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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, 29 October 18
IMPLEMENTATION OF SULPHUR 2020 LIMIT - CARRIAGE BAN ADOPTED - IMO
An amendment to support consistent implementation of the forthcoming 0.50% limit on sulphur in ships fuel oil was adopted by the International Mari ...
Monday, 29 October 18
SUPRAMAX: THE ASIAN AREA SAW FALLING RATES, WITH A 61,000DWT FIXING DELIVERY KOHSICHANG TRIP VIA INDONESIA, REDELIVERY INDIA, AT $10,500 - BALTIC BRIEFING
Capesize
A market of two halves for most of the week with rates in the Atlantic firming and easing in the East for most of the week, but then, ...
Friday, 26 October 18
SHIP OPERATING COSTS EXPECTED TO RISE IN 2018 AND 2019 - MOORE STEPHENS
Total vessel operating costs in the shipping industry are expected to rise by 2.7% in 2018 and by 3.1% in 2019, according to our latest survey.
...
Friday, 26 October 18
SEVERAL CONTRACTIONS IN GLOBAL STEEL PRODUCTION - JEFFREY LANDSBERG
World Steel Association data released today shows that global crude steel production totaled approximately 151.7 million tons in September. T ...
Thursday, 25 October 18
WHAT DOES THE "IMO 2020" REGULATION REALLY SAY? A QUICK GUIDE - BIMCO
KNOWLEDGE TO ELEVATE
The shipping industry has all eyes firmly fixed on the topic, but what exactly do the “IMO 2020” global sulph ...
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- Meralco Power Generation, Philippines
- Aditya Birla Group - India
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- Indo Tambangraya Megah - Indonesia
- Trasteel International SA, Italy
- Heidelberg Cement - Germany
- The State Trading Corporation of India Ltd
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- Larsen & Toubro Limited - India
- Agrawal Coal Company - India
- Sinarmas Energy and Mining - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Wilmar Investment Holdings
- Lanco Infratech Ltd - India
- GAC Shipping (India) Pvt Ltd
- Minerals Council of Australia
- Madhucon Powers Ltd - India
- Mercuria Energy - Indonesia
- Tamil Nadu electricity Board
- Directorate General of MIneral and Coal - Indonesia
- Antam Resourcindo - Indonesia
- Binh Thuan Hamico - Vietnam
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Eastern Energy - Thailand
- Medco Energi Mining Internasional
- Latin American Coal - Colombia
- Standard Chartered Bank - UAE
- Therma Luzon, Inc, Philippines
- Sojitz Corporation - Japan
- Kepco SPC Power Corporation, Philippines
- Parry Sugars Refinery, India
- Ministry of Transport, Egypt
- IHS Mccloskey Coal Group - USA
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- Altura Mining Limited, Indonesia
- Toyota Tsusho Corporation, Japan
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- Metalloyd Limited - United Kingdom
- SMG Consultants - Indonesia
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- Intertek Mineral Services - Indonesia
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- New Zealand Coal & Carbon
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- Maheswari Brothers Coal Limited - India
- Orica Australia Pty. Ltd.
- Orica Mining Services - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Africa Commodities Group - South Africa
- Kaltim Prima Coal - Indonesia
- Anglo American - United Kingdom
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Indian Energy Exchange, India
- Siam City Cement - Thailand
- Star Paper Mills Limited - India
- McConnell Dowell - Australia
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- TNB Fuel Sdn Bhd - Malaysia
- Coastal Gujarat Power Limited - India
- Bharathi Cement Corporation - India
- SN Aboitiz Power Inc, Philippines
- Coalindo Energy - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Jindal Steel & Power Ltd - India
- European Bulk Services B.V. - Netherlands
- Kobexindo Tractors - Indoneisa
- Wood Mackenzie - Singapore
- PTC India Limited - India
- International Coal Ventures Pvt Ltd - India
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- Global Green Power PLC Corporation, Philippines
- Central Java Power - Indonesia
- Goldman Sachs - Singapore
- Bhatia International Limited - India
- San Jose City I Power Corp, Philippines
- Globalindo Alam Lestari - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Cigading International Bulk Terminal - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Deloitte Consulting - India
- Singapore Mercantile Exchange
- Bangladesh Power Developement Board
- Mintek Dendrill Indonesia
- ICICI Bank Limited - India
- Edison Trading Spa - Italy
- Baramulti Group, Indonesia
- TeaM Sual Corporation - Philippines
- Eastern Coal Council - USA
