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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, 21 October 19
SHIPPERS CHANGE COURSE AS FUEL RULES TARGET SULPHUR EMISSIONS - WOOD MACKENZIE
The International Maritime Organization (IMO), the industry’s regulator, will require all ships to reduce the level of sulphur in their engin ...
Monday, 21 October 19
COAL TO PLAY SIGNIFICANT ROLE IN SOUTH AFRICA POWER MIX - MINISTER, REUTERS REPORTED
South Africa’s plans for additional power generation over the next decade will involve a variety of energy sources, with coal still playing a ...
Monday, 21 October 19
ULTRAMAX: IN ASIA, TRIPS FROM THE SINGAPORE AREA WERE PAYING BETWEEN $14,000 AND $16,000, DEPENDING ON THE VESSEL SIZE AND DURATION - BALTIC BRIEFING
Capesize
The market traded in a relatively stable supported manner in the Pacific this week while the Atlantic experienced weakening turbulence ...
Friday, 18 October 19
WHY CRUDE TANKER RATES JUST FELL (HALFWAY) BACK TO EARTH - FREIGHT WAVES
Panic drove crude-tanker rates up, very briefly, to mind-bogglingly high assessed levels of around $300,000 per day. Now, the fear factor has been ...
Friday, 18 October 19
SHORT TERM STRENGTH FOR OZ COMMODITIES - BALTIC BRIEFING
Volatility in the global commodity markets is not expected to unduly rattle Australia’s commodity outlook through 2020, but the 2021 picture ...
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- Kalimantan Lumbung Energi - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Sojitz Corporation - Japan
- Siam City Cement PLC, Thailand
- Coal and Oil Company - UAE
- AsiaOL BioFuels Corp., Philippines
- Cigading International Bulk Terminal - Indonesia
- Bangladesh Power Developement Board
- Bukit Makmur.PT - Indonesia
- Australian Coal Association
- Bukit Baiduri Energy - Indonesia
- Standard Chartered Bank - UAE
- Indogreen Group - Indonesia
- Thai Mozambique Logistica
- Eastern Energy - Thailand
- Semirara Mining Corp, Philippines
- Trasteel International SA, Italy
- Planning Commission, India
- Jindal Steel & Power Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Orica Australia Pty. Ltd.
- Independent Power Producers Association of India
- Vizag Seaport Private Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Bhushan Steel Limited - India
- Bayan Resources Tbk. - Indonesia
- Ind-Barath Power Infra Limited - India
- GVK Power & Infra Limited - India
- Indika Energy - Indonesia
- MS Steel International - UAE
- Wilmar Investment Holdings
- Timah Investasi Mineral - Indoneisa
- Samtan Co., Ltd - South Korea
- Straits Asia Resources Limited - Singapore
- ICICI Bank Limited - India
- OPG Power Generation Pvt Ltd - India
- Mercator Lines Limited - India
- Barasentosa Lestari - Indonesia
- CIMB Investment Bank - Malaysia
- Australian Commodity Traders Exchange
- Marubeni Corporation - India
- The State Trading Corporation of India Ltd
- Ministry of Transport, Egypt
- Bharathi Cement Corporation - India
- White Energy Company Limited
- Ceylon Electricity Board - Sri Lanka
- Uttam Galva Steels Limited - India
- Singapore Mercantile Exchange
- Latin American Coal - Colombia
- South Luzon Thermal Energy Corporation
- Semirara Mining and Power Corporation, Philippines
- Mintek Dendrill Indonesia
- Oldendorff Carriers - Singapore
- Grasim Industreis Ltd - India
- Star Paper Mills Limited - India
- Romanian Commodities Exchange
- Metalloyd Limited - United Kingdom
- Central Java Power - Indonesia
- Price Waterhouse Coopers - Russia
- Gujarat Electricity Regulatory Commission - India
- San Jose City I Power Corp, Philippines
- Ministry of Finance - Indonesia
- Africa Commodities Group - South Africa
- Edison Trading Spa - Italy
- Bukit Asam (Persero) Tbk - Indonesia
- Commonwealth Bank - Australia
- Vedanta Resources Plc - India
- PowerSource Philippines DevCo
- Toyota Tsusho Corporation, Japan
- SMC Global Power, Philippines
- SMG Consultants - Indonesia
- Xindia Steels Limited - India
- Georgia Ports Authority, United States
- Eastern Coal Council - USA
- Bulk Trading Sa - Switzerland
- Parliament of New Zealand
- Pipit Mutiara Jaya. PT, Indonesia
- Borneo Indobara - Indonesia
- IEA Clean Coal Centre - UK
- Merrill Lynch Commodities Europe
- Maheswari Brothers Coal Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Larsen & Toubro Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Coastal Gujarat Power Limited - India
- Goldman Sachs - Singapore
- SN Aboitiz Power Inc, Philippines
- Attock Cement Pakistan Limited
- Minerals Council of Australia
