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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, 12 June 19
IMO 2020 - COUNTDOWN TO 1 JANUARY 2020 -HOW WILL THE CHANGES AFFECT REFINING AND SHIPPING? - WOOD MACKENZIE
We know that the IMO’s regulations represent the biggest step change the shipping industry has ever seen and the implications will be felt th ...
Wednesday, 12 June 19
SHIPPING MARKET INSIGHT - INTERMODAL
This year’s tanker S&P activity keeps edging higher compared to the same period in 2018. Year to date we have seen some 143 ships, rangin ...
Tuesday, 11 June 19
INDONESIAN COAL PRICE REFERENCE SET AT $81.48 PER TON IN JUNE, DOWN 15.66 PERCENT YEAR-ON-YEAR
COALspot.com: The Ministry of Energy and Mineral Resources of the Republic of Indonesia has revised down again the benchmark price of Indonesian th ...
Monday, 10 June 19
CONSECUTIVE OWNERS OF CARGO: WHO HOLDS TITLE AND THE RIGHT TO SUE? - COLIN BIGGERS & PAISLEY
KNOWLEDGE TO ELEVATE
In Tritton Resources Pty Ltd v Ever Rock Navigation S.A. [2019] FCA 276, the Federal Court considered the application of ...
Monday, 10 June 19
KOSPO INVITES BIDS FOR 1,305,000 MT OF MIN 5600 KCAL/KG NCV COAL FOR SEPT 2019 TO DEC 2021
COALspot.com: South Korea state-owned utility Korea Southern Power Co. Ltd (KOSPO) issued a tender for 435,000 MT (per year) of max 5,600 kcal/kg N ...
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- Essar Steel Hazira Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Binh Thuan Hamico - Vietnam
- Metalloyd Limited - United Kingdom
- SMC Global Power, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- GN Power Mariveles Coal Plant, Philippines
- AsiaOL BioFuels Corp., Philippines
- McConnell Dowell - Australia
- Semirara Mining Corp, Philippines
- Petron Corporation, Philippines
- Electricity Authority, New Zealand
- Parry Sugars Refinery, India
- Meralco Power Generation, Philippines
- Chamber of Mines of South Africa
- Altura Mining Limited, Indonesia
- Sarangani Energy Corporation, Philippines
- SMG Consultants - Indonesia
- Banpu Public Company Limited - Thailand
- Merrill Lynch Commodities Europe
- Indonesian Coal Mining Association
- Asmin Koalindo Tuhup - Indonesia
- Kideco Jaya Agung - Indonesia
- Posco Energy - South Korea
- Karaikal Port Pvt Ltd - India
- PowerSource Philippines DevCo
- Globalindo Alam Lestari - Indonesia
- The Treasury - Australian Government
- Global Business Power Corporation, Philippines
- GMR Energy Limited - India
- Simpson Spence & Young - Indonesia
- Directorate Of Revenue Intelligence - India
- Indian Energy Exchange, India
- Alfred C Toepfer International GmbH - Germany
- Planning Commission, India
- Kumho Petrochemical, South Korea
- Medco Energi Mining Internasional
- Meenaskhi Energy Private Limited - India
- Independent Power Producers Association of India
- Tata Chemicals Ltd - India
- Aboitiz Power Corporation - Philippines
- Edison Trading Spa - Italy
- Sree Jayajothi Cements Limited - India
- Eastern Energy - Thailand
- Borneo Indobara - Indonesia
- European Bulk Services B.V. - Netherlands
- Wilmar Investment Holdings
- SN Aboitiz Power Inc, Philippines
- Electricity Generating Authority of Thailand
- Indo Tambangraya Megah - Indonesia
- Sical Logistics Limited - India
- Global Green Power PLC Corporation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Leighton Contractors Pty Ltd - Australia
- CNBM International Corporation - China
- Sakthi Sugars Limited - India
- Holcim Trading Pte Ltd - Singapore
- Kobexindo Tractors - Indoneisa
- Kartika Selabumi Mining - Indonesia
- OPG Power Generation Pvt Ltd - India
- India Bulls Power Limited - India
- Videocon Industries ltd - India
- Mercuria Energy - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Coastal Gujarat Power Limited - India
- Krishnapatnam Port Company Ltd. - India
- Orica Australia Pty. Ltd.