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bayan Resources Tbk. - Indonesia
- CNBM International Corporation - China
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- Videocon Industries ltd - India
- OPG Power Generation Pvt Ltd - India
- Sakthi Sugars Limited - India
- Cement Manufacturers Association - India
- India Bulls Power Limited - India
- Ceylon Electricity Board - Sri Lanka
- Borneo Indobara - Indonesia
- Iligan Light & Power Inc, Philippines
- Rashtriya Ispat Nigam Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Electricity Authority, New Zealand
- Miang Besar Coal Terminal - Indonesia
- Port Waratah Coal Services - Australia
- CIMB Investment Bank - Malaysia
- PetroVietnam Power Coal Import and Supply Company
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- Sarangani Energy Corporation, Philippines
- Kideco Jaya Agung - Indonesia
- PNOC Exploration Corporation - Philippines
- Posco Energy - South Korea
- Ministry of Finance - Indonesia
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- Neyveli Lignite Corporation Ltd, - India
- Simpson Spence & Young - Indonesia
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- Central Electricity Authority - India
- Jaiprakash Power Ventures ltd
- Semirara Mining Corp, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Timah Investasi Mineral - Indoneisa
- Formosa Plastics Group - Taiwan
- MS Steel International - UAE
- Energy Link Ltd, New Zealand
- Manunggal Multi Energi - Indonesia
- Kapuas Tunggal Persada - Indonesia
- The University of Queensland
- The Treasury - Australian Government
- VISA Power Limited - India
- Salva Resources Pvt Ltd - India
- Carbofer General Trading SA - India
- Ambuja Cements Ltd - India
- Commonwealth Bank - Australia
- Ministry of Mines - Canada
- AsiaOL BioFuels Corp., Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Marubeni Corporation - India
- ASAPP Information Group - India
- Indonesian Coal Mining Association
- Semirara Mining and Power Corporation, Philippines
- Kumho Petrochemical, South Korea
- Parliament of New Zealand
- Energy Development Corp, Philippines
- Siam City Cement PLC, Thailand
- Billiton Holdings Pty Ltd - Australia
- Holcim Trading Pte Ltd - Singapore
- South Luzon Thermal Energy Corporation
- Savvy Resources Ltd - HongKong
- Sindya Power Generating Company Private Ltd
- Petrochimia International Co. Ltd.- Taiwan
- Leighton Contractors Pty Ltd - Australia
- Merrill Lynch Commodities Europe
- Bukit Baiduri Energy - Indonesia
- Price Waterhouse Coopers - Russia
- Maharashtra Electricity Regulatory Commission - India
- Georgia Ports Authority, United States
- Tata Chemicals Ltd - India
- Chettinad Cement Corporation Ltd - India
- White Energy Company Limited
- GVK Power & Infra Limited - India
- Sree Jayajothi Cements Limited - India
- Ind-Barath Power Infra Limited - India
- Barasentosa Lestari - Indonesia
- Renaissance Capital - South Africa
- Bulk Trading Sa - Switzerland
- London Commodity Brokers - England
- Pipit Mutiara Jaya. PT, Indonesia
- GMR Energy Limited - India
- Indian Oil Corporation Limited
- Gujarat Electricity Regulatory Commission - India
- Indogreen Group - Indonesia
- Essar Steel Hazira Ltd - India
- Vedanta Resources Plc - India
- Australian Commodity Traders Exchange
- Banpu Public Company Limited - Thailand
- Kalimantan Lumbung Energi - Indonesia
- Pendopo Energi Batubara - Indonesia
- Bhoruka Overseas - Indonesia
- Planning Commission, India
- Straits Asia Resources Limited - Singapore
- Indika Energy - Indonesia
- Global Coal Blending Company Limited - Australia
- Riau Bara Harum - Indonesia
- Grasim Industreis Ltd - India
- Electricity Generating Authority of Thailand
- Malabar Cements Ltd - India
- Bukit Makmur.PT - Indonesia
- Mercator Lines Limited - India
- Attock Cement Pakistan Limited
- Makarim & Taira - Indonesia
- Directorate Of Revenue Intelligence - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Uttam Galva Steels Limited - India
- Economic Council, Georgia
- Chamber of Mines of South Africa
- Samtan Co., Ltd - South Korea
- Gujarat Sidhee Cement - India
- Coal and Oil Company - UAE
- Global Business Power Corporation, Philippines
- Thiess Contractors Indonesia
- Power Finance Corporation Ltd., India
- Australian Coal Association
- IEA Clean Coal Centre - UK
- Aboitiz Power Corporation - Philippines
- Vizag Seaport Private Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- LBH Netherlands Bv - Netherlands
- Rio Tinto Coal - Australia
- Oldendorff Carriers - Singapore
- Mjunction Services Limited - India
- Petron Corporation, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Meenaskhi Energy Private Limited - India
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