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