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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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Tuesday, 17 September 19
THE DRY BULK FREIGHT MARKET IS ALREADY ON A DOWNWARD CORRECTION - ALLIED
Here we are again, just a breath before the final quarter of the year. Under typical circumstances and on the basis of what we have seen during the ...
Monday, 16 September 19
COLOMBIAN COAL PRODUCTION TO FALL 5% THIS YEAR, MINING GROUP SAYS - REUTERS
Colombia’s coal production will decline to around 80 million tonnes in 2019, nearly 5% below last year’s, because of low prices and dro ...
Monday, 16 September 19
THE COAL-D SHOULDER? - BALTIC EXCHANGE
Good fortune and the number 13 don’t usually go hand in hand, but when it comes to coal, 2013 actually seems to have been the commodity&rsquo ...
Monday, 16 September 19
SCRUBBERS AND FUEL PROFIT SHARE CLAUSES - CLYDE&CO
From 1 January 2020, Regulation 14 of MARPOL Annex VI provides that the sulphur content in fuel oil used on board ships shall be reduced from a max ...
Monday, 16 September 19
KOREA SOUTH-EAST POWER INVITES BIDS FOR MAX 1,290,000 METRIC TONS OF STEAMING COAL
COALspot.com: South Korea’s Korea East-West Power Co. Ltd has issued an international tender for total 1,290,000 Metric Tons steam coal.
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- Salva Resources Pvt Ltd - India
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- Coal and Oil Company - UAE
- Directorate General of MIneral and Coal - Indonesia
- Jindal Steel & Power Ltd - India
- IHS Mccloskey Coal Group - USA
- Larsen & Toubro Limited - India
- Planning Commission, India
- Central Java Power - Indonesia
- Romanian Commodities Exchange
- Baramulti Group, Indonesia
- Bhatia International Limited - India
- Kumho Petrochemical, South Korea
- Wilmar Investment Holdings
- Deloitte Consulting - India
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- Straits Asia Resources Limited - Singapore
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- Coalindo Energy - Indonesia
- New Zealand Coal & Carbon
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- Kartika Selabumi Mining - Indonesia
- Sojitz Corporation - Japan
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- Indo Tambangraya Megah - Indonesia
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- European Bulk Services B.V. - Netherlands
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- LBH Netherlands Bv - Netherlands
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- Bahari Cakrawala Sebuku - Indonesia
- Meenaskhi Energy Private Limited - India
- Ceylon Electricity Board - Sri Lanka
- South Luzon Thermal Energy Corporation
- Indian Energy Exchange, India
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- Trasteel International SA, Italy
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- Banpu Public Company Limited - Thailand
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- AsiaOL BioFuels Corp., Philippines
- Parliament of New Zealand
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- Semirara Mining Corp, Philippines
- Ministry of Transport, Egypt
- Malabar Cements Ltd - India
- Minerals Council of Australia
- Carbofer General Trading SA - India
- IEA Clean Coal Centre - UK
- Riau Bara Harum - Indonesia
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- Bayan Resources Tbk. - Indonesia
- Heidelberg Cement - Germany
- Power Finance Corporation Ltd., India
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- McConnell Dowell - Australia
- India Bulls Power Limited - India
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- Price Waterhouse Coopers - Russia
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- PTC India Limited - India
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- Indonesian Coal Mining Association
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- Economic Council, Georgia
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- Meralco Power Generation, Philippines
- Goldman Sachs - Singapore
- Tata Chemicals Ltd - India
- Grasim Industreis Ltd - India
- Bukit Baiduri Energy - Indonesia
