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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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Monday, 19 November 18
SUPRAMAX: THE BSI CONTINUED TO FALL LAST WEEK, ESPECIALLY THE ASIAN ROUTES - BALTIC BRIEFING
Capesize
After a cut throat couple of weeks, the market finally appeared to have found a floor and rates ticked up. Those analysts that predict ...
Sunday, 18 November 18
COAL STOCKS IN A THIRD OF NTPC PLANTS CLOSE TO NIL - FINANCIAL EXPRESS
Coal supply shortage continues to haunt NTPC, the country’s largest power generator, with latest government data showing 31% of the company&r ...
Thursday, 15 November 18
OIL MARKET REPORT: HEEDING THE WARNINGS - IEA
In last month’s Report, we noted that since the middle of the year oil supply had increased sharply, with gains in the Middle East, Russia an ...
Wednesday, 14 November 18
BIMCO ADOPTS 2020 BUNKER CLAUSES
BIMCO has developed two 2020 bunker clauses that deal with general compliance and the transitional period for an early December release.
...
Wednesday, 14 November 18
SHIPPING MARKET INSIGHT - KONSTANTINOS KONTOMICHIS
The shipping industry is going through an interesting period across all markets. Since the end of last year, the Dry Baltic Index has been showing ...
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- Energy Link Ltd, New Zealand
- Semirara Mining Corp, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Standard Chartered Bank - UAE
- Global Business Power Corporation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Petron Corporation, Philippines
- Gujarat Sidhee Cement - India
- Billiton Holdings Pty Ltd - Australia
- Central Electricity Authority - India
- Minerals Council of Australia
- Vedanta Resources Plc - India
- Orica Mining Services - Indonesia
- Sree Jayajothi Cements Limited - India
- Romanian Commodities Exchange
- Bayan Resources Tbk. - Indonesia
- SMG Consultants - Indonesia
- Semirara Mining and Power Corporation, Philippines
- The State Trading Corporation of India Ltd
- London Commodity Brokers - England
- ICICI Bank Limited - India
- Wood Mackenzie - Singapore
- Kepco SPC Power Corporation, Philippines
- Coastal Gujarat Power Limited - India
- Larsen & Toubro Limited - India
- Medco Energi Mining Internasional
- Intertek Mineral Services - Indonesia
- Independent Power Producers Association of India
- Anglo American - United Kingdom
- Gujarat Electricity Regulatory Commission - India
- Straits Asia Resources Limited - Singapore
- Carbofer General Trading SA - India
- Borneo Indobara - Indonesia
- Parry Sugars Refinery, India
- Edison Trading Spa - Italy
- GN Power Mariveles Coal Plant, Philippines
- Indo Tambangraya Megah - Indonesia
- South Luzon Thermal Energy Corporation
- Power Finance Corporation Ltd., India
- Mjunction Services Limited - India
- VISA Power Limited - India
- Cigading International Bulk Terminal - Indonesia
- SN Aboitiz Power Inc, Philippines
- Directorate Of Revenue Intelligence - India
- Siam City Cement - Thailand
- Rio Tinto Coal - Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Pipit Mutiara Jaya. PT, Indonesia
- The University of Queensland
- Jindal Steel & Power Ltd - India
- Sojitz Corporation - Japan
- European Bulk Services B.V. - Netherlands
- Dalmia Cement Bharat India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Parliament of New Zealand
- Malabar Cements Ltd - India
- Makarim & Taira - Indonesia
- Attock Cement Pakistan Limited
- Xindia Steels Limited - India
- San Jose City I Power Corp, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Salva Resources Pvt Ltd - India
- Eastern Coal Council - USA
- Commonwealth Bank - Australia
- IHS Mccloskey Coal Group - USA
- TNB Fuel Sdn Bhd - Malaysia
- Karaikal Port Pvt Ltd - India
- Kaltim Prima Coal - Indonesia
- Energy Development Corp, Philippines
- Mercator Lines Limited - India
- Lanco Infratech Ltd - India
- Antam Resourcindo - Indonesia
- Kumho Petrochemical, South Korea
- Pendopo Energi Batubara - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- AsiaOL BioFuels Corp., Philippines
- Sindya Power Generating Company Private Ltd
- OPG Power Generation Pvt Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Mercuria Energy - Indonesia
- Posco Energy - South Korea
- Banpu Public Company Limited - Thailand
- Bangladesh Power Developement Board
- Chettinad Cement Corporation Ltd - India
- Singapore Mercantile Exchange
- Kideco Jaya Agung - Indonesia
- Aditya Birla Group - India
