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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, 18 June 19
TANKER SHIPPING: WHILE WE WAIT FOR 2020 TO KICK IN, IT'S ALL ABOUT POLITICS - BIMCO
Demand drivers and freight rates
Iran, Libya and Venezuela face export limitations because of sanctions and internal political troubles. At the s ...
Saturday, 15 June 19
SUPRAMAX: A 58,000-TONNER, OPEN QINGDAO, WAS BOOKED TO REDELIVER IN EAST COAST INDIA AT $6,500 - BALTIC BRIEFING
Capesize
The market closed on a quiet Friday last week after a few hectic days of mid-week trading. Trade routes from Brazil to the Far East we ...
Friday, 14 June 19
PANAMAX: OUTLOOK IS MIXED - FERNLEYS
Capesize
Sentiment changed to a more nervous tone as pacific cargo volumes failed to deliver as expected, however latest activity indicates res ...
Friday, 14 June 19
ELECTRONIC (PAPERLESS) TRADING - SKULD
KNOWLEDGE TO ELEVATE
Electronic Shipping Solutions: Bolero International Ltd, E-Title Authority Pte Ltd, Global Share S.A. (edoxOnline platfor ...
Wednesday, 12 June 19
KOSPO INVITES BIDS FOR 140,000 MT OF 4,600 NCV COAL FOR SEP. 2019 LOADING
COALspot.com: South Korea state-owned utility Korea Southern Power Co. Ltd (KOSPO) issued a tender for 140,000 MT of minimum 4,600 kcal/kg NCV coal ...
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- Bukit Asam (Persero) Tbk - Indonesia
- Dalmia Cement Bharat India
- Coalindo Energy - Indonesia
- Kobexindo Tractors - Indoneisa
- Bhatia International Limited - India
- Carbofer General Trading SA - India
- PTC India Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Attock Cement Pakistan Limited
- Deloitte Consulting - India
- Heidelberg Cement - Germany
- Oldendorff Carriers - Singapore
- Indian Energy Exchange, India
- CIMB Investment Bank - Malaysia
- Ceylon Electricity Board - Sri Lanka
- Eastern Energy - Thailand
- Anglo American - United Kingdom
- Coal and Oil Company - UAE
- Essar Steel Hazira Ltd - India
- Semirara Mining Corp, Philippines
- Electricity Authority, New Zealand
- Indonesian Coal Mining Association
- SN Aboitiz Power Inc, Philippines
- Singapore Mercantile Exchange
- Lanco Infratech Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bukit Makmur.PT - Indonesia
- Toyota Tsusho Corporation, Japan
- SMG Consultants - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Parry Sugars Refinery, India
- Marubeni Corporation - India
- Riau Bara Harum - Indonesia
- GVK Power & Infra Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Goldman Sachs - Singapore
- Renaissance Capital - South Africa
- Kaltim Prima Coal - Indonesia
- Sakthi Sugars Limited - India
- PowerSource Philippines DevCo
- Formosa Plastics Group - Taiwan
- Mjunction Services Limited - India
- Vizag Seaport Private Limited - India
- Latin American Coal - Colombia
- Larsen & Toubro Limited - India
- Leighton Contractors Pty Ltd - Australia
- AsiaOL BioFuels Corp., Philippines
- Commonwealth Bank - Australia
- Indogreen Group - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Jindal Steel & Power Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Mintek Dendrill Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Rio Tinto Coal - Australia
- Semirara Mining and Power Corporation, Philippines
- Standard Chartered Bank - UAE
- Mercator Lines Limited - India
- ASAPP Information Group - India
- Sinarmas Energy and Mining - Indonesia
- Price Waterhouse Coopers - Russia
- Bangladesh Power Developement Board
- OPG Power Generation Pvt Ltd - India
- Maheswari Brothers Coal Limited - India
- Tata Chemicals Ltd - India
- Australian Commodity Traders Exchange
- Central Electricity Authority - India
- Agrawal Coal Company - India
- Karbindo Abesyapradhi - Indoneisa
- Africa Commodities Group - South Africa
- Bhoruka Overseas - Indonesia
- Borneo Indobara - Indonesia
- Orica Australia Pty. Ltd.
