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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, 09 January 19
SHIPPING MARKET INSIGHT - INERMODAL
Paraphrasing the words of a Chief economist in a latest report of the World Bank Group, the current state of the shipping market very much resemble ...
Tuesday, 08 January 19
GLOBAL TRADE GROWTH EXPECTED TO REMAIN AT HEALTHY IN 2019 - ALLIED
2019 is here and we find ourselves with new challenges for the shipping industry and the global economy as whole, with market prospects being neith ...
Monday, 07 January 19
THE NEWCASTLE BENCHMARK SPOT PRICE IS FORECAST TO DECLINE FROM AN ESTIMATED AVERAGE OF US$105 A TONNE IN 2018 TO US$74 A TONNE IN 2020 - DEPARTMENT OF INDUSTRY, AUSTRALIA
• The Newcastle benchmark spot price is forecast to decline from an estimated average of US$105 a tonne in 2018 to US$74 a tonne in 2020, prim ...
Monday, 07 January 19
INDONESIAN GOVERNMENT DECLARED COAL BENCHMARK PRICE FALLS FOR FIFTH STRAIGHT MONTH IN JANUARY 2019; LOWEST SINCE JUNE 2018
COALspot.com: The Ministry of Energy and Mineral Resources of the Republic of Indonesia has revised down again the benchmark price of Indonesian th ...
Monday, 07 January 19
RUSSIA'S COAL PRODUCTION UP 5.9% TO 433.4 MLN TONNES IN 2018 - TASS
Coal production in Russia in 2018 increased by 5.9% year-on-year to 433.4 mln tonnes, according to the Central Dispatching Department of Fuel Energ ...
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- Renaissance Capital - South Africa
- Georgia Ports Authority, United States
- Gujarat Mineral Development Corp Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Sical Logistics Limited - India
- Rashtriya Ispat Nigam Limited - India
- McConnell Dowell - Australia
- GMR Energy Limited - India
- Energy Link Ltd, New Zealand
- GAC Shipping (India) Pvt Ltd
- Star Paper Mills Limited - India
- PTC India Limited - India
- Krishnapatnam Port Company Ltd. - India
- Thai Mozambique Logistica
- SMC Global Power, Philippines
- Energy Development Corp, Philippines
- Latin American Coal - Colombia
- New Zealand Coal & Carbon
- Indika Energy - Indonesia
- Wilmar Investment Holdings
- Salva Resources Pvt Ltd - India
- Antam Resourcindo - Indonesia
- Agrawal Coal Company - India
- Carbofer General Trading SA - India
- Directorate Of Revenue Intelligence - India
- Indogreen Group - Indonesia
- Sindya Power Generating Company Private Ltd
- Orica Mining Services - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Indian Oil Corporation Limited
- Parliament of New Zealand
- Port Waratah Coal Services - Australia
- CNBM International Corporation - China
- Banpu Public Company Limited - Thailand
- Sojitz Corporation - Japan
- Rio Tinto Coal - Australia
- Mercator Lines Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Australian Commodity Traders Exchange
- Power Finance Corporation Ltd., India
- Ministry of Mines - Canada
- Kapuas Tunggal Persada - Indonesia
- Grasim Industreis Ltd - India
- Lanco Infratech Ltd - India
- Economic Council, Georgia
- Bharathi Cement Corporation - India
- Altura Mining Limited, Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Xindia Steels Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Deloitte Consulting - India
- Dalmia Cement Bharat India
- Sree Jayajothi Cements Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Wood Mackenzie - Singapore
- Bulk Trading Sa - Switzerland
- Baramulti Group, Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Indonesian Coal Mining Association
- Parry Sugars Refinery, India
- Vizag Seaport Private Limited - India
- White Energy Company Limited
- Gujarat Sidhee Cement - India
- Global Business Power Corporation, Philippines
- Heidelberg Cement - Germany
- Maheswari Brothers Coal Limited - India
- Petron Corporation, Philippines
- Price Waterhouse Coopers - Russia
- Alfred C Toepfer International GmbH - Germany
- Sinarmas Energy and Mining - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Kepco SPC Power Corporation, Philippines
- Coal and Oil Company - UAE
- Kobexindo Tractors - Indoneisa
- Marubeni Corporation - India
- Bahari Cakrawala Sebuku - Indonesia
- Africa Commodities Group - South Africa
- Offshore Bulk Terminal Pte Ltd, Singapore
- Siam City Cement - Thailand
- Cement Manufacturers Association - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Karbindo Abesyapradhi - Indoneisa
- Edison Trading Spa - Italy
- Goldman Sachs - Singapore
- The University of Queensland
- AsiaOL BioFuels Corp., Philippines
- Bukit Baiduri Energy - Indonesia
- Coastal Gujarat Power Limited - India
- Mjunction Services Limited - India
