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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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- London Commodity Brokers - England
- Price Waterhouse Coopers - Russia
- Formosa Plastics Group - Taiwan
- Siam City Cement - Thailand
- Directorate Of Revenue Intelligence - India
- Kaltim Prima Coal - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- GN Power Mariveles Coal Plant, Philippines
- Bayan Resources Tbk. - Indonesia
- Marubeni Corporation - India
- ASAPP Information Group - India
- Krishnapatnam Port Company Ltd. - India
- Sakthi Sugars Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Madhucon Powers Ltd - India
- Ministry of Transport, Egypt
- Toyota Tsusho Corporation, Japan
- Dalmia Cement Bharat India
- Jaiprakash Power Ventures ltd
- Australian Coal Association
- Kartika Selabumi Mining - Indonesia
- Indogreen Group - Indonesia
- SMC Global Power, Philippines
- Energy Development Corp, Philippines
- Grasim Industreis Ltd - India
- Sical Logistics Limited - India
- Minerals Council of Australia
- Karaikal Port Pvt Ltd - India
- IHS Mccloskey Coal Group - USA
- International Coal Ventures Pvt Ltd - India
- Barasentosa Lestari - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Pendopo Energi Batubara - Indonesia
- Romanian Commodities Exchange
- Bangladesh Power Developement Board
- SMG Consultants - Indonesia
- Savvy Resources Ltd - HongKong
- PowerSource Philippines DevCo
- Australian Commodity Traders Exchange
- PTC India Limited - India
- Eastern Energy - Thailand
- Bank of Tokyo Mitsubishi UFJ Ltd
- Semirara Mining and Power Corporation, Philippines
- Bulk Trading Sa - Switzerland
- Cement Manufacturers Association - India
- Sree Jayajothi Cements Limited - India
- Latin American Coal - Colombia
- VISA Power Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Renaissance Capital - South Africa
- Trasteel International SA, Italy
- Tamil Nadu electricity Board
- Anglo American - United Kingdom
- Georgia Ports Authority, United States
- The University of Queensland
- Kalimantan Lumbung Energi - Indonesia
- Coastal Gujarat Power Limited - India
- Antam Resourcindo - Indonesia
- White Energy Company Limited
- Sinarmas Energy and Mining - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Sojitz Corporation - Japan
- Bukit Makmur.PT - Indonesia
- Global Business Power Corporation, Philippines
- AsiaOL BioFuels Corp., Philippines
- The State Trading Corporation of India Ltd
- Kumho Petrochemical, South Korea
- Karbindo Abesyapradhi - Indoneisa
- Oldendorff Carriers - Singapore
- Mercuria Energy - Indonesia
- Central Java Power - Indonesia
- San Jose City I Power Corp, Philippines
- Straits Asia Resources Limited - Singapore
- Indo Tambangraya Megah - Indonesia
- Bharathi Cement Corporation - India
- Chamber of Mines of South Africa
- Offshore Bulk Terminal Pte Ltd, Singapore
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Ministry of Mines - Canada
- Jorong Barutama Greston.PT - Indonesia
- Star Paper Mills Limited - India
- Orica Australia Pty. Ltd.
