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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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Monday, 18 November 19
SUPRAMAX: IN THE INDONESIAN COAL BUSINESS, A 58KDWT VESSEL FIXED DELIVERY PHILIPPINES, REDELIVERY INDIA AT CLOSE TO $8,000 - BALTIC BRIEFING
Capesize
For most of the week the rates were nudging up under a flurry of activity in the Pacific as levels for the West Australia to China C5 ...
Saturday, 16 November 19
LIFE AFTER FOSSIL FUELS: THE DAYS OF OIL AND COAL TRANSPORTATION ARE NUMBERED - BALTIC EXCHANGE
With the world fiercely focused on a decarbonised future, fossil fuel movers and traders might rightly be reconsidering their future. But cast a wi ...
Saturday, 16 November 19
OIL MARKET REPORT: PAUSING TO REFLECT - IEA
Global oil demand in 3Q19 increased by 1.1 mb/d year-on-year (y-o-y), more than double the 435 kb/d seen in 2Q19. China’s demand increased by ...
Friday, 15 November 19
RISING ENERGY DEMAND IN SOUTHEAST ASIA TO BE MET AND SUPPORTED BY COAL - WORLD COAL
Last week the International Energy Agency (IEA) released its semi-annual Southeast Asia Energy Outlook report which outlines the latest insights in ...
Thursday, 14 November 19
EIA EXPECTS U.S. STEAM COAL EXPORTS TO FACE INCREASING COMPETITION FROM EASTERN EUROPEAN SOURCES
EIA expects total U.S. coal production in 2019 to total 698 million short tons (MMst), an 8% decrease from the 2018 level of 756 MMst. The decline ...
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- Toyota Tsusho Corporation, Japan
- Neyveli Lignite Corporation Ltd, - India
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- Bahari Cakrawala Sebuku - Indonesia
- Interocean Group of Companies - India
- CNBM International Corporation - China
- Merrill Lynch Commodities Europe
- Bhoruka Overseas - Indonesia
- Sree Jayajothi Cements Limited - India
- Marubeni Corporation - India
- Latin American Coal - Colombia
- Sinarmas Energy and Mining - Indonesia
- Vedanta Resources Plc - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Alfred C Toepfer International GmbH - Germany
- Indo Tambangraya Megah - Indonesia
- Pendopo Energi Batubara - Indonesia
- Iligan Light & Power Inc, Philippines
- Meralco Power Generation, Philippines
- Aboitiz Power Corporation - Philippines
- Samtan Co., Ltd - South Korea
- Trasteel International SA, Italy
- Coalindo Energy - Indonesia
- Power Finance Corporation Ltd., India
- Semirara Mining Corp, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Savvy Resources Ltd - HongKong
- Price Waterhouse Coopers - Russia
- Rio Tinto Coal - Australia
- SMG Consultants - Indonesia
- Central Electricity Authority - India
- Jorong Barutama Greston.PT - Indonesia
- Cement Manufacturers Association - India
- Baramulti Group, Indonesia
- Indonesian Coal Mining Association
- Mercator Lines Limited - India
- Attock Cement Pakistan Limited
- Economic Council, Georgia
- San Jose City I Power Corp, Philippines
- Bhushan Steel Limited - India
- Anglo American - United Kingdom
- Kapuas Tunggal Persada - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Karaikal Port Pvt Ltd - India
- Electricity Authority, New Zealand
- Rashtriya Ispat Nigam Limited - India
- Lanco Infratech Ltd - India
- Energy Development Corp, Philippines
- Larsen & Toubro Limited - India
- Banpu Public Company Limited - Thailand
- Globalindo Alam Lestari - Indonesia
- Global Business Power Corporation, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Intertek Mineral Services - Indonesia
- Bayan Resources Tbk. - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Vizag Seaport Private Limited - India
- European Bulk Services B.V. - Netherlands
- Ministry of Transport, Egypt
- Cigading International Bulk Terminal - Indonesia
- SN Aboitiz Power Inc, Philippines
- Kaltim Prima Coal - Indonesia
- Sarangani Energy Corporation, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- ICICI Bank Limited - India
- Mintek Dendrill Indonesia
- Xindia Steels Limited - India
- Holcim Trading Pte Ltd - Singapore
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Gujarat Sidhee Cement - India
- CIMB Investment Bank - Malaysia
- Indian Oil Corporation Limited
- Vijayanagar Sugar Pvt Ltd - India
- Australian Commodity Traders Exchange
- Star Paper Mills Limited - India
- Chamber of Mines of South Africa
- Medco Energi Mining Internasional
- GN Power Mariveles Coal Plant, Philippines
- OPG Power Generation Pvt Ltd - India
- Sakthi Sugars Limited - India
- Wood Mackenzie - Singapore
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kideco Jaya Agung - Indonesia
- Bangladesh Power Developement Board
- Riau Bara Harum - Indonesia
