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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, 17 October 18
SHIPPING MARKET INSIGHT - TIMOS PAPADIMITRIOU
In the last three months approximately 72 tankers changed hands involving ships larger than 33kdwt up to VLCC. 43 of those vessels had to do ...
Tuesday, 16 October 18
A PRACTICAL OVERVIEW OF THE IMO 2020 SULPHUR CAP - CLYDE&CO
KNOWLEDGE TO ELEVATE
With less than eighteen months before Regulation 14.1.3 of Annex VI of the MARPOL Convention comes into effect, there are ...
Saturday, 13 October 18
SUPRAMAX: SIGNIFICANT ACTIVITY IN THE INDIAN OCEAN WAS EVIDENT AND RATES JUMPED - BALTIC BRIEFING
Capesize
A sharp reversal of fortunes for the big ships as the week closed after a depressed beginning. To start with drops were sudden, with t ...
Wednesday, 10 October 18
SHIPPING MARKET INSIGHT - ILIAS M. LALAOUNIS
During the end of last month the BHSI was hovering around 630 points, while the last observed sale on a 10-yr old Japanese Handy was the M/V Van Im ...
Monday, 08 October 18
INDONESIAN THERMAL COAL PRICE REFERENCE FELL 3.74% IN OCTOBER 2018
COALspot.com: The Ministry of Energy and Mineral Resources of the Republic of Indonesia has revised down the benchmark price of Indonesian thermal ...
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- Barasentosa Lestari - Indonesia
- Indogreen Group - Indonesia
- Romanian Commodities Exchange
- Directorate General of MIneral and Coal - Indonesia
- PTC India Limited - India
- Bhoruka Overseas - Indonesia
- Wood Mackenzie - Singapore
- Maharashtra Electricity Regulatory Commission - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kaltim Prima Coal - Indonesia
- Globalindo Alam Lestari - Indonesia
- MS Steel International - UAE
- Riau Bara Harum - Indonesia
- Savvy Resources Ltd - HongKong
- CNBM International Corporation - China
- Economic Council, Georgia
- Indonesian Coal Mining Association
- Agrawal Coal Company - India
- Uttam Galva Steels Limited - India
- Pendopo Energi Batubara - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Meralco Power Generation, Philippines
- Gujarat Sidhee Cement - India
- Latin American Coal - Colombia
- South Luzon Thermal Energy Corporation
- Renaissance Capital - South Africa
- Energy Link Ltd, New Zealand
- Mjunction Services Limited - India
- Australian Commodity Traders Exchange
- Petron Corporation, Philippines
- Banpu Public Company Limited - Thailand
- Indo Tambangraya Megah - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Eastern Coal Council - USA
- Ind-Barath Power Infra Limited - India
- Trasteel International SA, Italy
- Borneo Indobara - Indonesia
- Oldendorff Carriers - Singapore
- Timah Investasi Mineral - Indoneisa
- Thiess Contractors Indonesia
- Sakthi Sugars Limited - India
- The University of Queensland
- Bukit Asam (Persero) Tbk - Indonesia
- Parry Sugars Refinery, India
- Maheswari Brothers Coal Limited - India
- Aboitiz Power Corporation - Philippines
- Interocean Group of Companies - India
- Xindia Steels Limited - India
- Thai Mozambique Logistica
- ASAPP Information Group - India
- Tamil Nadu electricity Board
- Manunggal Multi Energi - Indonesia
- Altura Mining Limited, Indonesia
- ICICI Bank Limited - India
- Gujarat Electricity Regulatory Commission - India
- Gujarat Mineral Development Corp Ltd - India
- Standard Chartered Bank - UAE
- Jaiprakash Power Ventures ltd
- Siam City Cement PLC, Thailand
- Semirara Mining and Power Corporation, Philippines
- Billiton Holdings Pty Ltd - Australia
- Ceylon Electricity Board - Sri Lanka
- Rashtriya Ispat Nigam Limited - India
- Siam City Cement - Thailand
- Jindal Steel & Power Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Binh Thuan Hamico - Vietnam
- Kartika Selabumi Mining - Indonesia
- Meenaskhi Energy Private Limited - India
- Eastern Energy - Thailand
- Bukit Baiduri Energy - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Bhatia International Limited - India
- Holcim Trading Pte Ltd - Singapore
- Salva Resources Pvt Ltd - India
- Bhushan Steel Limited - India
- Sarangani Energy Corporation, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Wilmar Investment Holdings
- European Bulk Services B.V. - Netherlands
- Coal and Oil Company - UAE
- TNB Fuel Sdn Bhd - Malaysia
- Cigading International Bulk Terminal - Indonesia
- Therma Luzon, Inc, Philippines
- Toyota Tsusho Corporation, Japan
- Grasim Industreis Ltd - India
- Indian Oil Corporation Limited
- Sree Jayajothi Cements Limited - India
- Mintek Dendrill Indonesia
- Port Waratah Coal Services - Australia
- Straits Asia Resources Limited - Singapore
- Singapore Mercantile Exchange
- The Treasury - Australian Government
- Karaikal Port Pvt Ltd - India
- Central Java Power - Indonesia
- Orica Australia Pty. Ltd.
