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