- Global Green Power PLC Corporation, Philippines
- Romanian Commodities Exchange
- Oldendorff Carriers - Singapore
- Petrochimia International Co. Ltd.- Taiwan
- The University of Queensland
- Borneo Indobara - Indonesia
- Independent Power Producers Association of India
- Simpson Spence & Young - Indonesia
- Indian Energy Exchange, India
- Kalimantan Lumbung Energi - Indonesia
- Siam City Cement - Thailand
- PetroVietnam Power Coal Import and Supply Company
- Aditya Birla Group - India
- Karbindo Abesyapradhi - Indoneisa
- India Bulls Power Limited - India
- Kartika Selabumi Mining - Indonesia
- GAC Shipping (India) Pvt Ltd
- Grasim Industreis Ltd - India
- LBH Netherlands Bv - Netherlands
- Indogreen Group - Indonesia
- Tata Chemicals Ltd - India
- Energy Link Ltd, New Zealand
- Binh Thuan Hamico - Vietnam
- Bharathi Cement Corporation - India
- Krishnapatnam Port Company Ltd. - India
- Ambuja Cements Ltd - India
- Siam City Cement PLC, Thailand
- Miang Besar Coal Terminal - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Heidelberg Cement - Germany
- Wilmar Investment Holdings
- Parry Sugars Refinery, India
- Electricity Generating Authority of Thailand
- Ministry of Mines - Canada
- Georgia Ports Authority, United States
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Eastern Energy - Thailand
- Jindal Steel & Power Ltd - India
- Makarim & Taira - Indonesia
- Agrawal Coal Company - India
- Thiess Contractors Indonesia
- Eastern Coal Council - USA
- Essar Steel Hazira Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Ministry of Finance - Indonesia
- Kumho Petrochemical, South Korea
- Indika Energy - Indonesia
- Orica Australia Pty. Ltd.
- Madhucon Powers Ltd - India
- TeaM Sual Corporation - Philippines
- Leighton Contractors Pty Ltd - Australia
- IEA Clean Coal Centre - UK
- ASAPP Information Group - India
- Sojitz Corporation - Japan
- Dalmia Cement Bharat India
- London Commodity Brokers - England
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Coastal Gujarat Power Limited - India
- VISA Power Limited - India
- Planning Commission, India
- Standard Chartered Bank - UAE
- Carbofer General Trading SA - India
- Malabar Cements Ltd - India
- Chettinad Cement Corporation Ltd - India
- The State Trading Corporation of India Ltd
- IHS Mccloskey Coal Group - USA
- Billiton Holdings Pty Ltd - Australia
- Maheswari Brothers Coal Limited - India
- Ind-Barath Power Infra Limited - India
- Bhatia International Limited - India
- Singapore Mercantile Exchange
- Petron Corporation, Philippines
- Straits Asia Resources Limited - Singapore
- AsiaOL BioFuels Corp., Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Directorate General of MIneral and Coal - Indonesia
- Salva Resources Pvt Ltd - India
- Commonwealth Bank - Australia
- Africa Commodities Group - South Africa
- Goldman Sachs - Singapore
- Antam Resourcindo - Indonesia
- International Coal Ventures Pvt Ltd - India
- Altura Mining Limited, Indonesia
- Parliament of New Zealand
- Timah Investasi Mineral - Indoneisa
- SMC Global Power, Philippines
- Metalloyd Limited - United Kingdom
- New Zealand Coal & Carbon
- Thai Mozambique Logistica
- Uttam Galva Steels Limited - India
- Central Java Power - Indonesia
- Jaiprakash Power Ventures ltd
- PTC India Limited - India
- Posco Energy - South Korea
- White Energy Company Limited
- PowerSource Philippines DevCo
- Directorate Of Revenue Intelligence - India
- Coal and Oil Company - UAE
- Meenaskhi Energy Private Limited - India
- Renaissance Capital - South Africa
- The Treasury - Australian Government
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Global Coal Blending Company Limited - Australia
- Orica Mining Services - Indonesia
- PNOC Exploration Corporation - Philippines
- Bulk Trading Sa - Switzerland
- Kepco SPC Power Corporation, Philippines
- Sical Logistics Limited - India
- Bukit Makmur.PT - Indonesia
- Australian Coal Association
- Sindya Power Generating Company Private Ltd
- Mercuria Energy - Indonesia
- GVK Power & Infra Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Formosa Plastics Group - Taiwan
- Gujarat Electricity Regulatory Commission - India
- Manunggal Multi Energi - Indonesia
- South Luzon Thermal Energy Corporation
- McConnell Dowell - Australia
- Bukit Baiduri Energy - Indonesia
- Deloitte Consulting - India
- GMR Energy Limited - India
- Minerals Council of Australia
- Therma Luzon, Inc, Philippines
- Port Waratah Coal Services - Australia
- Kobexindo Tractors - Indoneisa
- Videocon Industries ltd - India
- MS Steel International - UAE
- Semirara Mining and Power Corporation, Philippines
- Barasentosa Lestari - Indonesia
- Tamil Nadu electricity Board
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