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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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Tuesday, 26 February 19
CHINA RESTRICTS SEABORNE COAL IMPORTS - WOOD MACKENZIE
In response to news on China's Dalian port restricting seaborne coal imports, Wood Mackenzie's experts provide the following commentary.
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Tuesday, 26 February 19
THE RELATIVELY DISAPPOINTING SCENE PORTRAYED IN THE DRY BULK MARKET RIGHT NOW - ALLIED SHIPBROKING
The relatively disappointing scene portrayed in the dry bulk market right now (especially in the Capesize segment) is undoubtedly one of the prevai ...
Friday, 22 February 19
AUSTRALIAN HIGH CV THERMAL COAL PRICES AT 19-MONTH LOW, BUT NOT FOR LONG - WOOD MACKENZIE
The benchmark Newcastle high energy thermal coal price has fallen from US$100/tonne at the turn of the new year to US$88/tonne. Thermal coal has be ...
Wednesday, 20 February 19
EFFECTIVE NOTICES OF ARBITRATION - AVOIDING WASTED COSTS AND A POTENTIALLY TIME-BARRED CLAIM
KNOWLEDGE TO ELEVATE
In a recent case, The Amity [2017], charterers successfully set aside an arbitration award on the basis that ow ...
Wednesday, 20 February 19
SHIPPING MARKET INSIGHT - INERMODAL
Market experts mostly agree that the recent dry bulk market downtrend was caused by seasonal slowdown amid the Chinese New Year celebrations in com ...
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- Salva Resources Pvt Ltd - India
- Bukit Makmur.PT - Indonesia
- Straits Asia Resources Limited - Singapore
- TNB Fuel Sdn Bhd - Malaysia
- Uttam Galva Steels Limited - India
- Semirara Mining Corp, Philippines
- Siam City Cement PLC, Thailand
- Sindya Power Generating Company Private Ltd
- Kobexindo Tractors - Indoneisa
- Commonwealth Bank - Australia
- Oldendorff Carriers - Singapore
- Globalindo Alam Lestari - Indonesia
- Lanco Infratech Ltd - India
- Romanian Commodities Exchange
- Georgia Ports Authority, United States
- Central Electricity Authority - India
- Chamber of Mines of South Africa
- Electricity Generating Authority of Thailand
- Alfred C Toepfer International GmbH - Germany
- Standard Chartered Bank - UAE
- Xindia Steels Limited - India
- Indian Energy Exchange, India
- Coal and Oil Company - UAE
- Coalindo Energy - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Bukit Baiduri Energy - Indonesia
- Indogreen Group - Indonesia
- New Zealand Coal & Carbon
- Karaikal Port Pvt Ltd - India
- Sical Logistics Limited - India
- San Jose City I Power Corp, Philippines
- Trasteel International SA, Italy
- Maharashtra Electricity Regulatory Commission - India
- Therma Luzon, Inc, Philippines
- Intertek Mineral Services - Indonesia
- Simpson Spence & Young - Indonesia
- Essar Steel Hazira Ltd - India
- Jaiprakash Power Ventures ltd
- SN Aboitiz Power Inc, Philippines
- Kepco SPC Power Corporation, Philippines
- Planning Commission, India
- Kartika Selabumi Mining - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Krishnapatnam Port Company Ltd. - India
- Banpu Public Company Limited - Thailand
- Grasim Industreis Ltd - India
- Singapore Mercantile Exchange
- Independent Power Producers Association of India
- Deloitte Consulting - India
- Bahari Cakrawala Sebuku - Indonesia
- Bayan Resources Tbk. - Indonesia
- Malabar Cements Ltd - India
- TeaM Sual Corporation - Philippines
- Asmin Koalindo Tuhup - Indonesia
- Vizag Seaport Private Limited - India
- Holcim Trading Pte Ltd - Singapore
- IEA Clean Coal Centre - UK
- GMR Energy Limited - India
- Ministry of Finance - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Jindal Steel & Power Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Mintek Dendrill Indonesia
- Directorate Of Revenue Intelligence - India
- Manunggal Multi Energi - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Thai Mozambique Logistica
- Marubeni Corporation - India
- Meenaskhi Energy Private Limited - India
- Bhatia International Limited - India
- Billiton Holdings Pty Ltd - Australia
- Kalimantan Lumbung Energi - Indonesia
- Savvy Resources Ltd - HongKong
- Cigading International Bulk Terminal - Indonesia
- Binh Thuan Hamico - Vietnam
- Rashtriya Ispat Nigam Limited - India
- Vedanta Resources Plc - India
- Bangladesh Power Developement Board
- Larsen & Toubro Limited - India
- South Luzon Thermal Energy Corporation
- SMC Global Power, Philippines
- AsiaOL BioFuels Corp., Philippines
- Coastal Gujarat Power Limited - India
- Directorate General of MIneral and Coal - Indonesia
- PTC India Limited - India
- Barasentosa Lestari - Indonesia
- Thiess Contractors Indonesia
- Eastern Coal Council - USA
- Gujarat Electricity Regulatory Commission - India
- Power Finance Corporation Ltd., India
- Samtan Co., Ltd - South Korea
- Timah Investasi Mineral - Indoneisa
- Borneo Indobara - Indonesia
- SMG Consultants - Indonesia
- PowerSource Philippines DevCo
- Aditya Birla Group - India
- CIMB Investment Bank - Malaysia
- Medco Energi Mining Internasional
- Star Paper Mills Limited - India
- London Commodity Brokers - England
- Merrill Lynch Commodities Europe
- The University of Queensland
- VISA Power Limited - India
- Riau Bara Harum - Indonesia
- Tata Chemicals Ltd - India
- Global Green Power PLC Corporation, Philippines
- Electricity Authority, New Zealand
- Wilmar Investment Holdings
- Agrawal Coal Company - India
- Pendopo Energi Batubara - Indonesia
- Sakthi Sugars Limited - India
- Orica Australia Pty. Ltd.
