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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, 24 October 19
AUSTRALIA'S HOPES TO EXPAND COAL EXPORTS IN SOUTH-EAST ASIA 'DELUSIONAL', EXPERTS SAY - THE GUARDIAN
The number of new coal-fired power plants starting construction across south-east Asia has fallen markedly over the past two years as Australia has ...
Thursday, 24 October 19
PANAMAX: NEGATIVE SENTIMENT IN THE MARKET AS IT CONTINUES TO WEAKEN - FEARNLEYS
Capesize
The market has continued to slide the last week, as lack of fresh requirements and a slight oversupply of tonnage heading towards Sout ...
Wednesday, 23 October 19
CHINA'S 2019 COAL IMPORTS SET TO RISE MORE THAN 10%: ANALYSTS - REUTERS
China, the world’s top coal buyer, is on track to boost imports of the fuel by more than 10% this year, traders and analysts said on Tuesday, ...
Wednesday, 23 October 19
SHIPPING MARKET INSIGHT - INTERMODAL
Moving closer to the end of the year, we are facing what the market was expecting for quite a while, the ship repair sector booming with the shipya ...
Tuesday, 22 October 19
DRY BULK: DESPITE THE DOWNWARD CORRECTION NOTED OVER THE PAST MONTH, RATES ARE STILL HOLDING OFF AT FAVORABLE LEVELS - ALLIED SHIPPING
Despite the downward correction that has been noted in the dry bulk market over the past month, rates are still holding off at favorable levels. Ev ...
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- Barasentosa Lestari - Indonesia
- International Coal Ventures Pvt Ltd - India
- Thai Mozambique Logistica
- IEA Clean Coal Centre - UK
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Indo Tambangraya Megah - Indonesia
- Coal and Oil Company - UAE
- Star Paper Mills Limited - India
- Wood Mackenzie - Singapore
- Vizag Seaport Private Limited - India
- Cement Manufacturers Association - India
- Australian Commodity Traders Exchange
- Kideco Jaya Agung - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Trasteel International SA, Italy
- Kapuas Tunggal Persada - Indonesia
- Kobexindo Tractors - Indoneisa
- Tata Chemicals Ltd - India
- SN Aboitiz Power Inc, Philippines
- Maheswari Brothers Coal Limited - India
- PowerSource Philippines DevCo
- Sinarmas Energy and Mining - Indonesia
- Karaikal Port Pvt Ltd - India
- Iligan Light & Power Inc, Philippines
- OPG Power Generation Pvt Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- CIMB Investment Bank - Malaysia
- Orica Mining Services - Indonesia
- Meenaskhi Energy Private Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Makarim & Taira - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Edison Trading Spa - Italy
- Binh Thuan Hamico - Vietnam
- Globalindo Alam Lestari - Indonesia
- Bayan Resources Tbk. - Indonesia
- Chettinad Cement Corporation Ltd - India
- GAC Shipping (India) Pvt Ltd
- Kartika Selabumi Mining - Indonesia
- ASAPP Information Group - India
- Sree Jayajothi Cements Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Altura Mining Limited, Indonesia
- MS Steel International - UAE
- Mercator Lines Limited - India
- Wilmar Investment Holdings
- Vedanta Resources Plc - India
- Jorong Barutama Greston.PT - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Alfred C Toepfer International GmbH - Germany
- Eastern Coal Council - USA
- Borneo Indobara - Indonesia
- Grasim Industreis Ltd - India
- Banpu Public Company Limited - Thailand
- TeaM Sual Corporation - Philippines
- GVK Power & Infra Limited - India
- Sical Logistics Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Pendopo Energi Batubara - Indonesia
- PTC India Limited - India
- Gujarat Electricity Regulatory Commission - India
- Toyota Tsusho Corporation, Japan
- Kalimantan Lumbung Energi - Indonesia
- Larsen & Toubro Limited - India
- Chamber of Mines of South Africa
- Central Java Power - Indonesia
- Sarangani Energy Corporation, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Planning Commission, India
- Metalloyd Limited - United Kingdom
- ICICI Bank Limited - India
- White Energy Company Limited
- SMC Global Power, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Indian Energy Exchange, India
- Bhushan Steel Limited - India
- Orica Australia Pty. Ltd.
