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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, 29 May 19
SHIPPING MARKET INSIGHT - INTERMODAL
Reflecting on the first quarter of 2019, the product tanker market was healthy, with average earnings significantly up compared to the first quarte ...
Sunday, 26 May 19
SUPRAMAX: A LIMITED ACTIVITY WAS REPORTED, WITH THE UPCOMING INDONESIAN HOLIDAYS SLOWING COAL MOVEMENTS - BALTIC BRIEFING
Capesize
The past week marked one of the busier periods for Capesizes this year. With a subdued start due to a public holiday in Singapore on M ...
Wednesday, 22 May 19
SHIPPING MARKET INSIGHT - INTERMODAL
The ship repair sector is showing a constant and gradual increase on the workload throughout the past months, with almost all the shipyards worldwi ...
Saturday, 18 May 19
SUPRAMAX: 56,000DWT OPEN PANJANG FIXING AT $10,500 FOR A TRIP VIA INDONESIA, AND REDELIVERY CHINA - BALTIC EXCHANGE
Capesize
The market continues to ebb and flow with a generally positive up trend. The Capesize 5TC opened with upward momentum from last week&r ...
Friday, 17 May 19
CHINA'S BENCHMARK POWER COAL PRICE REMAINS FLAT - XINHUA
China’s benchmark power coal price remained flat during the past week.
The Bohai-Rim Steam-Coal Price Index (BSPI), a gauge of ...
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- Wilmar Investment Holdings
- Bangladesh Power Developement Board
- Jindal Steel & Power Ltd - India
- Kartika Selabumi Mining - Indonesia
- Mintek Dendrill Indonesia
- Sinarmas Energy and Mining - Indonesia
- Sarangani Energy Corporation, Philippines
- Vizag Seaport Private Limited - India
- Planning Commission, India
- Standard Chartered Bank - UAE
- Karbindo Abesyapradhi - Indoneisa
- Orica Mining Services - Indonesia
- Semirara Mining Corp, Philippines
- AsiaOL BioFuels Corp., Philippines
- Medco Energi Mining Internasional
- London Commodity Brokers - England
- Merrill Lynch Commodities Europe
- Economic Council, Georgia
- Maharashtra Electricity Regulatory Commission - India
- Jorong Barutama Greston.PT - Indonesia
- Gujarat Electricity Regulatory Commission - India
- White Energy Company Limited
- Ind-Barath Power Infra Limited - India
- Coastal Gujarat Power Limited - India
- Therma Luzon, Inc, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Lanco Infratech Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Aditya Birla Group - India
- Trasteel International SA, Italy
- Marubeni Corporation - India
- San Jose City I Power Corp, Philippines
- Dalmia Cement Bharat India
- Bahari Cakrawala Sebuku - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Offshore Bulk Terminal Pte Ltd, Singapore
- Edison Trading Spa - Italy
- Heidelberg Cement - Germany
- Savvy Resources Ltd - HongKong
- Bhushan Steel Limited - India
- Georgia Ports Authority, United States
- Attock Cement Pakistan Limited
- Ministry of Transport, Egypt
- Ambuja Cements Ltd - India
- Bharathi Cement Corporation - India
- Kumho Petrochemical, South Korea
- Simpson Spence & Young - Indonesia
- VISA Power Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- The State Trading Corporation of India Ltd
- Mercator Lines Limited - India
- ASAPP Information Group - India
- MS Steel International - UAE
- Aboitiz Power Corporation - Philippines
- Ministry of Finance - Indonesia
- The Treasury - Australian Government
- South Luzon Thermal Energy Corporation
- Thai Mozambique Logistica
- ICICI Bank Limited - India
- Thiess Contractors Indonesia
- Agrawal Coal Company - India
- Riau Bara Harum - Indonesia
- Chettinad Cement Corporation Ltd - India
- Meralco Power Generation, Philippines
- Cement Manufacturers Association - India
- Iligan Light & Power Inc, Philippines
- Siam City Cement - Thailand
- TeaM Sual Corporation - Philippines
- Bhoruka Overseas - Indonesia
- Global Coal Blending Company Limited - Australia
- Goldman Sachs - Singapore
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- LBH Netherlands Bv - Netherlands
- Antam Resourcindo - Indonesia
- Barasentosa Lestari - Indonesia
- Australian Commodity Traders Exchange
- Kaltim Prima Coal - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Alfred C Toepfer International GmbH - Germany
- IHS Mccloskey Coal Group - USA
- Kideco Jaya Agung - Indonesia
- Energy Development Corp, Philippines
- International Coal Ventures Pvt Ltd - India
- Wood Mackenzie - Singapore
- Indo Tambangraya Megah - Indonesia
- PNOC Exploration Corporation - Philippines
- Gujarat Sidhee Cement - India
- Samtan Co., Ltd - South Korea
- CNBM International Corporation - China
