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