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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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Sunday, 02 December 18
TRADE WAR LEADING TO HEADWINDS FOR THE FRAGILE DRY BULK RECOVERY - PETER SAND, BIMCO
The first twelve weeks of the 2018/19 marketing year, which started on 1 September 2018, have painted a dire picture for US soya bean exports which ...
Friday, 30 November 18
GOVT MULLS REQUIRING MINERS TO TURN COAL INTO GAS - THE JAKARTA POST
The government is considering requiring all coal miners to turn the raw commodity into dimethylether (DME) as a substitute for liquefied petroleum ...
Friday, 30 November 18
SUPRAMAX: N. CHINA TO INDIA OR SE ASIA SUPRAS ARE GETTING PAID AROUND US$ 6000 - FEARNLEYS
Capesize
Sharp rise in spot activity and income, admittedly from very low levels, for the big ships. West Australia/China and Brazil/Far East b ...
Thursday, 29 November 18
NEW IMSBC CODE REQUIREMENTS AIM TO CONTROL LIQUEFACTION OF COAL CARGOES - GARD
KNOWLEDGE TO ELEVATE
The International Maritime Solid Bulk Cargoes (IMSBC) Code describes coal as a natural, solid, combustible material consi ...
Wednesday, 28 November 18
SHIPPING MARKET INSIGHT - GEORGE LAIOS
Last week I had the privilege to attend the SingularityU Greece Summit, in Athens. It was a privilege because you do not often have the chance to s ...
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- Offshore Bulk Terminal Pte Ltd, Singapore
- Vijayanagar Sugar Pvt Ltd - India
- Pendopo Energi Batubara - Indonesia
- Tamil Nadu electricity Board
- Medco Energi Mining Internasional
- PNOC Exploration Corporation - Philippines
- International Coal Ventures Pvt Ltd - India
- The University of Queensland
- Dalmia Cement Bharat India
- Kideco Jaya Agung - Indonesia
- OPG Power Generation Pvt Ltd - India
- GAC Shipping (India) Pvt Ltd
- Deloitte Consulting - India
- Marubeni Corporation - India
- White Energy Company Limited
- Port Waratah Coal Services - Australia
- Formosa Plastics Group - Taiwan
- Sree Jayajothi Cements Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Parry Sugars Refinery, India
- Energy Development Corp, Philippines
- Altura Mining Limited, Indonesia
- CNBM International Corporation - China
- Cigading International Bulk Terminal - Indonesia
- Kaltim Prima Coal - Indonesia
- Posco Energy - South Korea
- Toyota Tsusho Corporation, Japan
- Indian Oil Corporation Limited
- Edison Trading Spa - Italy
- Banpu Public Company Limited - Thailand
- TeaM Sual Corporation - Philippines
- Maharashtra Electricity Regulatory Commission - India
- Petron Corporation, Philippines
- Goldman Sachs - Singapore
- VISA Power Limited - India
- Indian Energy Exchange, India
- Vizag Seaport Private Limited - India
- Sojitz Corporation - Japan
- Karaikal Port Pvt Ltd - India
- SMC Global Power, Philippines
- Coal and Oil Company - UAE
- Global Business Power Corporation, Philippines
- Tata Chemicals Ltd - India
- Electricity Authority, New Zealand
- SMG Consultants - Indonesia
- Borneo Indobara - Indonesia
- Eastern Energy - Thailand
- Videocon Industries ltd - India
- Global Green Power PLC Corporation, Philippines
- Jaiprakash Power Ventures ltd
- The Treasury - Australian Government
- Ministry of Transport, Egypt
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Indogreen Group - Indonesia
- Malabar Cements Ltd - India
- Interocean Group of Companies - India
- Power Finance Corporation Ltd., India
- Siam City Cement - Thailand
- Cement Manufacturers Association - India
- Kobexindo Tractors - Indoneisa
- Standard Chartered Bank - UAE
- Simpson Spence & Young - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bahari Cakrawala Sebuku - Indonesia
- Price Waterhouse Coopers - Russia
- Salva Resources Pvt Ltd - India
- Energy Link Ltd, New Zealand
- PTC India Limited - India
- Savvy Resources Ltd - HongKong
- Chettinad Cement Corporation Ltd - India
- Lanco Infratech Ltd - India
- Samtan Co., Ltd - South Korea
- Ambuja Cements Ltd - India
- Jindal Steel & Power Ltd - India
- Globalindo Alam Lestari - Indonesia
- San Jose City I Power Corp, Philippines
- Carbofer General Trading SA - India
- Trasteel International SA, Italy
- Therma Luzon, Inc, Philippines
- Intertek Mineral Services - Indonesia
- McConnell Dowell - Australia
- Global Coal Blending Company Limited - Australia
- Orica Australia Pty. Ltd.
