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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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Thursday, 09 May 19
OFFSHORE CARIBBEAN CONGRESS 2019
Offshore Caribbean Congress 2019
Event Date: 4-5th July. 2019t
Location: Georgetown, Guyana
Hess announced a new d ...
Tuesday, 07 May 19
UNDOUBTEDLY A VERY TROUBLED YEAR FOR THE DRY BULK MARKET, SAYS ALLIED SHIPPING
Undoubtedly a very troubled year for the dry bulk market says Allied Shipping in its latest weekly report.
Thomas Chasapis, Re ...
Saturday, 04 May 19
HOW THE 'FAIR VALUE' OF COAL ASSETS IS AFFECTED BY COMMODITY CYCLES - CRU
As with any commodity, valuing coal assets can be tricky due to the cyclical nature of the market. In this insight, CRU discusses how commodity cyc ...
Friday, 03 May 19
SUPRAMAX: WITH WIDESPREAD HOLIDAYS DURING THE WEEK, THE MARKET LACKED IMPETUS - BALTIC BRIEFING
Capesize
The market last week was a tale of two halves, with substantial volatility. Beginning the week on a positive note the C5 West Australi ...
Friday, 03 May 19
COAL INDIA APRIL OUTPUT RISES 1% TO 45.29 MILLION TONNE - PTI
Coal India Ltd (CIL) Wednesday said its coal production in April 2019 rose by 1 per cent to 45.29 million tonne as compared with 44.86 million tonn ...
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- Maharashtra Electricity Regulatory Commission - India
- Coal and Oil Company - UAE
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Jaiprakash Power Ventures ltd
- Rashtriya Ispat Nigam Limited - India
- Essar Steel Hazira Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kohat Cement Company Ltd. - Pakistan
- Altura Mining Limited, Indonesia
- Miang Besar Coal Terminal - Indonesia
- GMR Energy Limited - India
- Makarim & Taira - Indonesia
- Banpu Public Company Limited - Thailand
- Bhoruka Overseas - Indonesia
- Standard Chartered Bank - UAE
- Kideco Jaya Agung - Indonesia
- Toyota Tsusho Corporation, Japan
- Binh Thuan Hamico - Vietnam
- Edison Trading Spa - Italy
- SMC Global Power, Philippines
- Uttam Galva Steels Limited - India
- Manunggal Multi Energi - Indonesia
- PNOC Exploration Corporation - Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Star Paper Mills Limited - India
- Aditya Birla Group - India
- PetroVietnam Power Coal Import and Supply Company
- Rio Tinto Coal - Australia
- Cement Manufacturers Association - India
- Videocon Industries ltd - India
- Timah Investasi Mineral - Indoneisa
- GN Power Mariveles Coal Plant, Philippines
- India Bulls Power Limited - India
- Tata Chemicals Ltd - India
- Mintek Dendrill Indonesia
- CIMB Investment Bank - Malaysia
- Pendopo Energi Batubara - Indonesia
- Indonesian Coal Mining Association
- Antam Resourcindo - Indonesia
- Bhushan Steel Limited - India
- GAC Shipping (India) Pvt Ltd
- Coalindo Energy - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Larsen & Toubro Limited - India
- Savvy Resources Ltd - HongKong
- Ministry of Finance - Indonesia
- Grasim Industreis Ltd - India
- Chamber of Mines of South Africa
- Australian Coal Association
- Bayan Resources Tbk. - Indonesia
- Parliament of New Zealand
- Price Waterhouse Coopers - Russia
- Ambuja Cements Ltd - India
- Commonwealth Bank - Australia
- Australian Commodity Traders Exchange
- Madhucon Powers Ltd - India
- Maheswari Brothers Coal Limited - India
- Semirara Mining and Power Corporation, Philippines
- VISA Power Limited - India
- Ceylon Electricity Board - Sri Lanka
- Global Green Power PLC Corporation, Philippines
- Holcim Trading Pte Ltd - Singapore
- Posco Energy - South Korea
- Romanian Commodities Exchange
- Karbindo Abesyapradhi - Indoneisa
- Attock Cement Pakistan Limited
- OPG Power Generation Pvt Ltd - India
- Kepco SPC Power Corporation, Philippines
- Medco Energi Mining Internasional
- Barasentosa Lestari - Indonesia
- Ministry of Mines - Canada
- Formosa Plastics Group - Taiwan
- Electricity Generating Authority of Thailand
- Bukit Makmur.PT - Indonesia
- The University of Queensland
- GVK Power & Infra Limited - India
- Kartika Selabumi Mining - Indonesia
- ASAPP Information Group - India
- Karaikal Port Pvt Ltd - India
- Merrill Lynch Commodities Europe
- Simpson Spence & Young - Indonesia
- London Commodity Brokers - England
- MS Steel International - UAE
- Petron Corporation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Thiess Contractors Indonesia
- Bangladesh Power Developement Board
- Central Electricity Authority - India
- New Zealand Coal & Carbon
- IEA Clean Coal Centre - UK
- Bulk Trading Sa - Switzerland
