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