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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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Wednesday, 31 July 19
INDIA'S 2019 THERMAL COAL IMPORTS SEEN AT 180-185 MLN T - WOODMAC
India is expected to import 180-185 million tonnes of thermal coal in 2019, said Dale Hazelton, head of thermal coal at consultancy Wood Mackenzie. ...
Wednesday, 31 July 19
SHIPPING MARKET INSIGHT - INTERMODAL
It was a fairly busy week in the dry S&P market. Despite the ease of Capesize rates which impacted Panamaxes as well, interest from potential b ...
Sunday, 28 July 19
ULTRAMAX - INDONESIAN COAL CARGOES SAW A 63,000DWT SHIP FIXING DELIVERY FOR A SOUTH CHINA TRIP VIA INDONESIA, REDELIVERY CHINA, AT $11,700 - BALTIC BRIEFING
Capesize
The market was a white knuckled ride this past week as a large downside movement shed value quickly leaving many in bewilderment. The ...
Wednesday, 24 July 19
CHINA TAIYUAN COAL TRANSACTION PRICE INDEX DOWN 0.27 PCT - XINHUA
China Taiyuan coal transaction price index stood at 138.78 points Monday, down 0.27 percent week on week.
The index, released by Chi ...
Wednesday, 24 July 19
SHIPPING MARKET INSIGHT - INTERMODAL
Tonnes of ink has been spent analysing the rebound of the dry bulk market the last weeks with the most representative example being the rising perf ...
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- Kartika Selabumi Mining - Indonesia
- Bulk Trading Sa - Switzerland
- Grasim Industreis Ltd - India
- Orica Australia Pty. Ltd.
- Mercuria Energy - Indonesia
- Borneo Indobara - Indonesia
- Romanian Commodities Exchange
- GAC Shipping (India) Pvt Ltd
- Trasteel International SA, Italy
- Karbindo Abesyapradhi - Indoneisa
- Vizag Seaport Private Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Bukit Makmur.PT - Indonesia
- SMC Global Power, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Miang Besar Coal Terminal - Indonesia
- PNOC Exploration Corporation - Philippines
- Binh Thuan Hamico - Vietnam
- Billiton Holdings Pty Ltd - Australia
- Samtan Co., Ltd - South Korea
- Central Java Power - Indonesia
- Interocean Group of Companies - India
- Videocon Industries ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Global Coal Blending Company Limited - Australia
- AsiaOL BioFuels Corp., Philippines
- European Bulk Services B.V. - Netherlands
- Mjunction Services Limited - India
- Coastal Gujarat Power Limited - India
- Savvy Resources Ltd - HongKong
- PowerSource Philippines DevCo
- SMG Consultants - Indonesia
- Power Finance Corporation Ltd., India
- Krishnapatnam Port Company Ltd. - India
- Sakthi Sugars Limited - India
- Africa Commodities Group - South Africa
- Renaissance Capital - South Africa
- Indika Energy - Indonesia
- Heidelberg Cement - Germany
- Bangladesh Power Developement Board
- Aboitiz Power Corporation - Philippines
- Attock Cement Pakistan Limited
- Thai Mozambique Logistica
- Jaiprakash Power Ventures ltd
- Toyota Tsusho Corporation, Japan
- Intertek Mineral Services - Indonesia
- Therma Luzon, Inc, Philippines
- Madhucon Powers Ltd - India
- Malabar Cements Ltd - India
- Rio Tinto Coal - Australia
- Vijayanagar Sugar Pvt Ltd - India
- Sojitz Corporation - Japan
- Coalindo Energy - Indonesia
- Straits Asia Resources Limited - Singapore
- Cement Manufacturers Association - India
- GMR Energy Limited - India
- Gujarat Sidhee Cement - India
- Kumho Petrochemical, South Korea
- Georgia Ports Authority, United States
- Carbofer General Trading SA - India
- Star Paper Mills Limited - India
- New Zealand Coal & Carbon
- Global Green Power PLC Corporation, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- TeaM Sual Corporation - Philippines
- Timah Investasi Mineral - Indoneisa
- Riau Bara Harum - Indonesia
- Medco Energi Mining Internasional
- Barasentosa Lestari - Indonesia
- Dalmia Cement Bharat India
- Cigading International Bulk Terminal - Indonesia
- International Coal Ventures Pvt Ltd - India
- Anglo American - United Kingdom
- Latin American Coal - Colombia
- Semirara Mining and Power Corporation, Philippines
- Holcim Trading Pte Ltd - Singapore
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Directorate Of Revenue Intelligence - India
- Mercator Lines Limited - India
- Leighton Contractors Pty Ltd - Australia
- Kideco Jaya Agung - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Global Business Power Corporation, Philippines
- Karaikal Port Pvt Ltd - India
- The Treasury - Australian Government
- Gujarat Electricity Regulatory Commission - India
