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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, 25 December 18
FUEL QUALITY AND SAFETY IN IMO CONVENTIONS: A GROWING CHALLENGE, EVEN PRIOR TO 1 JANUARY 2020 - IUMI
At the 100th session of the International Maritime Organization’s (IMO) Maritime Safety Committee (MSC) meeting discussions on fuel quality a ...
Monday, 24 December 18
DRY BULK MARKET: CAPESIZE MARKET ON BACKFOOT AS 2018'S END DRAWS NEAR - THE BALTIC BRIEFING
Capesize
Panic set in in the East as the holiday season approaches, with owners chasing rates lower. Rates on the key West Australia/China route ...
Friday, 21 December 18
4.2 MILLION DWT OF DRY BULK SHIPS SCRAPPED UNTIL 17 DEC, DOWN 71.6% Y/Y - BIMCO
2018 has been a slow year for dry bulk demolitions, with only 4.2 million DWT scrapped (as of 17 December), down 71.6% compared to last year. An al ...
Thursday, 20 December 18
INDONESIAN COAL PRICES DIVERGE FROM KEY BENCHMARK - FITCH RATINGS
The Newcastle 6,000kcal coal price benchmark that is widely used to determine most coal price estimates for Indonesian coal miners has increasingly ...
Wednesday, 19 December 18
CHINA'S IMPORT RESTRICTIONS ON COAL SPOILS THE PARTY FOR PANAMAXES - DREWRY
The Chinese government’s objective of suppressing coal and lignite imports in November and December 2018 is adversely impacting demand for Pa ...
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- CIMB Investment Bank - Malaysia
- Therma Luzon, Inc, Philippines
- Tata Chemicals Ltd - India
- Coalindo Energy - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Power Finance Corporation Ltd., India
- Carbofer General Trading SA - India
- SN Aboitiz Power Inc, Philippines
- Gujarat Electricity Regulatory Commission - India
- Price Waterhouse Coopers - Russia
- San Jose City I Power Corp, Philippines
- Electricity Authority, New Zealand
- ICICI Bank Limited - India
- Africa Commodities Group - South Africa
- Grasim Industreis Ltd - India
- Kepco SPC Power Corporation, Philippines
- ASAPP Information Group - India
- Star Paper Mills Limited - India
- Bukit Baiduri Energy - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Central Java Power - Indonesia
- Iligan Light & Power Inc, Philippines
- Trasteel International SA, Italy
- India Bulls Power Limited - India
- Toyota Tsusho Corporation, Japan
- Tamil Nadu electricity Board
- McConnell Dowell - Australia
- GVK Power & Infra Limited - India
- Borneo Indobara - Indonesia
- Energy Development Corp, Philippines
- Directorate Of Revenue Intelligence - India
- Parry Sugars Refinery, India
- Indian Energy Exchange, India
- Heidelberg Cement - Germany
- Deloitte Consulting - India
- Global Coal Blending Company Limited - Australia
- Electricity Generating Authority of Thailand
- Semirara Mining and Power Corporation, Philippines
- Indika Energy - Indonesia
- Baramulti Group, Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Merrill Lynch Commodities Europe
- Antam Resourcindo - Indonesia
- Barasentosa Lestari - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Mjunction Services Limited - India
- Metalloyd Limited - United Kingdom
- Parliament of New Zealand
- Petron Corporation, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Aditya Birla Group - India
- Energy Link Ltd, New Zealand
- Krishnapatnam Port Company Ltd. - India
- Meralco Power Generation, Philippines
- Malabar Cements Ltd - India
- PNOC Exploration Corporation - Philippines
- Thiess Contractors Indonesia
- Semirara Mining Corp, Philippines
- Riau Bara Harum - Indonesia
- International Coal Ventures Pvt Ltd - India
- IHS Mccloskey Coal Group - USA
- Kaltim Prima Coal - Indonesia
- Gujarat Sidhee Cement - India
- SMG Consultants - Indonesia
- White Energy Company Limited
- PowerSource Philippines DevCo
- Australian Coal Association
- Jorong Barutama Greston.PT - Indonesia
- Samtan Co., Ltd - South Korea
- Posco Energy - South Korea
- Minerals Council of Australia
- Kumho Petrochemical, South Korea
- Australian Commodity Traders Exchange
- Sindya Power Generating Company Private Ltd
- Kideco Jaya Agung - Indonesia
- Agrawal Coal Company - India
- Rio Tinto Coal - Australia
- PTC India Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Bangladesh Power Developement Board
- Sinarmas Energy and Mining - Indonesia
- TeaM Sual Corporation - Philippines
- GMR Energy Limited - India
- Savvy Resources Ltd - HongKong
- Renaissance Capital - South Africa
- Eastern Coal Council - USA
- Alfred C Toepfer International GmbH - Germany
- Bhoruka Overseas - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Vedanta Resources Plc - India
- Bulk Trading Sa - Switzerland
- Salva Resources Pvt Ltd - India
- Orica Australia Pty. Ltd.
