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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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Monday, 01 April 19
AUSTRALIAN COAL AT RISK FROM CHINA MOVE, WARNS GOVERNMENT REPORT - SYDNEY MORNING HERALD
A new government report warns China’s restrictions on coal imports is the number one risk for Australian coal this year and could lead to a s ...
Saturday, 30 March 19
KOEN INVITES BIDS FOR 450,000 TONS OF (SUB) BITUMINOUS COAL FOR H1 AND JUNE 2019
South Korea state-owned utility KOREA SOUTH-EAST POWER CO., LTD. (KOEN) issued a tender for total 450,000 MT of min. 4300, 3500 and 5600 NCV ...
Wednesday, 27 March 19
SHIPPING MARKET INSIGHT - INTERMODAL
Contrary to the December 2018 forecasts but in line with the expectations of the dry bulk market, the first quarter of the year closed negatively. ...
Saturday, 23 March 19
IT WAS A POSITIVE WEEK FOR THE HANDY SIZE MARKET - BALTIC BRIEFING
Capesize
The big ships endured heavy losses last week extinguishing any hopes from the recent minor rally. Negative sentiment gained pace throu ...
Friday, 22 March 19
CHINA MARKET: COAL OUT IN THE COLD - BUSINESS RECORDER
Though China maintains there is no ban, China-bound Australian coal shipments are looking for a new home. For the past few months, coal cargoes are ...
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- OPG Power Generation Pvt Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Meralco Power Generation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Eastern Coal Council - USA
- Timah Investasi Mineral - Indoneisa
- Ministry of Finance - Indonesia
- GMR Energy Limited - India
- Kohat Cement Company Ltd. - Pakistan
- International Coal Ventures Pvt Ltd - India
- Riau Bara Harum - Indonesia
- Parry Sugars Refinery, India
- Meenaskhi Energy Private Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Global Business Power Corporation, Philippines
- Manunggal Multi Energi - Indonesia
- PNOC Exploration Corporation - Philippines
- Eastern Energy - Thailand
- Indian Energy Exchange, India
- Star Paper Mills Limited - India
- Siam City Cement - Thailand
- Sarangani Energy Corporation, Philippines
- Energy Link Ltd, New Zealand
- Karaikal Port Pvt Ltd - India
- The University of Queensland
- Merrill Lynch Commodities Europe
- Bukit Baiduri Energy - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Pipit Mutiara Jaya. PT, Indonesia
- Wilmar Investment Holdings
- Ambuja Cements Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Cement Manufacturers Association - India
- Savvy Resources Ltd - HongKong
- Bhoruka Overseas - Indonesia
- SMG Consultants - Indonesia
- Altura Mining Limited, Indonesia
- Antam Resourcindo - Indonesia
- Thiess Contractors Indonesia
- VISA Power Limited - India
- Sindya Power Generating Company Private Ltd
- Indo Tambangraya Megah - Indonesia
- Toyota Tsusho Corporation, Japan
- AsiaOL BioFuels Corp., Philippines
- Latin American Coal - Colombia
- Kobexindo Tractors - Indoneisa
- Barasentosa Lestari - Indonesia
- Central Electricity Authority - India
- Larsen & Toubro Limited - India
- Africa Commodities Group - South Africa
- Sree Jayajothi Cements Limited - India
- The Treasury - Australian Government
- Global Green Power PLC Corporation, Philippines
- Standard Chartered Bank - UAE
- Billiton Holdings Pty Ltd - Australia
- Grasim Industreis Ltd - India
- Electricity Authority, New Zealand
- Miang Besar Coal Terminal - Indonesia
- Vedanta Resources Plc - India
- Interocean Group of Companies - India
- Bayan Resources Tbk. - Indonesia
- Banpu Public Company Limited - Thailand
- Commonwealth Bank - Australia
- Minerals Council of Australia
- Anglo American - United Kingdom
- Bangladesh Power Developement Board
- Wood Mackenzie - Singapore
- Ind-Barath Power Infra Limited - India
- Bhatia International Limited - India
- Rashtriya Ispat Nigam Limited - India
- Leighton Contractors Pty Ltd - Australia
- Dalmia Cement Bharat India
- Kartika Selabumi Mining - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Kepco SPC Power Corporation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Sojitz Corporation - Japan
- Essar Steel Hazira Ltd - India
- Agrawal Coal Company - India
- Heidelberg Cement - Germany
- Attock Cement Pakistan Limited
- Thai Mozambique Logistica
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Xindia Steels Limited - India
- Iligan Light & Power Inc, Philippines
- Ministry of Mines - Canada
- Bukit Makmur.PT - Indonesia
- Mercator Lines Limited - India
- Videocon Industries ltd - India
- Electricity Generating Authority of Thailand
- Siam City Cement PLC, Thailand
- Edison Trading Spa - Italy
- Metalloyd Limited - United Kingdom
- MS Steel International - UAE
- GVK Power & Infra Limited - India
- Baramulti Group, Indonesia
- Trasteel International SA, Italy
- GN Power Mariveles Coal Plant, Philippines
- Bharathi Cement Corporation - India
- Tamil Nadu electricity Board
- Parliament of New Zealand
- Gujarat Mineral Development Corp Ltd - India
- Power Finance Corporation Ltd., India
- Mercuria Energy - Indonesia
- Deloitte Consulting - India
- Salva Resources Pvt Ltd - India
- Directorate Of Revenue Intelligence - India
- Mintek Dendrill Indonesia
- Binh Thuan Hamico - Vietnam
- Directorate General of MIneral and Coal - Indonesia
- Renaissance Capital - South Africa
- Borneo Indobara - Indonesia
- Medco Energi Mining Internasional
- Ceylon Electricity Board - Sri Lanka
- Orica Australia Pty. Ltd.
