Singapore
- Cigading International Bulk Terminal - Indonesia
- SN Aboitiz Power Inc, Philippines
- Latin American Coal - Colombia
- Sojitz Corporation - Japan
- Jaiprakash Power Ventures ltd
- Formosa Plastics Group - Taiwan
- Global Business Power Corporation, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Metalloyd Limited - United Kingdom
- Siam City Cement PLC, Thailand
- Sinarmas Energy and Mining - Indonesia
- Port Waratah Coal Services - Australia
- LBH Netherlands Bv - Netherlands
- Eastern Energy - Thailand
- Indogreen Group - Indonesia
- Indonesian Coal Mining Association
- Deloitte Consulting - India
- Goldman Sachs - Singapore
- Borneo Indobara - Indonesia
- The University of Queensland
- Uttam Galva Steels Limited - India
- Jorong Barutama Greston.PT - Indonesia
- CIMB Investment Bank - Malaysia
- Maheswari Brothers Coal Limited - India
- Electricity Authority, New Zealand
- Coalindo Energy - Indonesia
- Billiton Holdings Pty Ltd - Australia
- CNBM International Corporation - China
- Siam City Cement - Thailand
- Kepco SPC Power Corporation, Philippines
- The State Trading Corporation of India Ltd
- Meralco Power Generation, Philippines
- Commonwealth Bank - Australia
- Simpson Spence & Young - Indonesia
- Edison Trading Spa - Italy
- European Bulk Services B.V. - Netherlands
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Central Electricity Authority - India
- White Energy Company Limited
- Ministry of Transport, Egypt
- Bhushan Steel Limited - India
- Power Finance Corporation Ltd., India
- GMR Energy Limited - India
- Aditya Birla Group - India
- ASAPP Information Group - India
- Kobexindo Tractors - Indoneisa
- Rashtriya Ispat Nigam Limited - India
- Madhucon Powers Ltd - India
- Therma Luzon, Inc, Philippines
- Electricity Generating Authority of Thailand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Banpu Public Company Limited - Thailand
- Central Java Power - Indonesia
- India Bulls Power Limited - India
- Indo Tambangraya Megah - Indonesia
- Orica Australia Pty. Ltd.
- Salva Resources Pvt Ltd - India
- Africa Commodities Group - South Africa
- MS Steel International - UAE
- Posco Energy - South Korea
- GN Power Mariveles Coal Plant, Philippines
- Baramulti Group, Indonesia
- Holcim Trading Pte Ltd - Singapore
- Anglo American - United Kingdom
- Samtan Co., Ltd - South Korea
- Ind-Barath Power Infra Limited - India
- Interocean Group of Companies - India
- Dalmia Cement Bharat India
- Pendopo Energi Batubara - Indonesia
- Savvy Resources Ltd - HongKong
- The Treasury - Australian Government
- Renaissance Capital - South Africa
- Maharashtra Electricity Regulatory Commission - India
- Coastal Gujarat Power Limited - India
- Energy Development Corp, Philippines
- Manunggal Multi Energi - Indonesia
- South Luzon Thermal Energy Corporation
- Indian Oil Corporation Limited
- Bangladesh Power Developement Board
- Riau Bara Harum - Indonesia
- Bhoruka Overseas - Indonesia
- IEA Clean Coal Centre - UK
- Price Waterhouse Coopers - Russia
- Sree Jayajothi Cements Limited - India
- Kumho Petrochemical, South Korea
- Eastern Coal Council - USA
- PetroVietnam Power Coal Import and Supply Company
- SMC Global Power, Philippines
- Ceylon Electricity Board - Sri Lanka
- Kartika Selabumi Mining - Indonesia
- Australian Commodity Traders Exchange
- Iligan Light & Power Inc, Philippines
- Petron Corporation, Philippines
- Marubeni Corporation - India
- Cement Manufacturers Association - India
- Gujarat Sidhee Cement - India
- San Jose City I Power Corp, Philippines
- Thai Mozambique Logistica
- Parliament of New Zealand
- SMG Consultants - Indonesia
- Romanian Commodities Exchange
- Vizag Seaport Private Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Sical Logistics Limited - India
- Malabar Cements Ltd - India
- IHS Mccloskey Coal Group - USA
- Bharathi Cement Corporation - India
- Petrochimia International Co. Ltd.- Taiwan
- Timah Investasi Mineral - Indoneisa
- Sakthi Sugars Limited - India
- GAC Shipping (India) Pvt Ltd
- Global Coal Blending Company Limited - Australia
- Global Green Power PLC Corporation, Philippines
- Grasim Industreis Ltd - India
- Videocon Industries ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Larsen & Toubro Limited - India
- Wood Mackenzie - Singapore
- Kapuas Tunggal Persada - Indonesia
- Thiess Contractors Indonesia
- ICICI Bank Limited - India
- Bukit Baiduri Energy - Indonesia
- Star Paper Mills Limited - India
- GVK Power & Infra Limited - India
- Economic Council, Georgia
- Krishnapatnam Port Company Ltd. - India
- Attock Cement Pakistan Limited
- Gujarat Mineral Development Corp Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Lanco Infratech Ltd - India
- VISA Power Limited - India
- Kalimantan Lumbung Energi - Indonesia
- London Commodity Brokers - England
- Orica Mining Services - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Singapore Mercantile Exchange
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Ambuja Cements Ltd - India
- PNOC Exploration Corporation - Philippines
- Chettinad Cement Corporation Ltd - India
- Heidelberg Cement - Germany
- Kaltim Prima Coal - Indonesia
- Minerals Council of Australia
- Bayan Resources Tbk. - Indonesia
- Mercuria Energy - Indonesia
- Tata Chemicals Ltd - India
- New Zealand Coal & Carbon
- Standard Chartered Bank - UAE
- Binh Thuan Hamico - Vietnam
- Wilmar Investment Holdings
- Bulk Trading Sa - Switzerland
- Essar Steel Hazira Ltd - India
- Aboitiz Power Corporation - Philippines
- Meenaskhi Energy Private Limited - India
- Bukit Makmur.PT - Indonesia
- Leighton Contractors Pty Ltd - Australia
- TeaM Sual Corporation - Philippines
- Makarim & Taira - Indonesia
- Antam Resourcindo - Indonesia
- Coal and Oil Company - UAE
- Vedanta Resources Plc - India
- Trasteel International SA, Italy
- Intertek Mineral Services - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Planning Commission, India
- Indian Energy Exchange, India
- Toyota Tsusho Corporation, Japan
- McConnell Dowell - Australia
- Gujarat Electricity Regulatory Commission - India
- Directorate Of Revenue Intelligence - India
- Altura Mining Limited, Indonesia
- OPG Power Generation Pvt Ltd - India
- Sindya Power Generating Company Private Ltd
- Jindal Steel & Power Ltd - India
- Ministry of Finance - Indonesia
- Energy Link Ltd, New Zealand
- Indika Energy - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Mercator Lines Limited - India
- Barasentosa Lestari - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Sarangani Energy Corporation, Philippines
- Agrawal Coal Company - India
- Directorate General of MIneral and Coal - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
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