- Edison Trading Spa - Italy
- Energy Development Corp, Philippines
- Orica Mining Services - Indonesia
- Ministry of Transport, Egypt
- Bhoruka Overseas - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- IHS Mccloskey Coal Group - USA
- GAC Shipping (India) Pvt Ltd
- Antam Resourcindo - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Central Java Power - Indonesia
- Metalloyd Limited - United Kingdom
- Africa Commodities Group - South Africa
- Mjunction Services Limited - India
- Tamil Nadu electricity Board
- Jorong Barutama Greston.PT - Indonesia
- ICICI Bank Limited - India
- LBH Netherlands Bv - Netherlands
- Port Waratah Coal Services - Australia
- Maheswari Brothers Coal Limited - India
- Bhushan Steel Limited - India
- Makarim & Taira - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Global Business Power Corporation, Philippines
- Price Waterhouse Coopers - Russia
- Mercator Lines Limited - India
- Ceylon Electricity Board - Sri Lanka
- Madhucon Powers Ltd - India
- Australian Commodity Traders Exchange
- Parliament of New Zealand
- Wood Mackenzie - Singapore
- Dalmia Cement Bharat India
- Ministry of Mines - Canada
- Latin American Coal - Colombia
- Attock Cement Pakistan Limited
- Sojitz Corporation - Japan
- Ind-Barath Power Infra Limited - India
- Miang Besar Coal Terminal - Indonesia
- Rio Tinto Coal - Australia
- Videocon Industries ltd - India
- The Treasury - Australian Government
- Bharathi Cement Corporation - India
- Eastern Energy - Thailand
- OPG Power Generation Pvt Ltd - India
- Energy Link Ltd, New Zealand
- Petron Corporation, Philippines
- Anglo American - United Kingdom
- CNBM International Corporation - China
- Sarangani Energy Corporation, Philippines
- Posco Energy - South Korea
- Chettinad Cement Corporation Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Indian Oil Corporation Limited
- Offshore Bulk Terminal Pte Ltd, Singapore
- PNOC Exploration Corporation - Philippines
- Heidelberg Cement - Germany
- Sree Jayajothi Cements Limited - India
- Parry Sugars Refinery, India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Indonesian Coal Mining Association
- Carbofer General Trading SA - India
- International Coal Ventures Pvt Ltd - India
- Meralco Power Generation, Philippines
- Cement Manufacturers Association - India
- Ambuja Cements Ltd - India
- Australian Coal Association
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- White Energy Company Limited
- Aboitiz Power Corporation - Philippines
- GVK Power & Infra Limited - India
- Global Coal Blending Company Limited - Australia
- Interocean Group of Companies - India
- Economic Council, Georgia
- Indo Tambangraya Megah - Indonesia
- The State Trading Corporation of India Ltd
- Gujarat Sidhee Cement - India
- Kaltim Prima Coal - Indonesia
- Bulk Trading Sa - Switzerland
- Kumho Petrochemical, South Korea
- Leighton Contractors Pty Ltd - Australia
- Sinarmas Energy and Mining - Indonesia
- McConnell Dowell - Australia
- Toyota Tsusho Corporation, Japan
- Siam City Cement - Thailand
- Minerals Council of Australia
- Formosa Plastics Group - Taiwan
- India Bulls Power Limited - India
- Semirara Mining and Power Corporation, Philippines
- Mercuria Energy - Indonesia
- European Bulk Services B.V. - Netherlands
- Renaissance Capital - South Africa
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Altura Mining Limited, Indonesia
- Kideco Jaya Agung - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- ASAPP Information Group - India
- PetroVietnam Power Coal Import and Supply Company
- Goldman Sachs - Singapore
- Bukit Asam (Persero) Tbk - Indonesia
- Iligan Light & Power Inc, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- MS Steel International - UAE
- Baramulti Group, Indonesia
- Indika Energy - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
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