- Simpson Spence & Young - Indonesia
- Price Waterhouse Coopers - Russia
- PowerSource Philippines DevCo
- Indika Energy - Indonesia
- Jindal Steel & Power Ltd - India
- San Jose City I Power Corp, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Gujarat Sidhee Cement - India
- Georgia Ports Authority, United States
- Coal and Oil Company - UAE
- Goldman Sachs - Singapore
- CIMB Investment Bank - Malaysia
- Neyveli Lignite Corporation Ltd, - India
- PTC India Limited - India
- Chettinad Cement Corporation Ltd - India
- European Bulk Services B.V. - Netherlands
- LBH Netherlands Bv - Netherlands
- Marubeni Corporation - India
- Petron Corporation, Philippines
- Bulk Trading Sa - Switzerland
- The State Trading Corporation of India Ltd
- Semirara Mining and Power Corporation, Philippines
- Economic Council, Georgia
- Australian Commodity Traders Exchange
- TNB Fuel Sdn Bhd - Malaysia
- SMC Global Power, Philippines
- CNBM International Corporation - China
- Makarim & Taira - Indonesia
- Cigading International Bulk Terminal - Indonesia
- SN Aboitiz Power Inc, Philippines
- Planning Commission, India
- Krishnapatnam Port Company Ltd. - India
- ICICI Bank Limited - India
- GAC Shipping (India) Pvt Ltd
- Carbofer General Trading SA - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Tata Chemicals Ltd - India
- Intertek Mineral Services - Indonesia
- New Zealand Coal & Carbon
- Kalimantan Lumbung Energi - Indonesia
- Semirara Mining Corp, Philippines
- Jaiprakash Power Ventures ltd
- Vizag Seaport Private Limited - India
- IEA Clean Coal Centre - UK
- White Energy Company Limited
- London Commodity Brokers - England
- Alfred C Toepfer International GmbH - Germany
- McConnell Dowell - Australia
- Indonesian Coal Mining Association
- Malabar Cements Ltd - India
- Sical Logistics Limited - India
- Kumho Petrochemical, South Korea
- Therma Luzon, Inc, Philippines
- South Luzon Thermal Energy Corporation
- Mjunction Services Limited - India
- Formosa Plastics Group - Taiwan
- Coalindo Energy - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Maheswari Brothers Coal Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Lanco Infratech Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Straits Asia Resources Limited - Singapore
- Holcim Trading Pte Ltd - Singapore
- Pendopo Energi Batubara - Indonesia
- Romanian Commodities Exchange
- Central Java Power - Indonesia
- Oldendorff Carriers - Singapore
- IHS Mccloskey Coal Group - USA
- Energy Development Corp, Philippines
- Singapore Mercantile Exchange
- Sinarmas Energy and Mining - Indonesia
- Sakthi Sugars Limited - India
- ASAPP Information Group - India
- Australian Coal Association
- Rio Tinto Coal - Australia
- Independent Power Producers Association of India
- Kideco Jaya Agung - Indonesia
- Globalindo Alam Lestari - Indonesia
- Indogreen Group - Indonesia
- Aditya Birla Group - India
- Bhushan Steel Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Chamber of Mines of South Africa
- Aboitiz Power Corporation - Philippines
- Ministry of Transport, Egypt
- India Bulls Power Limited - India
- Samtan Co., Ltd - South Korea
- Global Coal Blending Company Limited - Australia
- Uttam Galva Steels Limited - India
- Indian Oil Corporation Limited
- Port Waratah Coal Services - Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- TeaM Sual Corporation - Philippines
- Coastal Gujarat Power Limited - India
- Orica Mining Services - Indonesia
- Posco Energy - South Korea
- Kaltim Prima Coal - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Madhucon Powers Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
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