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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, 19 December 18
GLOBAL COAL DEMAND SET TO REMAIN STABLE THROUGH 2023, DESPITE HEADWINDS - IEA
While global coal demand looks set to rise for the second year in a row in 2018, it is forecast to remain stable over the next five years, as decli ...
Wednesday, 19 December 18
GLOBAL SHIPPING SCOUTS FOR FUTURE GROWTH - PETER SAND, BIMCO
Where do we go to find economic growth that spurs shipping demand in the next five years? According to the International Monetary Fund (IMF), we sh ...
Wednesday, 19 December 18
SHIPPING MARKET INSIGHT - INTERMODAL
As another year is coming to an end, it is interesting to look at the main shipping markets and how these performed compared to 2017.
&nb ...
Tuesday, 18 December 18
COAL DEMAND WILL REMAIN STEADY THROUGH 2023, INTERNATIONAL ENERGY AGENCY SAYS - TOM DICHRISTOPHER, CNBC
Coal consumption is on the rise but will remain roughly stable over the next five years, the International Energy Agency forecasts.
...
Tuesday, 18 December 18
DRY BULK: IN ABSOLUTE TERMS, ALL MAIN SIZE SEGMENTS SAW THEIR ACTUAL VOLATILITY FIGURES DECREASE - ALLIED
Since the beginning of 2016, when the dry bulk market reached its absolute bottom, freight rates have been ever since on an upward trajectory. Taki ...
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- Goldman Sachs - Singapore
- Deloitte Consulting - India
- VISA Power Limited - India
- Eastern Energy - Thailand
- Sree Jayajothi Cements Limited - India
- Global Business Power Corporation, Philippines
- Edison Trading Spa - Italy
- Attock Cement Pakistan Limited
- Romanian Commodities Exchange
- Eastern Coal Council - USA
- Larsen & Toubro Limited - India
- Anglo American - United Kingdom
- Maheswari Brothers Coal Limited - India
- CIMB Investment Bank - Malaysia
- Ambuja Cements Ltd - India
- Borneo Indobara - Indonesia
- Indonesian Coal Mining Association
- Central Java Power - Indonesia
- Parliament of New Zealand
- GN Power Mariveles Coal Plant, Philippines
- Mjunction Services Limited - India
- Commonwealth Bank - Australia
- Banpu Public Company Limited - Thailand
- Coal and Oil Company - UAE
- SN Aboitiz Power Inc, Philippines
- GMR Energy Limited - India
- Global Coal Blending Company Limited - Australia
- PTC India Limited - India
- Kobexindo Tractors - Indoneisa
- Bharathi Cement Corporation - India
- Kepco SPC Power Corporation, Philippines
- Tamil Nadu electricity Board
- Semirara Mining and Power Corporation, Philippines
- Aditya Birla Group - India
- Alfred C Toepfer International GmbH - Germany
- Ind-Barath Power Infra Limited - India
- Carbofer General Trading SA - India
- PowerSource Philippines DevCo
- Simpson Spence & Young - Indonesia
- Chettinad Cement Corporation Ltd - India
- SMG Consultants - Indonesia
- India Bulls Power Limited - India
- Lanco Infratech Ltd - India
- ASAPP Information Group - India
- South Luzon Thermal Energy Corporation
- Antam Resourcindo - Indonesia
- Savvy Resources Ltd - HongKong
- Coalindo Energy - Indonesia
- Miang Besar Coal Terminal - Indonesia
- GAC Shipping (India) Pvt Ltd
- Meralco Power Generation, Philippines
- Kaltim Prima Coal - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Indo Tambangraya Megah - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Central Electricity Authority - India
- Planning Commission, India
- San Jose City I Power Corp, Philippines
- CNBM International Corporation - China
- PetroVietnam Power Coal Import and Supply Company
- Star Paper Mills Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Marubeni Corporation - India
- Therma Luzon, Inc, Philippines
- Indogreen Group - Indonesia
- Formosa Plastics Group - Taiwan
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Economic Council, Georgia
- Barasentosa Lestari - Indonesia
- Bhushan Steel Limited - India
- Semirara Mining Corp, Philippines
- Minerals Council of Australia
- Makarim & Taira - Indonesia
- Bulk Trading Sa - Switzerland
- Straits Asia Resources Limited - Singapore
- Manunggal Multi Energi - Indonesia
- Energy Link Ltd, New Zealand
- Jaiprakash Power Ventures ltd
- Parry Sugars Refinery, India
- Merrill Lynch Commodities Europe
- Karaikal Port Pvt Ltd - India
- Medco Energi Mining Internasional
- Georgia Ports Authority, United States
- Bukit Asam (Persero) Tbk - Indonesia
- Aboitiz Power Corporation - Philippines
- Mercator Lines Limited - India
- Port Waratah Coal Services - Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kapuas Tunggal Persada - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Sarangani Energy Corporation, Philippines
