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