- Indika Energy - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Indogreen Group - Indonesia
- Bhatia International Limited - India
- Sical Logistics Limited - India
- Straits Asia Resources Limited - Singapore
- Heidelberg Cement - Germany
- Coastal Gujarat Power Limited - India
- Indo Tambangraya Megah - Indonesia
- Jindal Steel & Power Ltd - India
- South Luzon Thermal Energy Corporation
- Minerals Council of Australia
- Orica Mining Services - Indonesia
- Thai Mozambique Logistica
- Latin American Coal - Colombia
- Mjunction Services Limited - India
- Global Business Power Corporation, Philippines
- Sree Jayajothi Cements Limited - India
- Trasteel International SA, Italy
- Mercator Lines Limited - India
- Eastern Energy - Thailand
- Siam City Cement PLC, Thailand
- Parry Sugars Refinery, India
- Kapuas Tunggal Persada - Indonesia
- Vedanta Resources Plc - India
- Therma Luzon, Inc, Philippines
- Meralco Power Generation, Philippines
- Marubeni Corporation - India
- Billiton Holdings Pty Ltd - Australia
- Singapore Mercantile Exchange
- Port Waratah Coal Services - Australia
- Agrawal Coal Company - India
- Kumho Petrochemical, South Korea
- Pipit Mutiara Jaya. PT, Indonesia
- SN Aboitiz Power Inc, Philippines
- Siam City Cement - Thailand
- The State Trading Corporation of India Ltd
- Mercuria Energy - Indonesia
- SMG Consultants - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Gujarat Electricity Regulatory Commission - India
- Planning Commission, India
- Iligan Light & Power Inc, Philippines
- Directorate Of Revenue Intelligence - India
- Malabar Cements Ltd - India
- Global Coal Blending Company Limited - Australia
- Electricity Authority, New Zealand
- Metalloyd Limited - United Kingdom
- IHS Mccloskey Coal Group - USA
- PTC India Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Indian Oil Corporation Limited
- Bharathi Cement Corporation - India
- McConnell Dowell - Australia
- CNBM International Corporation - China
- TNB Fuel Sdn Bhd - Malaysia
- Aboitiz Power Corporation - Philippines
- International Coal Ventures Pvt Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Samtan Co., Ltd - South Korea
- San Jose City I Power Corp, Philippines
- Carbofer General Trading SA - India
- Dalmia Cement Bharat India
- Baramulti Group, Indonesia
- Salva Resources Pvt Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kaltim Prima Coal - Indonesia
- Lanco Infratech Ltd - India
- White Energy Company Limited
- Goldman Sachs - Singapore
- ICICI Bank Limited - India
- The Treasury - Australian Government
- Asia Pacific Energy Resources Ventures Inc, Philippines
- AsiaOL BioFuels Corp., Philippines
- Krishnapatnam Port Company Ltd. - India
- Bukit Baiduri Energy - Indonesia
- Gujarat Sidhee Cement - India
- Wilmar Investment Holdings
- Sojitz Corporation - Japan
- Eastern Coal Council - USA
- Bukit Asam (Persero) Tbk - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Africa Commodities Group - South Africa
- Anglo American - United Kingdom
- Georgia Ports Authority, United States
- TeaM Sual Corporation - Philippines
- Cigading International Bulk Terminal - Indonesia
- Kobexindo Tractors - Indoneisa
- Sindya Power Generating Company Private Ltd
- Orica Australia Pty. Ltd.
- Alfred C Toepfer International GmbH - Germany
- Meenaskhi Energy Private Limited - India
- Borneo Indobara - Indonesia
- Energy Link Ltd, New Zealand
- Riau Bara Harum - Indonesia
- Power Finance Corporation Ltd., India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- LBH Netherlands Bv - Netherlands
- Neyveli Lignite Corporation Ltd, - India
- Ministry of Transport, Egypt
- Tamil Nadu electricity Board
- Wood Mackenzie - Singapore
- Globalindo Alam Lestari - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Indian Energy Exchange, India
- Vizag Seaport Private Limited - India
- Oldendorff Carriers - Singapore
- Central Java Power - Indonesia
- Energy Development Corp, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Sakthi Sugars Limited - India
- Interocean Group of Companies - India
- Xindia Steels Limited - India
- Semirara Mining Corp, Philippines
- European Bulk Services B.V. - Netherlands
- Sarangani Energy Corporation, Philippines
- Deloitte Consulting - India
- Chettinad Cement Corporation Ltd - India
- Intertek Mineral Services - Indonesia
- Independent Power Producers Association of India
- PowerSource Philippines DevCo
- Renaissance Capital - South Africa
- Kalimantan Lumbung Energi - Indonesia
- Economic Council, Georgia
- Ind-Barath Power Infra Limited - India
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