- Dalmia Cement Bharat India
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- Jorong Barutama Greston.PT - Indonesia
- Central Electricity Authority - India
- Global Green Power PLC Corporation, Philippines
- International Coal Ventures Pvt Ltd - India
- Samtan Co., Ltd - South Korea
- Aboitiz Power Corporation - Philippines
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- Posco Energy - South Korea
- Vizag Seaport Private Limited - India
- Thiess Contractors Indonesia
- Ind-Barath Power Infra Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Kepco SPC Power Corporation, Philippines
- Directorate Of Revenue Intelligence - India
- Bhoruka Overseas - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Edison Trading Spa - Italy
- Wood Mackenzie - Singapore
- Offshore Bulk Terminal Pte Ltd, Singapore
- Siam City Cement PLC, Thailand
- Commonwealth Bank - Australia
- Tamil Nadu electricity Board
- Petron Corporation, Philippines
- Cigading International Bulk Terminal - Indonesia
- Agrawal Coal Company - India
- Jaiprakash Power Ventures ltd
- Thai Mozambique Logistica
- Bank of Tokyo Mitsubishi UFJ Ltd
- VISA Power Limited - India
- Bharathi Cement Corporation - India
- Africa Commodities Group - South Africa
- Ministry of Mines - Canada
- Indogreen Group - Indonesia
- Siam City Cement - Thailand
- Sree Jayajothi Cements Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Barasentosa Lestari - Indonesia
- Anglo American - United Kingdom
- Savvy Resources Ltd - HongKong
- Madhucon Powers Ltd - India
- Standard Chartered Bank - UAE
- Singapore Mercantile Exchange
- Vedanta Resources Plc - India
- Krishnapatnam Port Company Ltd. - India
- Karaikal Port Pvt Ltd - India
- Ministry of Finance - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Vijayanagar Sugar Pvt Ltd - India
- Orica Australia Pty. Ltd.
- The Treasury - Australian Government
- Merrill Lynch Commodities Europe
- Holcim Trading Pte Ltd - Singapore
- Antam Resourcindo - Indonesia
- Mercator Lines Limited - India
- Kaltim Prima Coal - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Electricity Authority, New Zealand
- Bukit Makmur.PT - Indonesia
- Energy Link Ltd, New Zealand
- Australian Coal Association
- Aditya Birla Group - India
- Electricity Generating Authority of Thailand
- Chamber of Mines of South Africa
- London Commodity Brokers - England
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Independent Power Producers Association of India
- Eastern Energy - Thailand
- CIMB Investment Bank - Malaysia
- Essar Steel Hazira Ltd - India
- Eastern Coal Council - USA
- Bukit Asam (Persero) Tbk - Indonesia
- GVK Power & Infra Limited - India
- Marubeni Corporation - India
- Makarim & Taira - Indonesia
- ICICI Bank Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Karbindo Abesyapradhi - Indoneisa
- PowerSource Philippines DevCo
- Binh Thuan Hamico - Vietnam
- Port Waratah Coal Services - Australia
- Rio Tinto Coal - Australia
- Interocean Group of Companies - India
- Timah Investasi Mineral - Indoneisa
- Formosa Plastics Group - Taiwan
- SMC Global Power, Philippines
- The State Trading Corporation of India Ltd
- Leighton Contractors Pty Ltd - Australia
- Manunggal Multi Energi - Indonesia
- Mintek Dendrill Indonesia
- Intertek Mineral Services - Indonesia
- Georgia Ports Authority, United States
- Maheswari Brothers Coal Limited - India
- Rashtriya Ispat Nigam Limited - India
- Alfred C Toepfer International GmbH - Germany
- White Energy Company Limited
- Neyveli Lignite Corporation Ltd, - India
- Global Coal Blending Company Limited - Australia
- Pendopo Energi Batubara - Indonesia
- Bangladesh Power Developement Board
- Indian Oil Corporation Limited
- Orica Mining Services - Indonesia
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- SMG Consultants - Indonesia
- Australian Commodity Traders Exchange
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- Sindya Power Generating Company Private Ltd
- PNOC Exploration Corporation - Philippines
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- Pipit Mutiara Jaya. PT, Indonesia
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