- VISA Power Limited - India
- Ambuja Cements Ltd - India
- South Luzon Thermal Energy Corporation
- Bangladesh Power Developement Board
- Merrill Lynch Commodities Europe
- Malabar Cements Ltd - India
- Intertek Mineral Services - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Romanian Commodities Exchange
- Petron Corporation, Philippines
- Kaltim Prima Coal - Indonesia
- Essar Steel Hazira Ltd - India
- Bharathi Cement Corporation - India
- Sindya Power Generating Company Private Ltd
- Indonesian Coal Mining Association
- Indogreen Group - Indonesia
- Independent Power Producers Association of India
- Indian Oil Corporation Limited
- Energy Link Ltd, New Zealand
- Therma Luzon, Inc, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sakthi Sugars Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Bahari Cakrawala Sebuku - Indonesia
- Agrawal Coal Company - India
- Rashtriya Ispat Nigam Limited - India
- Mintek Dendrill Indonesia
- GMR Energy Limited - India
- Posco Energy - South Korea
- Antam Resourcindo - Indonesia
- Parliament of New Zealand
- Krishnapatnam Port Company Ltd. - India
- Jaiprakash Power Ventures ltd
- Miang Besar Coal Terminal - Indonesia
- Uttam Galva Steels Limited - India
- Bhoruka Overseas - Indonesia
- Rio Tinto Coal - Australia
- Dalmia Cement Bharat India
- Marubeni Corporation - India
- Bukit Makmur.PT - Indonesia
- McConnell Dowell - Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Riau Bara Harum - Indonesia
- Attock Cement Pakistan Limited
- Meralco Power Generation, Philippines
- Semirara Mining and Power Corporation, Philippines
- Siam City Cement PLC, Thailand
- Economic Council, Georgia
- Price Waterhouse Coopers - Russia
- Vijayanagar Sugar Pvt Ltd - India
- Central Electricity Authority - India
- Salva Resources Pvt Ltd - India
- PNOC Exploration Corporation - Philippines
- Savvy Resources Ltd - HongKong
- Kepco SPC Power Corporation, Philippines
- Videocon Industries ltd - India
- Leighton Contractors Pty Ltd - Australia
- PetroVietnam Power Coal Import and Supply Company
- Ministry of Transport, Egypt
- Aditya Birla Group - India
- Billiton Holdings Pty Ltd - Australia
- Heidelberg Cement - Germany
- Petrochimia International Co. Ltd.- Taiwan
- Ministry of Finance - Indonesia
- Lanco Infratech Ltd - India
- Semirara Mining Corp, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Directorate Of Revenue Intelligence - India
- Baramulti Group, Indonesia
- Goldman Sachs - Singapore
- Africa Commodities Group - South Africa
- Power Finance Corporation Ltd., India
- CNBM International Corporation - China
- Global Green Power PLC Corporation, Philippines
- Bulk Trading Sa - Switzerland
- Anglo American - United Kingdom
- Ministry of Mines - Canada
- Oldendorff Carriers - Singapore
- Ceylon Electricity Board - Sri Lanka
- LBH Netherlands Bv - Netherlands
- Latin American Coal - Colombia
- The State Trading Corporation of India Ltd
- Aboitiz Power Corporation - Philippines
- New Zealand Coal & Carbon
- Manunggal Multi Energi - Indonesia
- Jindal Steel & Power Ltd - India
- Renaissance Capital - South Africa
- Coastal Gujarat Power Limited - India
- Bhatia International Limited - India
- Standard Chartered Bank - UAE
- The Treasury - Australian Government
- Straits Asia Resources Limited - Singapore
- Madhucon Powers Ltd - India
- Medco Energi Mining Internasional
- San Jose City I Power Corp, Philippines
- Minerals Council of Australia
- India Bulls Power Limited - India
- Eastern Energy - Thailand
- Kohat Cement Company Ltd. - Pakistan
- Mjunction Services Limited - India
- Commonwealth Bank - Australia
- Interocean Group of Companies - India
- Mercuria Energy - Indonesia
- Carbofer General Trading SA - India
- Thiess Contractors Indonesia
- Kumho Petrochemical, South Korea
- Siam City Cement - Thailand
- Samtan Co., Ltd - South Korea
- Tamil Nadu electricity Board
- Electricity Authority, New Zealand
- Bukit Baiduri Energy - Indonesia
- Global Coal Blending Company Limited - Australia
- Formosa Plastics Group - Taiwan
- Port Waratah Coal Services - Australia
- IHS Mccloskey Coal Group - USA
- Ind-Barath Power Infra Limited - India
- Deloitte Consulting - India
- Bukit Asam (Persero) Tbk - Indonesia
- Electricity Generating Authority of Thailand
- The University of Queensland
- Timah Investasi Mineral - Indoneisa
- Cigading International Bulk Terminal - Indonesia
- Holcim Trading Pte Ltd - Singapore
- London Commodity Brokers - England
- Georgia Ports Authority, United States
- Australian Coal Association
- Sojitz Corporation - Japan
- Xindia Steels Limited - India
- Coalindo Energy - Indonesia
- Singapore Mercantile Exchange
- Global Business Power Corporation, Philippines
- European Bulk Services B.V. - Netherlands
- Energy Development Corp, Philippines
- Parry Sugars Refinery, India
- SMG Consultants - Indonesia
- Simpson Spence & Young - Indonesia
- Indika Energy - Indonesia
- Gujarat Sidhee Cement - India
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