- Power Finance Corporation Ltd., India
- GAC Shipping (India) Pvt Ltd
- Malabar Cements Ltd - India
- PNOC Exploration Corporation - Philippines
- Africa Commodities Group - South Africa
- Karbindo Abesyapradhi - Indoneisa
- VISA Power Limited - India
- The State Trading Corporation of India Ltd
- Bhatia International Limited - India
- IEA Clean Coal Centre - UK
- Wood Mackenzie - Singapore
- Agrawal Coal Company - India
- Rashtriya Ispat Nigam Limited - India
- Orica Mining Services - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- TeaM Sual Corporation - Philippines
- Formosa Plastics Group - Taiwan
- Ind-Barath Power Infra Limited - India
- Australian Coal Association
- San Jose City I Power Corp, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Mintek Dendrill Indonesia
- Dalmia Cement Bharat India
- Barasentosa Lestari - Indonesia
- Samtan Co., Ltd - South Korea
- The University of Queensland
- Cigading International Bulk Terminal - Indonesia
- Antam Resourcindo - Indonesia
- Savvy Resources Ltd - HongKong
- Maheswari Brothers Coal Limited - India
- Bulk Trading Sa - Switzerland
- Directorate General of MIneral and Coal - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Bukit Baiduri Energy - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Renaissance Capital - South Africa
- Anglo American - United Kingdom
- Billiton Holdings Pty Ltd - Australia
- Central Java Power - Indonesia
- Chettinad Cement Corporation Ltd - India
- Heidelberg Cement - Germany
- Lanco Infratech Ltd - India
- Thiess Contractors Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Timah Investasi Mineral - Indoneisa
- Kaltim Prima Coal - Indonesia
- Georgia Ports Authority, United States
- Bangladesh Power Developement Board
- Cement Manufacturers Association - India
- Neyveli Lignite Corporation Ltd, - India
- Bhoruka Overseas - Indonesia
- Gujarat Sidhee Cement - India
- PetroVietnam Power Coal Import and Supply Company
- Standard Chartered Bank - UAE
- Pendopo Energi Batubara - Indonesia
- Kepco SPC Power Corporation, Philippines
- Miang Besar Coal Terminal - Indonesia
- Coal and Oil Company - UAE
- Siam City Cement - Thailand
- Ministry of Transport, Egypt
- Central Electricity Authority - India
- Economic Council, Georgia
- Trasteel International SA, Italy
- CIMB Investment Bank - Malaysia
- New Zealand Coal & Carbon
- Romanian Commodities Exchange
- Manunggal Multi Energi - Indonesia
- Minerals Council of Australia
- ASAPP Information Group - India
- Bhushan Steel Limited - India
- Marubeni Corporation - India
- Global Coal Blending Company Limited - Australia
- Latin American Coal - Colombia
- Indika Energy - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Coalindo Energy - Indonesia
- Grasim Industreis Ltd - India
- Bharathi Cement Corporation - India
- Salva Resources Pvt Ltd - India
- MS Steel International - UAE
- Rio Tinto Coal - Australia
- Jindal Steel & Power Ltd - India
- Deloitte Consulting - India
- Vijayanagar Sugar Pvt Ltd - India
- Bayan Resources Tbk. - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Makarim & Taira - Indonesia
- Aditya Birla Group - India
- Indogreen Group - Indonesia
- Therma Luzon, Inc, Philippines
- Kapuas Tunggal Persada - Indonesia
- GVK Power & Infra Limited - India
- Australian Commodity Traders Exchange
- Ministry of Mines - Canada
- Energy Link Ltd, New Zealand
- Pipit Mutiara Jaya. PT, Indonesia
- Mercator Lines Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Port Waratah Coal Services - Australia
- LBH Netherlands Bv - Netherlands
- London Commodity Brokers - England
- ICICI Bank Limited - India
- Ambuja Cements Ltd - India
- Baramulti Group, Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Vizag Seaport Private Limited - India
- Jaiprakash Power Ventures ltd
- Ministry of Finance - Indonesia
- Interocean Group of Companies - India
- Parliament of New Zealand
- Carbofer General Trading SA - India
- Riau Bara Harum - Indonesia
- Iligan Light & Power Inc, Philippines
- Price Waterhouse Coopers - Russia
- Energy Development Corp, Philippines
- Siam City Cement PLC, Thailand
- Bukit Makmur.PT - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Larsen & Toubro Limited - India
- IHS Mccloskey Coal Group - USA
- PTC India Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Thai Mozambique Logistica
- Eastern Coal Council - USA
- Singapore Mercantile Exchange
- Madhucon Powers Ltd - India
- Sindya Power Generating Company Private Ltd
- Goldman Sachs - Singapore
- Toyota Tsusho Corporation, Japan
- Uttam Galva Steels Limited - India
- Straits Asia Resources Limited - Singapore
- Intertek Mineral Services - Indonesia
- Indian Oil Corporation Limited
- Star Paper Mills Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Commonwealth Bank - Australia
- Mjunction Services Limited - India
- Sojitz Corporation - Japan
- International Coal Ventures Pvt Ltd - India
- Xindia Steels Limited - India
- Tamil Nadu electricity Board
- Sinarmas Energy and Mining - Indonesia
- Oldendorff Carriers - Singapore
- South Luzon Thermal Energy Corporation
- Gujarat Electricity Regulatory Commission - India
- Vedanta Resources Plc - India
- Attock Cement Pakistan Limited
- White Energy Company Limited
- Dong Bac Coal Mineral Investment Coporation - Vietnam
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