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