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