- Ministry of Mines - Canada
- Singapore Mercantile Exchange
- Manunggal Multi Energi - Indonesia
- Ind-Barath Power Infra Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Semirara Mining Corp, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Essar Steel Hazira Ltd - India
- Bayan Resources Tbk. - Indonesia
- White Energy Company Limited
- Agrawal Coal Company - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Ministry of Finance - Indonesia
- CIMB Investment Bank - Malaysia
- Banpu Public Company Limited - Thailand
- Thiess Contractors Indonesia
- Chettinad Cement Corporation Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Bhatia International Limited - India
- LBH Netherlands Bv - Netherlands
- Salva Resources Pvt Ltd - India
- Aditya Birla Group - India
- Planning Commission, India
- Energy Link Ltd, New Zealand
- OPG Power Generation Pvt Ltd - India
- Rashtriya Ispat Nigam Limited - India
- IHS Mccloskey Coal Group - USA
- Pendopo Energi Batubara - Indonesia
- ICICI Bank Limited - India
- Simpson Spence & Young - Indonesia
- Parry Sugars Refinery, India
- Independent Power Producers Association of India
- Meralco Power Generation, Philippines
- Indian Energy Exchange, India
- Oldendorff Carriers - Singapore
- Port Waratah Coal Services - Australia
- McConnell Dowell - Australia
- SN Aboitiz Power Inc, Philippines
- Siam City Cement PLC, Thailand
- Tamil Nadu electricity Board
- Meenaskhi Energy Private Limited - India
- Siam City Cement - Thailand
- Bharathi Cement Corporation - India
- Australian Coal Association
- Parliament of New Zealand
- The University of Queensland
- London Commodity Brokers - England
- Iligan Light & Power Inc, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Deloitte Consulting - India
- Formosa Plastics Group - Taiwan
- PTC India Limited - India
- South Luzon Thermal Energy Corporation
- India Bulls Power Limited - India
- Goldman Sachs - Singapore
- San Jose City I Power Corp, Philippines
- Ministry of Transport, Egypt
- Central Electricity Authority - India
- Indian Oil Corporation Limited
- Australian Commodity Traders Exchange
- Price Waterhouse Coopers - Russia
- Sree Jayajothi Cements Limited - India
- Lanco Infratech Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Bhoruka Overseas - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Larsen & Toubro Limited - India
- The State Trading Corporation of India Ltd
- Kapuas Tunggal Persada - Indonesia
- Jindal Steel & Power Ltd - India
- Kaltim Prima Coal - Indonesia
- Electricity Authority, New Zealand
- Maheswari Brothers Coal Limited - India
- Posco Energy - South Korea
- Indo Tambangraya Megah - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Ambuja Cements Ltd - India
- MS Steel International - UAE
- Indogreen Group - Indonesia
- Xindia Steels Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Energy Development Corp, Philippines
- Antam Resourcindo - Indonesia
- Indonesian Coal Mining Association
- Sindya Power Generating Company Private Ltd
- Jorong Barutama Greston.PT - Indonesia
- Tata Chemicals Ltd - India
- Electricity Generating Authority of Thailand
- Globalindo Alam Lestari - Indonesia
- Coal and Oil Company - UAE
- Kobexindo Tractors - Indoneisa
- Merrill Lynch Commodities Europe
- Baramulti Group, Indonesia
- Standard Chartered Bank - UAE
- Asmin Koalindo Tuhup - Indonesia
- Wilmar Investment Holdings
- Sinarmas Energy and Mining - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Edison Trading Spa - Italy
- Sarangani Energy Corporation, Philippines
- Sical Logistics Limited - India
- Minerals Council of Australia
- Uttam Galva Steels Limited - India
- Commonwealth Bank - Australia
- Makarim & Taira - Indonesia
- Mintek Dendrill Indonesia
- Altura Mining Limited, Indonesia
- GVK Power & Infra Limited - India
- VISA Power Limited - India
- Marubeni Corporation - India
- Bukit Baiduri Energy - Indonesia
- Kepco SPC Power Corporation, Philippines
- Metalloyd Limited - United Kingdom
- CNBM International Corporation - China
- Wood Mackenzie - Singapore
- ASAPP Information Group - India
- Petron Corporation, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Eastern Energy - Thailand
- Vedanta Resources Plc - India
- Chamber of Mines of South Africa
- Orica Mining Services - Indonesia
- Bhushan Steel Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Eastern Coal Council - USA
- Economic Council, Georgia
- IEA Clean Coal Centre - UK
- PetroVietnam Power Coal Import and Supply Company
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