- South Luzon Thermal Energy Corporation
- Orica Mining Services - Indonesia
- Indo Tambangraya Megah - Indonesia
- LBH Netherlands Bv - Netherlands
- Gujarat Electricity Regulatory Commission - India
- Merrill Lynch Commodities Europe
- Directorate General of MIneral and Coal - Indonesia
- Aditya Birla Group - India
- Sical Logistics Limited - India
- Planning Commission, India
- Georgia Ports Authority, United States
- The State Trading Corporation of India Ltd
- Kepco SPC Power Corporation, Philippines
- Grasim Industreis Ltd - India
- Metalloyd Limited - United Kingdom
- Directorate Of Revenue Intelligence - India
- PetroVietnam Power Coal Import and Supply Company
- Ministry of Mines - Canada
- Larsen & Toubro Limited - India
- Coalindo Energy - Indonesia
- European Bulk Services B.V. - Netherlands
- Antam Resourcindo - Indonesia
- Economic Council, Georgia
- Indika Energy - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bayan Resources Tbk. - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Coastal Gujarat Power Limited - India
- Electricity Generating Authority of Thailand
- Meenaskhi Energy Private Limited - India
- Kartika Selabumi Mining - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- SN Aboitiz Power Inc, Philippines
- Ind-Barath Power Infra Limited - India
- Attock Cement Pakistan Limited
- ASAPP Information Group - India
- Bhushan Steel Limited - India
- Mercator Lines Limited - India
- Gujarat Sidhee Cement - India
- Anglo American - United Kingdom
- IHS Mccloskey Coal Group - USA
- Australian Coal Association
- Petrochimia International Co. Ltd.- Taiwan
- Renaissance Capital - South Africa
- Manunggal Multi Energi - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Central Electricity Authority - India
- Wilmar Investment Holdings
- CIMB Investment Bank - Malaysia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Central Java Power - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Miang Besar Coal Terminal - Indonesia
- Vedanta Resources Plc - India
- Xindia Steels Limited - India
- Timah Investasi Mineral - Indoneisa
- Mjunction Services Limited - India
- Eastern Coal Council - USA
- Baramulti Group, Indonesia
- Billiton Holdings Pty Ltd - Australia
- Krishnapatnam Port Company Ltd. - India
- Asmin Koalindo Tuhup - Indonesia
- Semirara Mining Corp, Philippines
- Uttam Galva Steels Limited - India
- Chamber of Mines of South Africa
- Essar Steel Hazira Ltd - India
- GMR Energy Limited - India
- Kapuas Tunggal Persada - Indonesia
- Sindya Power Generating Company Private Ltd
- Kumho Petrochemical, South Korea
- Maheswari Brothers Coal Limited - India
- ICICI Bank Limited - India
- Binh Thuan Hamico - Vietnam
- Agrawal Coal Company - India
- Bulk Trading Sa - Switzerland
- Indonesian Coal Mining Association
- Rashtriya Ispat Nigam Limited - India
- Gujarat Mineral Development Corp Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Barasentosa Lestari - Indonesia
- Thiess Contractors Indonesia
- Australian Commodity Traders Exchange
- Bukit Baiduri Energy - Indonesia
- Africa Commodities Group - South Africa
- New Zealand Coal & Carbon
- Siam City Cement PLC, Thailand
- Karbindo Abesyapradhi - Indoneisa
- Mercuria Energy - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Ministry of Finance - Indonesia
- Straits Asia Resources Limited - Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bangladesh Power Developement Board
- Wood Mackenzie - Singapore
- Kohat Cement Company Ltd. - Pakistan
- Mintek Dendrill Indonesia
- Meralco Power Generation, Philippines
- Singapore Mercantile Exchange
- Rio Tinto Coal - Australia
- Bhoruka Overseas - Indonesia
- Makarim & Taira - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- GVK Power & Infra Limited - India
- Aboitiz Power Corporation - Philippines
- PowerSource Philippines DevCo
- TNB Fuel Sdn Bhd - Malaysia
- Latin American Coal - Colombia
- Parliament of New Zealand
- Sarangani Energy Corporation, Philippines
- Holcim Trading Pte Ltd - Singapore
- Minerals Council of Australia
- Thai Mozambique Logistica
- Star Paper Mills Limited - India
- Madhucon Powers Ltd - India
- Riau Bara Harum - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Oldendorff Carriers - Singapore
- Iligan Light & Power Inc, Philippines
- MS Steel International - UAE
- Romanian Commodities Exchange
- IEA Clean Coal Centre - UK
- Bukit Makmur.PT - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Bhatia International Limited - India
- Heidelberg Cement - Germany
- London Commodity Brokers - England
- Independent Power Producers Association of India
- Bharathi Cement Corporation - India
- Sakthi Sugars Limited - India
- India Bulls Power Limited - India
- Commonwealth Bank - Australia
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