- Tata Chemicals Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Aboitiz Power Corporation - Philippines
- Agrawal Coal Company - India
- Pendopo Energi Batubara - Indonesia
- Riau Bara Harum - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Orica Mining Services - Indonesia
- Rio Tinto Coal - Australia
- PetroVietnam Power Coal Import and Supply Company
- Petron Corporation, Philippines
- Thiess Contractors Indonesia
- Parry Sugars Refinery, India
- Directorate Of Revenue Intelligence - India
- GAC Shipping (India) Pvt Ltd
- VISA Power Limited - India
- Siam City Cement - Thailand
- Essar Steel Hazira Ltd - India
- Global Green Power PLC Corporation, Philippines
- ASAPP Information Group - India
- Makarim & Taira - Indonesia
- New Zealand Coal & Carbon
- Formosa Plastics Group - Taiwan
- Bank of Tokyo Mitsubishi UFJ Ltd
- Economic Council, Georgia
- Dalmia Cement Bharat India
- The University of Queensland
- Wood Mackenzie - Singapore
- Deloitte Consulting - India
- Globalindo Alam Lestari - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Krishnapatnam Port Company Ltd. - India
- Indonesian Coal Mining Association
- Leighton Contractors Pty Ltd - Australia
- Rashtriya Ispat Nigam Limited - India
- Meralco Power Generation, Philippines
- Kepco SPC Power Corporation, Philippines
- Electricity Generating Authority of Thailand
- Iligan Light & Power Inc, Philippines
- Malabar Cements Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Karaikal Port Pvt Ltd - India
- Gujarat Sidhee Cement - India
- Aditya Birla Group - India
- Chettinad Cement Corporation Ltd - India
- Indian Energy Exchange, India
- Carbofer General Trading SA - India
- Global Coal Blending Company Limited - Australia
- Power Finance Corporation Ltd., India
- Indo Tambangraya Megah - Indonesia
- Bhatia International Limited - India
- Ambuja Cements Ltd - India
- Meenaskhi Energy Private Limited - India
- Cement Manufacturers Association - India
- PNOC Exploration Corporation - Philippines
- Miang Besar Coal Terminal - Indonesia
- Renaissance Capital - South Africa
- Medco Energi Mining Internasional
- Jaiprakash Power Ventures ltd
- GMR Energy Limited - India
- Sical Logistics Limited - India
- CNBM International Corporation - China
- Altura Mining Limited, Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Mjunction Services Limited - India
- Savvy Resources Ltd - HongKong
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Kaltim Prima Coal - Indonesia
- Madhucon Powers Ltd - India
- Kartika Selabumi Mining - Indonesia
- PTC India Limited - India
- Heidelberg Cement - Germany
- Coalindo Energy - Indonesia
- Global Business Power Corporation, Philippines
- Salva Resources Pvt Ltd - India
- Manunggal Multi Energi - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- LBH Netherlands Bv - Netherlands
- Mercuria Energy - Indonesia
- Posco Energy - South Korea
- Tamil Nadu electricity Board
- Billiton Holdings Pty Ltd - Australia
- India Bulls Power Limited - India
- Lanco Infratech Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Jorong Barutama Greston.PT - Indonesia
- London Commodity Brokers - England
- Interocean Group of Companies - India
- Antam Resourcindo - Indonesia
- TeaM Sual Corporation - Philippines
- Sinarmas Energy and Mining - Indonesia
- Sakthi Sugars Limited - India
- Bhoruka Overseas - Indonesia
- Intertek Mineral Services - Indonesia
- Electricity Authority, New Zealand
- Holcim Trading Pte Ltd - Singapore
- Indian Oil Corporation Limited
- Energy Development Corp, Philippines
- Sree Jayajothi Cements Limited - India
- Port Waratah Coal Services - Australia
- Gujarat Mineral Development Corp Ltd - India
- Energy Link Ltd, New Zealand
- Simpson Spence & Young - Indonesia
- The Treasury - Australian Government
- Videocon Industries ltd - India
- Chamber of Mines of South Africa
- Neyveli Lignite Corporation Ltd, - India
- Sindya Power Generating Company Private Ltd
- Baramulti Group, Indonesia
- International Coal Ventures Pvt Ltd - India
- Kumho Petrochemical, South Korea
- Ministry of Mines - Canada
- Banpu Public Company Limited - Thailand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Binh Thuan Hamico - Vietnam
- Karbindo Abesyapradhi - Indoneisa
- Central Electricity Authority - India
- Therma Luzon, Inc, Philippines
- European Bulk Services B.V. - Netherlands
- Anglo American - United Kingdom
- IHS Mccloskey Coal Group - USA
- Kideco Jaya Agung - Indonesia
- Sarangani Energy Corporation, Philippines
- Kobexindo Tractors - Indoneisa
- McConnell Dowell - Australia
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