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