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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, 13 February 19
MALAYSIA WAS THE REGION'S LARGEST COAL IMPORTER WITH 34 MT IN 2018, UP 25% Y-O-Y
Although coal market in 2018 started with strong prices, starting in the beginning of the second half of 2018, the international spot prices for co ...
Wednesday, 13 February 19
SHIPPING MARKET INSIGHT - INTERMODAL
If there is one word that can describe the current shipping environment then that this word is most probably “volatility.” The sentimen ...
Saturday, 09 February 19
SUPRAMAX: A 63,000-TONNER WAS REPORTED FIXED DELIVERY FOR AN EAST KALIMANTAN TRIP, REDELIVERY WEST COAST INDIA, AT $9,250 - THE BALTIC BRIEFING
Cape
The Vale disaster weighed heavily on the market for big ships, with uncertainty about shipments/future exports leading to a sharp drop in ...
Friday, 08 February 19
LOWER-QUALITY INDONESIA EXPORTS ROSE 39 MT IN 2018 YOY PRIMARILY IN RESPONSE TO INCREASED DEMAND FROM CHINA AND INDIA - PEABODY
"Underlying seaborne met and thermal coal conditions remain quite positive and the pace of U.S. coal-fueled power plant retirements is expecte ...
Thursday, 07 February 19
QATAR CAN GAIN FROM DECLINING COAL - THE PENINSULA
With North America and Europe closing down their old coal and nuclear plants, major gas exporters like Qatar can and should gain market share. With ...
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- IEA Clean Coal Centre - UK
- Directorate General of MIneral and Coal - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Energy Development Corp, Philippines
- Ceylon Electricity Board - Sri Lanka
- Offshore Bulk Terminal Pte Ltd, Singapore
- GN Power Mariveles Coal Plant, Philippines
- Baramulti Group, Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Africa Commodities Group - South Africa
- Aditya Birla Group - India
- Trasteel International SA, Italy
- White Energy Company Limited
- Star Paper Mills Limited - India
- Gujarat Sidhee Cement - India
- Chettinad Cement Corporation Ltd - India
- Coal and Oil Company - UAE
- Krishnapatnam Port Company Ltd. - India
- Vedanta Resources Plc - India
- Altura Mining Limited, Indonesia
- Bulk Trading Sa - Switzerland
- Bayan Resources Tbk. - Indonesia
- TeaM Sual Corporation - Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Indonesian Coal Mining Association
- Ministry of Finance - Indonesia
- Bhatia International Limited - India
- Agrawal Coal Company - India
- Karaikal Port Pvt Ltd - India
- Coastal Gujarat Power Limited - India
- Petron Corporation, Philippines
- Manunggal Multi Energi - Indonesia
- Minerals Council of Australia
- Eastern Energy - Thailand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Chamber of Mines of South Africa
- Siam City Cement PLC, Thailand
- Tamil Nadu electricity Board
- Dalmia Cement Bharat India
- Lanco Infratech Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Mercator Lines Limited - India
- Australian Coal Association
- The Treasury - Australian Government
- Kepco SPC Power Corporation, Philippines
- Posco Energy - South Korea
- Vizag Seaport Private Limited - India
- Global Business Power Corporation, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Formosa Plastics Group - Taiwan
- Toyota Tsusho Corporation, Japan
- Wilmar Investment Holdings
- Meenaskhi Energy Private Limited - India
- Singapore Mercantile Exchange
- Parry Sugars Refinery, India
- Electricity Authority, New Zealand
- Essar Steel Hazira Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Power Finance Corporation Ltd., India
- Larsen & Toubro Limited - India
- Simpson Spence & Young - Indonesia
- Binh Thuan Hamico - Vietnam
- Sarangani Energy Corporation, Philippines
- Heidelberg Cement - Germany
- Mercuria Energy - Indonesia
- Electricity Generating Authority of Thailand
- Kobexindo Tractors - Indoneisa
- Bukit Baiduri Energy - Indonesia
- Mintek Dendrill Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Rashtriya Ispat Nigam Limited - India
- Orica Australia Pty. Ltd.