- International Coal Ventures Pvt Ltd - India
- Central Java Power - Indonesia
- Coastal Gujarat Power Limited - India
- IEA Clean Coal Centre - UK
- PNOC Exploration Corporation - Philippines
- Grasim Industreis Ltd - India
- Directorate Of Revenue Intelligence - India
- White Energy Company Limited
- The University of Queensland
- Jaiprakash Power Ventures ltd
- Global Green Power PLC Corporation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Interocean Group of Companies - India
- India Bulls Power Limited - India
- Altura Mining Limited, Indonesia
- Indo Tambangraya Megah - Indonesia
- Banpu Public Company Limited - Thailand
- Jorong Barutama Greston.PT - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Thai Mozambique Logistica
- Bayan Resources Tbk. - Indonesia
- Chamber of Mines of South Africa
- Wood Mackenzie - Singapore
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Ministry of Mines - Canada
- Global Business Power Corporation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Port Waratah Coal Services - Australia
- Globalindo Alam Lestari - Indonesia
- Therma Luzon, Inc, Philippines
- Pendopo Energi Batubara - Indonesia
- Kepco SPC Power Corporation, Philippines
- Krishnapatnam Port Company Ltd. - India
- Ministry of Finance - Indonesia
- Makarim & Taira - Indonesia
- Parliament of New Zealand
- Vijayanagar Sugar Pvt Ltd - India
- The State Trading Corporation of India Ltd
- Pipit Mutiara Jaya. PT, Indonesia
- GAC Shipping (India) Pvt Ltd
- Star Paper Mills Limited - India
- Medco Energi Mining Internasional
- Economic Council, Georgia
- Ministry of Transport, Egypt
- Wilmar Investment Holdings
- Kalimantan Lumbung Energi - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- CNBM International Corporation - China
- Simpson Spence & Young - Indonesia
- Bharathi Cement Corporation - India
- Salva Resources Pvt Ltd - India
- Meenaskhi Energy Private Limited - India
- Karaikal Port Pvt Ltd - India
- Minerals Council of Australia
- Sical Logistics Limited - India
- Siam City Cement PLC, Thailand
- Miang Besar Coal Terminal - Indonesia
- Aboitiz Power Corporation - Philippines
- Asmin Koalindo Tuhup - Indonesia
- Tamil Nadu electricity Board
- GN Power Mariveles Coal Plant, Philippines
- Planning Commission, India
- Ambuja Cements Ltd - India
- IHS Mccloskey Coal Group - USA
- Madhucon Powers Ltd - India
- ICICI Bank Limited - India
- McConnell Dowell - Australia
- Kohat Cement Company Ltd. - Pakistan
- Malabar Cements Ltd - India
- GMR Energy Limited - India
- Bhushan Steel Limited - India
- Orica Mining Services - Indonesia
- Ind-Barath Power Infra Limited - India
- Holcim Trading Pte Ltd - Singapore
- MS Steel International - UAE
- SMC Global Power, Philippines
- Videocon Industries ltd - India
- Intertek Mineral Services - Indonesia
- Baramulti Group, Indonesia
- Petron Corporation, Philippines
- Power Finance Corporation Ltd., India
- European Bulk Services B.V. - Netherlands
- Mercuria Energy - Indonesia
- Thiess Contractors Indonesia
- Kumho Petrochemical, South Korea
- Global Coal Blending Company Limited - Australia
- Trasteel International SA, Italy
- Cement Manufacturers Association - India
- Barasentosa Lestari - Indonesia
- Sree Jayajothi Cements Limited - India
- Merrill Lynch Commodities Europe
- New Zealand Coal & Carbon
- Manunggal Multi Energi - Indonesia
- Aditya Birla Group - India
- Bulk Trading Sa - Switzerland
- LBH Netherlands Bv - Netherlands
- TNB Fuel Sdn Bhd - Malaysia
- Kartika Selabumi Mining - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Metalloyd Limited - United Kingdom
- Binh Thuan Hamico - Vietnam
- South Luzon Thermal Energy Corporation
- London Commodity Brokers - England
- Rashtriya Ispat Nigam Limited - India
- Samtan Co., Ltd - South Korea
- Romanian Commodities Exchange
- Siam City Cement - Thailand
- Edison Trading Spa - Italy
- Neyveli Lignite Corporation Ltd, - India
- Posco Energy - South Korea
- Sindya Power Generating Company Private Ltd
- VISA Power Limited - India
- Vedanta Resources Plc - India
- Eastern Coal Council - USA
- Sarangani Energy Corporation, Philippines
- Uttam Galva Steels Limited - India
- Iligan Light & Power Inc, Philippines
- Indika Energy - Indonesia
- Electricity Generating Authority of Thailand
- The Treasury - Australian Government
- Indian Oil Corporation Limited
- Australian Coal Association
- Independent Power Producers Association of India
- San Jose City I Power Corp, Philippines
- Straits Asia Resources Limited - Singapore
- Gujarat Electricity Regulatory Commission - India
- Gujarat Sidhee Cement - India
- Energy Development Corp, Philippines
- Sojitz Corporation - Japan
- Meralco Power Generation, Philippines
- Georgia Ports Authority, United States
- Bukit Baiduri Energy - Indonesia
- Savvy Resources Ltd - HongKong
- Directorate General of MIneral and Coal - Indonesia
- Xindia Steels Limited - India
- Chettinad Cement Corporation Ltd - India
- Antam Resourcindo - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kideco Jaya Agung - Indonesia
- TeaM Sual Corporation - Philippines
- Timah Investasi Mineral - Indoneisa
- Energy Link Ltd, New Zealand
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