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