- Power Finance Corporation Ltd., India
- Kepco SPC Power Corporation, Philippines
- McConnell Dowell - Australia
- The University of Queensland
- Bayan Resources Tbk. - Indonesia
- Manunggal Multi Energi - Indonesia
- Vedanta Resources Plc - India
- Karaikal Port Pvt Ltd - India
- Sical Logistics Limited - India
- Madhucon Powers Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Bukit Makmur.PT - Indonesia
- India Bulls Power Limited - India
- Siam City Cement PLC, Thailand
- Indian Energy Exchange, India
- Salva Resources Pvt Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Electricity Generating Authority of Thailand
- Uttam Galva Steels Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Parry Sugars Refinery, India
- Carbofer General Trading SA - India
- Borneo Indobara - Indonesia
- Renaissance Capital - South Africa
- Indogreen Group - Indonesia
- SN Aboitiz Power Inc, Philippines
- Oldendorff Carriers - Singapore
- Singapore Mercantile Exchange
- Vijayanagar Sugar Pvt Ltd - India
- Grasim Industreis Ltd - India
- Sojitz Corporation - Japan
- Rashtriya Ispat Nigam Limited - India
- Altura Mining Limited, Indonesia
- Semirara Mining and Power Corporation, Philippines
- Directorate Of Revenue Intelligence - India
- New Zealand Coal & Carbon
- Energy Link Ltd, New Zealand
- Romanian Commodities Exchange
- Miang Besar Coal Terminal - Indonesia
- IEA Clean Coal Centre - UK
- Mjunction Services Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Ministry of Mines - Canada
- Intertek Mineral Services - Indonesia
- Binh Thuan Hamico - Vietnam
- Gujarat Mineral Development Corp Ltd - India
- Meenaskhi Energy Private Limited - India
- Commonwealth Bank - Australia
- Minerals Council of Australia
- Neyveli Lignite Corporation Ltd, - India
- Australian Coal Association
- TNB Fuel Sdn Bhd - Malaysia
- Independent Power Producers Association of India
- Directorate General of MIneral and Coal - Indonesia
- Latin American Coal - Colombia
- Straits Asia Resources Limited - Singapore
- Bukit Asam (Persero) Tbk - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- CIMB Investment Bank - Malaysia
- Bulk Trading Sa - Switzerland
- Central Electricity Authority - India
- Central Java Power - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Timah Investasi Mineral - Indoneisa
- Kapuas Tunggal Persada - Indonesia
- Videocon Industries ltd - India
- Cigading International Bulk Terminal - Indonesia
- Tata Chemicals Ltd - India
- Jaiprakash Power Ventures ltd
- Metalloyd Limited - United Kingdom
- Tamil Nadu electricity Board
- Sakthi Sugars Limited - India
- PowerSource Philippines DevCo
- GMR Energy Limited - India
- Xindia Steels Limited - India
- GAC Shipping (India) Pvt Ltd
- Africa Commodities Group - South Africa
- Petron Corporation, Philippines
- Global Business Power Corporation, Philippines
- Deloitte Consulting - India
- Posco Energy - South Korea
- Star Paper Mills Limited - India
- Electricity Authority, New Zealand
- Banpu Public Company Limited - Thailand
- Kohat Cement Company Ltd. - Pakistan
- Maheswari Brothers Coal Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bhatia International Limited - India
- Eastern Energy - Thailand
- Formosa Plastics Group - Taiwan
- Ceylon Electricity Board - Sri Lanka
- Port Waratah Coal Services - Australia
- Leighton Contractors Pty Ltd - Australia
- Coalindo Energy - Indonesia
- Sindya Power Generating Company Private Ltd
- SMG Consultants - Indonesia
- Indian Oil Corporation Limited
- Global Green Power PLC Corporation, Philippines
- Parliament of New Zealand
- Makarim & Taira - Indonesia
- Coal and Oil Company - UAE
- Toyota Tsusho Corporation, Japan
- Asmin Koalindo Tuhup - Indonesia
- Price Waterhouse Coopers - Russia
- Essar Steel Hazira Ltd - India
- OPG Power Generation Pvt Ltd - India
- Interocean Group of Companies - India
- Bukit Baiduri Energy - Indonesia
- Orica Australia Pty. Ltd.
- Krishnapatnam Port Company Ltd. - India
- Anglo American - United Kingdom
- Sree Jayajothi Cements Limited - India
- PTC India Limited - India
- Indonesian Coal Mining Association
- Indika Energy - Indonesia
- Eastern Coal Council - USA
- Larsen & Toubro Limited - India
- European Bulk Services B.V. - Netherlands
- Rio Tinto Coal - Australia
- Pendopo Energi Batubara - Indonesia
- Mercuria Energy - Indonesia
- Malabar Cements Ltd - India
- GVK Power & Infra Limited - India
- Kobexindo Tractors - Indoneisa
- Globalindo Alam Lestari - Indonesia
- Chamber of Mines of South Africa
- SMC Global Power, Philippines
- Baramulti Group, Indonesia
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