- Intertek Mineral Services - Indonesia
- Meralco Power Generation, Philippines
- Eastern Coal Council - USA
- Wilmar Investment Holdings
- Orica Mining Services - Indonesia
- Indian Oil Corporation Limited
- Salva Resources Pvt Ltd - India
- Power Finance Corporation Ltd., India
- Jindal Steel & Power Ltd - India
- Kideco Jaya Agung - Indonesia
- Medco Energi Mining Internasional
- ICICI Bank Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Maheswari Brothers Coal Limited - India
- Alfred C Toepfer International GmbH - Germany
- Central Electricity Authority - India
- Bukit Baiduri Energy - Indonesia
- PNOC Exploration Corporation - Philippines
- Ind-Barath Power Infra Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Mjunction Services Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Independent Power Producers Association of India
- Singapore Mercantile Exchange
- South Luzon Thermal Energy Corporation
- Thai Mozambique Logistica
- Aditya Birla Group - India
- Energy Link Ltd, New Zealand
- Simpson Spence & Young - Indonesia
- Timah Investasi Mineral - Indoneisa
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- PetroVietnam Power Coal Import and Supply Company
- Leighton Contractors Pty Ltd - Australia
- Samtan Co., Ltd - South Korea
- TNB Fuel Sdn Bhd - Malaysia
- Maharashtra Electricity Regulatory Commission - India
- Makarim & Taira - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Planning Commission, India
- Parry Sugars Refinery, India
- Heidelberg Cement - Germany
- TeaM Sual Corporation - Philippines
- Deloitte Consulting - India
- Lanco Infratech Ltd - India
- Malabar Cements Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Kobexindo Tractors - Indoneisa
- Vizag Seaport Private Limited - India
- Binh Thuan Hamico - Vietnam
- Indika Energy - Indonesia
- GMR Energy Limited - India
- Ambuja Cements Ltd - India
- Coalindo Energy - Indonesia
- IEA Clean Coal Centre - UK
- SN Aboitiz Power Inc, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Ceylon Electricity Board - Sri Lanka
- Port Waratah Coal Services - Australia
- Uttam Galva Steels Limited - India
- Posco Energy - South Korea
- Bhushan Steel Limited - India
- Chettinad Cement Corporation Ltd - India
- Kepco SPC Power Corporation, Philippines
- Rio Tinto Coal - Australia
- Thiess Contractors Indonesia
- Electricity Generating Authority of Thailand
- Africa Commodities Group - South Africa
- Ministry of Finance - Indonesia
- Borneo Indobara - Indonesia
- CIMB Investment Bank - Malaysia
- Parliament of New Zealand
- The Treasury - Australian Government
- McConnell Dowell - Australia
- Economic Council, Georgia
- Aboitiz Power Corporation - Philippines
- Interocean Group of Companies - India
- Carbofer General Trading SA - India
- Tata Chemicals Ltd - India
- Indonesian Coal Mining Association
- Petron Corporation, Philippines
- Metalloyd Limited - United Kingdom
- Gujarat Sidhee Cement - India
- Edison Trading Spa - Italy
- Globalindo Alam Lestari - Indonesia
- Therma Luzon, Inc, Philippines
- Meenaskhi Energy Private Limited - India
- Coal and Oil Company - UAE
- Kohat Cement Company Ltd. - Pakistan
- Altura Mining Limited, Indonesia
- Goldman Sachs - Singapore
- Baramulti Group, Indonesia
- Xindia Steels Limited - India
- Sarangani Energy Corporation, Philippines
- India Bulls Power Limited - India
- Global Coal Blending Company Limited - Australia
- Videocon Industries ltd - India
- Wood Mackenzie - Singapore
- Rashtriya Ispat Nigam Limited - India
- Standard Chartered Bank - UAE
- Indian Energy Exchange, India
- Semirara Mining Corp, Philippines
- Global Green Power PLC Corporation, Philippines
- Sindya Power Generating Company Private Ltd
- MS Steel International - UAE
- European Bulk Services B.V. - Netherlands
- Manunggal Multi Energi - Indonesia
- OPG Power Generation Pvt Ltd - India
- New Zealand Coal & Carbon
- Riau Bara Harum - Indonesia
- LBH Netherlands Bv - Netherlands
- Banpu Public Company Limited - Thailand
- Siam City Cement PLC, Thailand
- Mercator Lines Limited - India
- Attock Cement Pakistan Limited
- Merrill Lynch Commodities Europe
- Essar Steel Hazira Ltd - India
- GAC Shipping (India) Pvt Ltd
- Commonwealth Bank - Australia
- Bhoruka Overseas - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- GVK Power & Infra Limited - India
- Larsen & Toubro Limited - India
- Agrawal Coal Company - India
- Vijayanagar Sugar Pvt Ltd - India
- CNBM International Corporation - China
- Vedanta Resources Plc - India
- Bukit Asam (Persero) Tbk - Indonesia
- Electricity Authority, New Zealand
- Mintek Dendrill Indonesia
- Bhatia International Limited - India
- Gujarat Electricity Regulatory Commission - India
- Iligan Light & Power Inc, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
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