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