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