- Port Waratah Coal Services - Australia
- Formosa Plastics Group - Taiwan
- India Bulls Power Limited - India
- Iligan Light & Power Inc, Philippines
- Baramulti Group, Indonesia
- Kobexindo Tractors - Indoneisa
- SMC Global Power, Philippines
- Essar Steel Hazira Ltd - India
- Samtan Co., Ltd - South Korea
- Indian Energy Exchange, India
- Jaiprakash Power Ventures ltd
- Wilmar Investment Holdings
- Deloitte Consulting - India
- Indian Oil Corporation Limited
- Star Paper Mills Limited - India
- GVK Power & Infra Limited - India
- Sinarmas Energy and Mining - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Videocon Industries ltd - India
- Ambuja Cements Ltd - India
- Coal and Oil Company - UAE
- Kartika Selabumi Mining - Indonesia
- Bharathi Cement Corporation - India
- Toyota Tsusho Corporation, Japan
- Bulk Trading Sa - Switzerland
- Electricity Generating Authority of Thailand
- Bukit Asam (Persero) Tbk - Indonesia
- Savvy Resources Ltd - HongKong
- Agrawal Coal Company - India
- PTC India Limited - India
- Riau Bara Harum - Indonesia
- GMR Energy Limited - India
- Coalindo Energy - Indonesia
- Goldman Sachs - Singapore
- PetroVietnam Power Coal Import and Supply Company
- Leighton Contractors Pty Ltd - Australia
- Indogreen Group - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- GAC Shipping (India) Pvt Ltd
- Australian Commodity Traders Exchange
- Georgia Ports Authority, United States
- LBH Netherlands Bv - Netherlands
- Binh Thuan Hamico - Vietnam
- Maharashtra Electricity Regulatory Commission - India
- International Coal Ventures Pvt Ltd - India
- White Energy Company Limited
- Marubeni Corporation - India
- The Treasury - Australian Government
- McConnell Dowell - Australia
- Thiess Contractors Indonesia
- Eastern Energy - Thailand
- TeaM Sual Corporation - Philippines
- Kohat Cement Company Ltd. - Pakistan
- Vizag Seaport Private Limited - India
- Bhushan Steel Limited - India
- Chamber of Mines of South Africa
- Indika Energy - Indonesia
- Global Coal Blending Company Limited - Australia
- Kapuas Tunggal Persada - Indonesia
- Ind-Barath Power Infra Limited - India
- Bhatia International Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Indonesian Coal Mining Association
- PNOC Exploration Corporation - Philippines
- Globalindo Alam Lestari - Indonesia
- ASAPP Information Group - India
- Trasteel International SA, Italy
- Central Java Power - Indonesia
- Sakthi Sugars Limited - India
- New Zealand Coal & Carbon
- Gujarat Mineral Development Corp Ltd - India
- Maheswari Brothers Coal Limited - India
- Simpson Spence & Young - Indonesia
- Thai Mozambique Logistica
- Africa Commodities Group - South Africa
- Ministry of Transport, Egypt
- Ministry of Mines - Canada
- Heidelberg Cement - Germany
- CNBM International Corporation - China
- Madhucon Powers Ltd - India
- Economic Council, Georgia
- Aboitiz Power Corporation - Philippines
- Ministry of Finance - Indonesia
- Mintek Dendrill Indonesia
- Australian Coal Association
- Merrill Lynch Commodities Europe
- Therma Luzon, Inc, Philippines
- PowerSource Philippines DevCo
- Metalloyd Limited - United Kingdom
- Bukit Baiduri Energy - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Timah Investasi Mineral - Indoneisa
- Barasentosa Lestari - Indonesia
- Renaissance Capital - South Africa
- Electricity Authority, New Zealand
- Cement Manufacturers Association - India
- MS Steel International - UAE
- Directorate General of MIneral and Coal - Indonesia
- Siam City Cement PLC, Thailand
- Sarangani Energy Corporation, Philippines
- Grasim Industreis Ltd - India
- Sical Logistics Limited - India
- Global Green Power PLC Corporation, Philippines
- Rashtriya Ispat Nigam Limited - India
- Tamil Nadu electricity Board
- Miang Besar Coal Terminal - Indonesia
- IEA Clean Coal Centre - UK
- Latin American Coal - Colombia
- Meenaskhi Energy Private Limited - India
- Tata Chemicals Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bukit Makmur.PT - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Holcim Trading Pte Ltd - Singapore
- Orica Australia Pty. Ltd.
- Bhoruka Overseas - Indonesia
- Interocean Group of Companies - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Meralco Power Generation, Philippines
- Altura Mining Limited, Indonesia
- Manunggal Multi Energi - Indonesia
- CIMB Investment Bank - Malaysia
- Price Waterhouse Coopers - Russia
- Uttam Galva Steels Limited - India
- Oldendorff Carriers - Singapore
- Planning Commission, India
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