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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, 06 March 19
KOREA SOUTHERN POWER CO INVITES BIDS FOR 980,000 MT OF 4600 NCV COAL FOR THREE YEARS
COALspot.com: South Korea state-owned utility Korea Southern Power Co. Ltd (KOSPO) issued a tender for 320,000 MT of min 4,600 kcal/kg NCV low calo ...
Wednesday, 06 March 19
SHIPPING MARKET INSIGHT - INERMODAL
In a downward moving market, softer SnP activity is usually a given, as the gap between Sellers’ and Buyers’ ideas widens, especially w ...
Saturday, 02 March 19
A 60,500-TONNER WAS BOOKED DELIVERY SINGAPORE, VIA INDONESIA, REDELIVERY WEST COAST INDIA, AT $11,250 - BALTIC BRIEFING
Capesize
Vale’s ongoing absence from the Brazil spot market continued to have a negative impact on sentiment, with rates falling in all a ...
Thursday, 28 February 19
COAL'S PERFECT STORM HITS $70 BILLION AUSTRALIAN PROJECTS - BLOOMBERG
It’s been a tough few weeks for our coal industry.
First there was a court ruling blocking a new mine on climate change ground ...
Wednesday, 27 February 19
SHIPPING MARKET INSIGHT - INTERMODAL
With the IMO 2020 approaching, it becomes challenging for the market to accurately explore the run-up to the deadline given that marine fuel-oil of ...
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- Jorong Barutama Greston.PT - Indonesia
- Gujarat Sidhee Cement - India
- Meenaskhi Energy Private Limited - India
- Meralco Power Generation, Philippines
- Semirara Mining and Power Corporation, Philippines
- Vedanta Resources Plc - India
- PetroVietnam Power Coal Import and Supply Company
- Georgia Ports Authority, United States
- Jaiprakash Power Ventures ltd
- Singapore Mercantile Exchange
- Globalindo Alam Lestari - Indonesia
- Samtan Co., Ltd - South Korea
- Vizag Seaport Private Limited - India
- Ind-Barath Power Infra Limited - India
- European Bulk Services B.V. - Netherlands
- Neyveli Lignite Corporation Ltd, - India
- Orica Australia Pty. Ltd.
- Xindia Steels Limited - India
- Edison Trading Spa - Italy
- Cement Manufacturers Association - India
- Minerals Council of Australia
- Thai Mozambique Logistica
- International Coal Ventures Pvt Ltd - India
- GAC Shipping (India) Pvt Ltd
- Salva Resources Pvt Ltd - India
- Chettinad Cement Corporation Ltd - India
- Bhushan Steel Limited - India
- Holcim Trading Pte Ltd - Singapore
- SN Aboitiz Power Inc, Philippines
- Australian Coal Association
- Mintek Dendrill Indonesia
- Binh Thuan Hamico - Vietnam
- Siam City Cement - Thailand
- Maharashtra Electricity Regulatory Commission - India
- Indian Oil Corporation Limited
- Indo Tambangraya Megah - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Savvy Resources Ltd - HongKong
- SMC Global Power, Philippines
- San Jose City I Power Corp, Philippines
- Bharathi Cement Corporation - India
- Energy Link Ltd, New Zealand
- Deloitte Consulting - India
- The University of Queensland
- Heidelberg Cement - Germany
- New Zealand Coal & Carbon
- ICICI Bank Limited - India
- Antam Resourcindo - Indonesia
- Sical Logistics Limited - India
- Kobexindo Tractors - Indoneisa
- Kepco SPC Power Corporation, Philippines
- Makarim & Taira - Indonesia
- Sarangani Energy Corporation, Philippines
- Central Java Power - Indonesia
- Sindya Power Generating Company Private Ltd
- Banpu Public Company Limited - Thailand
- Altura Mining Limited, Indonesia
- Economic Council, Georgia
- Aditya Birla Group - India
- Grasim Industreis Ltd - India
- Anglo American - United Kingdom
- Ministry of Transport, Egypt
- Kartika Selabumi Mining - Indonesia
- OPG Power Generation Pvt Ltd - India
- Orica Mining Services - Indonesia
- Power Finance Corporation Ltd., India
- Timah Investasi Mineral - Indoneisa
- Sinarmas Energy and Mining - Indonesia
- Marubeni Corporation - India
- Krishnapatnam Port Company Ltd. - India
- Thiess Contractors Indonesia
- Iligan Light & Power Inc, Philippines
- Ambuja Cements Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Ministry of Finance - Indonesia
- Formosa Plastics Group - Taiwan
- McConnell Dowell - Australia
- Kohat Cement Company Ltd. - Pakistan
- Tata Chemicals Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Bukit Asam (Persero) Tbk - Indonesia
- Kumho Petrochemical, South Korea
- Siam City Cement PLC, Thailand
- Carbofer General Trading SA - India
- Coal and Oil Company - UAE
- Bukit Makmur.PT - Indonesia
- Coastal Gujarat Power Limited - India
- Kapuas Tunggal Persada - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Goldman Sachs - Singapore
- Uttam Galva Steels Limited - India