- Vizag Seaport Private Limited - India
- Essar Steel Hazira Ltd - India
- White Energy Company Limited
- Timah Investasi Mineral - Indoneisa
- Tata Chemicals Ltd - India
- The Treasury - Australian Government
- Kartika Selabumi Mining - Indonesia
- SMC Global Power, Philippines
- Sojitz Corporation - Japan
- Riau Bara Harum - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Thiess Contractors Indonesia
- Baramulti Group, Indonesia
- Bayan Resources Tbk. - Indonesia
- Thai Mozambique Logistica
- Mintek Dendrill Indonesia
- Australian Coal Association
- Indian Oil Corporation Limited
- Posco Energy - South Korea
- Petrochimia International Co. Ltd.- Taiwan
- Neyveli Lignite Corporation Ltd, - India
- Heidelberg Cement - Germany
- Binh Thuan Hamico - Vietnam
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Coastal Gujarat Power Limited - India
- Bangladesh Power Developement Board
- Asmin Koalindo Tuhup - Indonesia
- Electricity Authority, New Zealand
- Bhoruka Overseas - Indonesia
- Independent Power Producers Association of India
- Videocon Industries ltd - India
- Australian Commodity Traders Exchange
- Indika Energy - Indonesia
- Pendopo Energi Batubara - Indonesia
- International Coal Ventures Pvt Ltd - India
- Sical Logistics Limited - India
- Siam City Cement - Thailand
- Salva Resources Pvt Ltd - India
- Orica Australia Pty. Ltd.
- Madhucon Powers Ltd - India
- LBH Netherlands Bv - Netherlands
- Holcim Trading Pte Ltd - Singapore
- ICICI Bank Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Power Finance Corporation Ltd., India
- Energy Development Corp, Philippines
- MS Steel International - UAE
- Kalimantan Lumbung Energi - Indonesia
- Kideco Jaya Agung - Indonesia
- Latin American Coal - Colombia
- Jindal Steel & Power Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Globalindo Alam Lestari - Indonesia
- Meenaskhi Energy Private Limited - India
- Wood Mackenzie - Singapore
- Indian Energy Exchange, India
- Petron Corporation, Philippines
- Price Waterhouse Coopers - Russia
- Agrawal Coal Company - India
- Metalloyd Limited - United Kingdom
- Rio Tinto Coal - Australia
- Uttam Galva Steels Limited - India
- Billiton Holdings Pty Ltd - Australia
- Karbindo Abesyapradhi - Indoneisa
- Gujarat Mineral Development Corp Ltd - India
- Standard Chartered Bank - UAE
- Cement Manufacturers Association - India
- Electricity Generating Authority of Thailand
- Interocean Group of Companies - India
- Oldendorff Carriers - Singapore
- Directorate Of Revenue Intelligence - India
- Bahari Cakrawala Sebuku - Indonesia
- Malabar Cements Ltd - India
- McConnell Dowell - Australia
- Dalmia Cement Bharat India
- Bhatia International Limited - India
- Ministry of Transport, Egypt
- Chamber of Mines of South Africa
- Jorong Barutama Greston.PT - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- TeaM Sual Corporation - Philippines
- London Commodity Brokers - England
- Altura Mining Limited, Indonesia
- Iligan Light & Power Inc, Philippines
- Wilmar Investment Holdings
- Africa Commodities Group - South Africa
- PNOC Exploration Corporation - Philippines
- Sindya Power Generating Company Private Ltd
- The University of Queensland
- Ministry of Mines - Canada
- IHS Mccloskey Coal Group - USA
- TNB Fuel Sdn Bhd - Malaysia
- Sakthi Sugars Limited - India
- Trasteel International SA, Italy
- Renaissance Capital - South Africa
- Samtan Co., Ltd - South Korea
- AsiaOL BioFuels Corp., Philippines
- Gujarat Sidhee Cement - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Ministry of Finance - Indonesia
- Bukit Makmur.PT - Indonesia
- GVK Power & Infra Limited - India
- Singapore Mercantile Exchange
- Orica Mining Services - Indonesia
- Kumho Petrochemical, South Korea
- Rashtriya Ispat Nigam Limited - India
- Leighton Contractors Pty Ltd - Australia
- Cigading International Bulk Terminal - Indonesia
- Bukit Baiduri Energy - Indonesia
- Xindia Steels Limited - India
- Global Green Power PLC Corporation, Philippines
- New Zealand Coal & Carbon
- Mercuria Energy - Indonesia
- Grasim Industreis Ltd - India
- Toyota Tsusho Corporation, Japan
- Intertek Mineral Services - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Vedanta Resources Plc - India
- European Bulk Services B.V. - Netherlands
- Siam City Cement PLC, Thailand
- IEA Clean Coal Centre - UK
- OPG Power Generation Pvt Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- The State Trading Corporation of India Ltd
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