- Chettinad Cement Corporation Ltd - India
- Bharathi Cement Corporation - India
- Orica Mining Services - Indonesia
- European Bulk Services B.V. - Netherlands
- Central Electricity Authority - India
- IEA Clean Coal Centre - UK
- Bhushan Steel Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Meenaskhi Energy Private Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Kartika Selabumi Mining - Indonesia
- Cement Manufacturers Association - India
- Ministry of Finance - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- The University of Queensland
- Interocean Group of Companies - India
- Planning Commission, India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Anglo American - United Kingdom
- Bank of Tokyo Mitsubishi UFJ Ltd
- Standard Chartered Bank - UAE
- Bhatia International Limited - India
- London Commodity Brokers - England
- The Treasury - Australian Government
- LBH Netherlands Bv - Netherlands
- Sarangani Energy Corporation, Philippines
- Commonwealth Bank - Australia
- Binh Thuan Hamico - Vietnam
- Goldman Sachs - Singapore
- Port Waratah Coal Services - Australia
- Ministry of Mines - Canada
- Bahari Cakrawala Sebuku - Indonesia
- Kobexindo Tractors - Indoneisa
- Pendopo Energi Batubara - Indonesia
- Global Business Power Corporation, Philippines
- Simpson Spence & Young - Indonesia
- Edison Trading Spa - Italy
- Medco Energi Mining Internasional
- Ind-Barath Power Infra Limited - India
- VISA Power Limited - India
- Manunggal Multi Energi - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Wilmar Investment Holdings
- Georgia Ports Authority, United States
- Thai Mozambique Logistica
- Jaiprakash Power Ventures ltd
- Billiton Holdings Pty Ltd - Australia
- Aboitiz Power Corporation - Philippines
- Dalmia Cement Bharat India
- Straits Asia Resources Limited - Singapore
- Leighton Contractors Pty Ltd - Australia
- Vijayanagar Sugar Pvt Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Siam City Cement PLC, Thailand
- Sree Jayajothi Cements Limited - India
- Miang Besar Coal Terminal - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Economic Council, Georgia
- MS Steel International - UAE
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Lanco Infratech Ltd - India
- Maheswari Brothers Coal Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Globalindo Alam Lestari - Indonesia
- Coastal Gujarat Power Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Bayan Resources Tbk. - Indonesia
- Essar Steel Hazira Ltd - India
- Larsen & Toubro Limited - India
- Formosa Plastics Group - Taiwan
- Jindal Steel & Power Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Global Green Power PLC Corporation, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Indogreen Group - Indonesia
- Vizag Seaport Private Limited - India
- Mintek Dendrill Indonesia
- Romanian Commodities Exchange
- Madhucon Powers Ltd - India
- New Zealand Coal & Carbon
- GAC Shipping (India) Pvt Ltd
- Eastern Energy - Thailand
- Altura Mining Limited, Indonesia
- Singapore Mercantile Exchange
- AsiaOL BioFuels Corp., Philippines
- Attock Cement Pakistan Limited
- Videocon Industries ltd - India
- Latin American Coal - Colombia
- OPG Power Generation Pvt Ltd - India
- Independent Power Producers Association of India
- Indonesian Coal Mining Association
- Banpu Public Company Limited - Thailand
- Mercuria Energy - Indonesia
- Uttam Galva Steels Limited - India
- South Luzon Thermal Energy Corporation
- Oldendorff Carriers - Singapore
- CNBM International Corporation - China
- Bukit Makmur.PT - Indonesia
- Indian Oil Corporation Limited
- Intertek Mineral Services - Indonesia
- Ambuja Cements Ltd - India
- Wood Mackenzie - Singapore
- Timah Investasi Mineral - Indoneisa
- Sakthi Sugars Limited - India
- Makarim & Taira - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Sical Logistics Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Holcim Trading Pte Ltd - Singapore
- Indo Tambangraya Megah - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- The State Trading Corporation of India Ltd
- Sojitz Corporation - Japan
- Karaikal Port Pvt Ltd - India
- SMC Global Power, Philippines
- Mercator Lines Limited - India
- Coal and Oil Company - UAE
- Siam City Cement - Thailand
- Chamber of Mines of South Africa
- Marubeni Corporation - India
- Bukit Asam (Persero) Tbk - Indonesia
- Xindia Steels Limited - India
- Ministry of Transport, Egypt
- Kapuas Tunggal Persada - Indonesia
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