- Chamber of Mines of South Africa
- Toyota Tsusho Corporation, Japan
- Sakthi Sugars Limited - India
- Billiton Holdings Pty Ltd - Australia
- Kaltim Prima Coal - Indonesia
- Ministry of Transport, Egypt
- ASAPP Information Group - India
- Malabar Cements Ltd - India
- Central Java Power - Indonesia
- MS Steel International - UAE
- Meralco Power Generation, Philippines
- Tamil Nadu electricity Board
- Kartika Selabumi Mining - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Directorate General of MIneral and Coal - Indonesia
- Mercuria Energy - Indonesia
- South Luzon Thermal Energy Corporation
- Timah Investasi Mineral - Indoneisa
- Commonwealth Bank - Australia
- San Jose City I Power Corp, Philippines
- Borneo Indobara - Indonesia
- Formosa Plastics Group - Taiwan
- Chettinad Cement Corporation Ltd - India
- Standard Chartered Bank - UAE
- Semirara Mining Corp, Philippines
- Jindal Steel & Power Ltd - India
- Ministry of Finance - Indonesia
- Thiess Contractors Indonesia
- Jaiprakash Power Ventures ltd
- Anglo American - United Kingdom
- Binh Thuan Hamico - Vietnam
- Madhucon Powers Ltd - India
- IEA Clean Coal Centre - UK
- IHS Mccloskey Coal Group - USA
- Kumho Petrochemical, South Korea
- SN Aboitiz Power Inc, Philippines
- International Coal Ventures Pvt Ltd - India
- Indian Energy Exchange, India
- The Treasury - Australian Government
- OPG Power Generation Pvt Ltd - India
- Intertek Mineral Services - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Eastern Coal Council - USA
- Singapore Mercantile Exchange
- Central Electricity Authority - India
- PowerSource Philippines DevCo
- Riau Bara Harum - Indonesia
- Bukit Makmur.PT - Indonesia
- Vedanta Resources Plc - India
- Eastern Energy - Thailand
- Ambuja Cements Ltd - India
- European Bulk Services B.V. - Netherlands
- Interocean Group of Companies - India
- Makarim & Taira - Indonesia
- Indo Tambangraya Megah - Indonesia
- Orica Australia Pty. Ltd.
- Global Coal Blending Company Limited - Australia
- ICICI Bank Limited - India
- Bhoruka Overseas - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- TeaM Sual Corporation - Philippines
- Minerals Council of Australia
- Sarangani Energy Corporation, Philippines
- Leighton Contractors Pty Ltd - Australia
- Metalloyd Limited - United Kingdom
- Siam City Cement PLC, Thailand
- Iligan Light & Power Inc, Philippines
- The State Trading Corporation of India Ltd
- Trasteel International SA, Italy
- Romanian Commodities Exchange
- Asmin Koalindo Tuhup - Indonesia
- Mintek Dendrill Indonesia
- Uttam Galva Steels Limited - India
- Gujarat Electricity Regulatory Commission - India
- Oldendorff Carriers - Singapore
- Meenaskhi Energy Private Limited - India
- Bangladesh Power Developement Board
- Globalindo Alam Lestari - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Jorong Barutama Greston.PT - Indonesia
- Straits Asia Resources Limited - Singapore
- Coalindo Energy - Indonesia
- Karaikal Port Pvt Ltd - India
- SMG Consultants - Indonesia
- VISA Power Limited - India
- Global Green Power PLC Corporation, Philippines
- Holcim Trading Pte Ltd - Singapore
- India Bulls Power Limited - India
- CIMB Investment Bank - Malaysia
- Medco Energi Mining Internasional
- Aboitiz Power Corporation - Philippines
- Electricity Authority, New Zealand
- Tata Chemicals Ltd - India
- Bhushan Steel Limited - India
- PNOC Exploration Corporation - Philippines
- Neyveli Lignite Corporation Ltd, - India
- Cigading International Bulk Terminal - Indonesia
- Bhatia International Limited - India
- Aditya Birla Group - India
- Attock Cement Pakistan Limited
- Bayan Resources Tbk. - Indonesia
- Barasentosa Lestari - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Pendopo Energi Batubara - Indonesia
- LBH Netherlands Bv - Netherlands
- Manunggal Multi Energi - Indonesia
- GVK Power & Infra Limited - India
- Ind-Barath Power Infra Limited - India
- Savvy Resources Ltd - HongKong
- Larsen & Toubro Limited - India
- Planning Commission, India
- Samtan Co., Ltd - South Korea
- Australian Coal Association
- Electricity Generating Authority of Thailand
- Posco Energy - South Korea
- Essar Steel Hazira Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Videocon Industries ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Ceylon Electricity Board - Sri Lanka
- Kideco Jaya Agung - Indonesia
- Independent Power Producers Association of India
- London Commodity Brokers - England
- Simpson Spence & Young - Indonesia
- Merrill Lynch Commodities Europe
- Therma Luzon, Inc, Philippines
- Petrochimia International Co. Ltd.- Taiwan
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