- Commonwealth Bank - Australia
- CIMB Investment Bank - Malaysia
- Miang Besar Coal Terminal - Indonesia
- Parry Sugars Refinery, India
- Petron Corporation, Philippines
- Attock Cement Pakistan Limited
- Aboitiz Power Corporation - Philippines
- Energy Development Corp, Philippines
- PTC India Limited - India
- Alfred C Toepfer International GmbH - Germany
- SMG Consultants - Indonesia
- Indika Energy - Indonesia
- Romanian Commodities Exchange
- IHS Mccloskey Coal Group - USA
- Leighton Contractors Pty Ltd - Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bahari Cakrawala Sebuku - Indonesia
- Karaikal Port Pvt Ltd - India
- Wood Mackenzie - Singapore
- Gujarat Electricity Regulatory Commission - India
- Asmin Koalindo Tuhup - Indonesia
- Standard Chartered Bank - UAE
- TNB Fuel Sdn Bhd - Malaysia
- Manunggal Multi Energi - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- The Treasury - Australian Government
- Agrawal Coal Company - India
- Posco Energy - South Korea
- Bayan Resources Tbk. - Indonesia
- Sojitz Corporation - Japan
- Riau Bara Harum - Indonesia
- Borneo Indobara - Indonesia
- IEA Clean Coal Centre - UK
- London Commodity Brokers - England
- Merrill Lynch Commodities Europe
- Rashtriya Ispat Nigam Limited - India
- Intertek Mineral Services - Indonesia
- Simpson Spence & Young - Indonesia
- Directorate Of Revenue Intelligence - India
- Coalindo Energy - Indonesia
- MS Steel International - UAE
- Kideco Jaya Agung - Indonesia
- Bangladesh Power Developement Board
- Kalimantan Lumbung Energi - Indonesia
- Indian Energy Exchange, India
- Bulk Trading Sa - Switzerland
- Parliament of New Zealand
- LBH Netherlands Bv - Netherlands
- Mjunction Services Limited - India
- Lanco Infratech Ltd - India
- Rio Tinto Coal - Australia
- Price Waterhouse Coopers - Russia
- Barasentosa Lestari - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Pendopo Energi Batubara - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Global Green Power PLC Corporation, Philippines
- Independent Power Producers Association of India
- CNBM International Corporation - China
- PNOC Exploration Corporation - Philippines
- Therma Luzon, Inc, Philippines
- Ceylon Electricity Board - Sri Lanka
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Planning Commission, India
- GVK Power & Infra Limited - India
- ASAPP Information Group - India
- Pipit Mutiara Jaya. PT, Indonesia
- Toyota Tsusho Corporation, Japan
- Tamil Nadu electricity Board
- Sakthi Sugars Limited - India
- Electricity Authority, New Zealand
- Global Coal Blending Company Limited - Australia
- Trasteel International SA, Italy
- White Energy Company Limited
- Madhucon Powers Ltd - India
- Eastern Energy - Thailand
- Central Electricity Authority - India
- Wilmar Investment Holdings
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Maheswari Brothers Coal Limited - India
- Latin American Coal - Colombia
- Cigading International Bulk Terminal - Indonesia
- Oldendorff Carriers - Singapore
- The State Trading Corporation of India Ltd
- Jindal Steel & Power Ltd - India
- Renaissance Capital - South Africa
- Australian Commodity Traders Exchange
- Videocon Industries ltd - India
- Straits Asia Resources Limited - Singapore
- Interocean Group of Companies - India
- GN Power Mariveles Coal Plant, Philippines
- Baramulti Group, Indonesia
- TeaM Sual Corporation - Philippines
- Chamber of Mines of South Africa
- Mercuria Energy - Indonesia
- Indogreen Group - Indonesia
- Africa Commodities Group - South Africa
- Kaltim Prima Coal - Indonesia
- India Bulls Power Limited - India
- Eastern Coal Council - USA
- Indonesian Coal Mining Association
- South Luzon Thermal Energy Corporation
- Star Paper Mills Limited - India
- Global Business Power Corporation, Philippines
- VISA Power Limited - India
- Bhatia International Limited - India
- Medco Energi Mining Internasional
- Malabar Cements Ltd - India
- Mercator Lines Limited - India
- Ministry of Mines - Canada
- Directorate General of MIneral and Coal - Indonesia
- Larsen & Toubro Limited - India
- Sree Jayajothi Cements Limited - India
- PowerSource Philippines DevCo
- Port Waratah Coal Services - Australia
- Metalloyd Limited - United Kingdom
- Bukit Baiduri Energy - Indonesia
- Electricity Generating Authority of Thailand
- Gujarat Mineral Development Corp Ltd - India
- Dalmia Cement Bharat India
- Bhoruka Overseas - Indonesia
- Essar Steel Hazira Ltd - India
- GMR Energy Limited - India
- Semirara Mining Corp, Philippines
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