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