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