- Therma Luzon, Inc, Philippines
- Pendopo Energi Batubara - Indonesia
- Antam Resourcindo - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Siam City Cement - Thailand
- Indika Energy - Indonesia
- ASAPP Information Group - India
- AsiaOL BioFuels Corp., Philippines
- Georgia Ports Authority, United States
- Kumho Petrochemical, South Korea
- Australian Commodity Traders Exchange
- Jorong Barutama Greston.PT - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Grasim Industreis Ltd - India
- Timah Investasi Mineral - Indoneisa
- MS Steel International - UAE
- Ind-Barath Power Infra Limited - India
- Bangladesh Power Developement Board
- VISA Power Limited - India
- Metalloyd Limited - United Kingdom
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Jindal Steel & Power Ltd - India
- GVK Power & Infra Limited - India
- Parliament of New Zealand
- Global Green Power PLC Corporation, Philippines
- International Coal Ventures Pvt Ltd - India
- Latin American Coal - Colombia
- Maheswari Brothers Coal Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Ministry of Transport, Egypt
- PowerSource Philippines DevCo
- PTC India Limited - India
- Coalindo Energy - Indonesia
- SN Aboitiz Power Inc, Philippines
- Thai Mozambique Logistica
- Kapuas Tunggal Persada - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Ambuja Cements Ltd - India
- Renaissance Capital - South Africa
- McConnell Dowell - Australia
- Goldman Sachs - Singapore
- Billiton Holdings Pty Ltd - Australia
- Wood Mackenzie - Singapore
- Indogreen Group - Indonesia
- Intertek Mineral Services - Indonesia
- OPG Power Generation Pvt Ltd - India
- Thiess Contractors Indonesia
- Alfred C Toepfer International GmbH - Germany
- Uttam Galva Steels Limited - India
- Tata Chemicals Ltd - India
- The University of Queensland
- Medco Energi Mining Internasional
- Maharashtra Electricity Regulatory Commission - India
- PNOC Exploration Corporation - Philippines
- Bukit Makmur.PT - Indonesia
- Meralco Power Generation, Philippines
- Interocean Group of Companies - India
- Aboitiz Power Corporation - Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- ICICI Bank Limited - India
- South Luzon Thermal Energy Corporation
- Bharathi Cement Corporation - India
- Directorate Of Revenue Intelligence - India
- Eastern Coal Council - USA
- San Jose City I Power Corp, Philippines
- Makarim & Taira - Indonesia
- Attock Cement Pakistan Limited
- Economic Council, Georgia
- Global Coal Blending Company Limited - Australia
- Gujarat Electricity Regulatory Commission - India
- Carbofer General Trading SA - India
- Xindia Steels Limited - India
- CNBM International Corporation - China
- India Bulls Power Limited - India
- Salva Resources Pvt Ltd - India
- Marubeni Corporation - India
- Anglo American - United Kingdom
- Sojitz Corporation - Japan
- Planning Commission, India
- Leighton Contractors Pty Ltd - Australia
- GMR Energy Limited - India
- Port Waratah Coal Services - Australia
- Bhushan Steel Limited - India
- New Zealand Coal & Carbon
- Semirara Mining and Power Corporation, Philippines
- Rio Tinto Coal - Australia
- Holcim Trading Pte Ltd - Singapore
- Banpu Public Company Limited - Thailand
- Commonwealth Bank - Australia
- Mjunction Services Limited - India
- Savvy Resources Ltd - HongKong
- Ministry of Mines - Canada
- The State Trading Corporation of India Ltd
- Kaltim Prima Coal - Indonesia
- Sree Jayajothi Cements Limited - India
- Sindya Power Generating Company Private Ltd
- European Bulk Services B.V. - Netherlands
- IHS Mccloskey Coal Group - USA
- Oldendorff Carriers - Singapore
- Madhucon Powers Ltd - India
- Kartika Selabumi Mining - Indonesia
- Indo Tambangraya Megah - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Central Java Power - Indonesia
- Bhoruka Overseas - Indonesia
- Romanian Commodities Exchange
- Samtan Co., Ltd - South Korea
- PetroVietnam Power Coal Import and Supply Company
- Cement Manufacturers Association - India
- Independent Power Producers Association of India
- Malabar Cements Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Standard Chartered Bank - UAE
- SMC Global Power, Philippines
- Iligan Light & Power Inc, Philippines
- Riau Bara Harum - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Kideco Jaya Agung - Indonesia
- Sical Logistics Limited - India
- London Commodity Brokers - England
- Barasentosa Lestari - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Energy Link Ltd, New Zealand
- GAC Shipping (India) Pvt Ltd
- Jaiprakash Power Ventures ltd
- Deloitte Consulting - India
- Orica Mining Services - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- CIMB Investment Bank - Malaysia
- SMG Consultants - Indonesia
- LBH Netherlands Bv - Netherlands
- Price Waterhouse Coopers - Russia
- Indian Energy Exchange, India
- Edison Trading Spa - Italy
- Central Electricity Authority - India
- Indian Oil Corporation Limited
- Borneo Indobara - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Videocon Industries ltd - India
- Straits Asia Resources Limited - Singapore
- Semirara Mining Corp, Philippines
- Globalindo Alam Lestari - Indonesia
- Merrill Lynch Commodities Europe
- Bahari Cakrawala Sebuku - Indonesia
- Sakthi Sugars Limited - India
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