- Samtan Co., Ltd - South Korea
- Malabar Cements Ltd - India
- Star Paper Mills Limited - India
- LBH Netherlands Bv - Netherlands
- Price Waterhouse Coopers - Russia
- Commonwealth Bank - Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Antam Resourcindo - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Minerals Council of Australia
- Tata Chemicals Ltd - India
- PNOC Exploration Corporation - Philippines
- Karbindo Abesyapradhi - Indoneisa
- Ministry of Transport, Egypt
- Neyveli Lignite Corporation Ltd, - India
- Kapuas Tunggal Persada - Indonesia
- Mercator Lines Limited - India
- Electricity Generating Authority of Thailand
- GVK Power & Infra Limited - India
- Essar Steel Hazira Ltd - India
- Energy Development Corp, Philippines
- Deloitte Consulting - India
- Cement Manufacturers Association - India
- Goldman Sachs - Singapore
- Planning Commission, India
- The State Trading Corporation of India Ltd
- Indian Energy Exchange, India
- Chamber of Mines of South Africa
- Sindya Power Generating Company Private Ltd
- Miang Besar Coal Terminal - Indonesia
- Metalloyd Limited - United Kingdom
- Kalimantan Lumbung Energi - Indonesia
- Orica Mining Services - Indonesia
- Africa Commodities Group - South Africa
- Pipit Mutiara Jaya. PT, Indonesia
- Bayan Resources Tbk. - Indonesia
- Intertek Mineral Services - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Makarim & Taira - Indonesia
- IEA Clean Coal Centre - UK
- Ambuja Cements Ltd - India
- Aditya Birla Group - India
- Medco Energi Mining Internasional
- Leighton Contractors Pty Ltd - Australia
- Madhucon Powers Ltd - India
- Posco Energy - South Korea
- GMR Energy Limited - India
- Global Green Power PLC Corporation, Philippines
- Kepco SPC Power Corporation, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Kohat Cement Company Ltd. - Pakistan
- Vizag Seaport Private Limited - India
- McConnell Dowell - Australia
- PowerSource Philippines DevCo
- Mercuria Energy - Indonesia
- Electricity Authority, New Zealand
- SN Aboitiz Power Inc, Philippines
- Heidelberg Cement - Germany
- White Energy Company Limited
- Indika Energy - Indonesia
- Simpson Spence & Young - Indonesia
- Ministry of Finance - Indonesia
- Kumho Petrochemical, South Korea
- Semirara Mining Corp, Philippines
- Directorate Of Revenue Intelligence - India
- Carbofer General Trading SA - India
- San Jose City I Power Corp, Philippines
- Australian Coal Association
- Georgia Ports Authority, United States
- Videocon Industries ltd - India
- Central Electricity Authority - India
- Anglo American - United Kingdom
- Dalmia Cement Bharat India
- Parliament of New Zealand
- Petrochimia International Co. Ltd.- Taiwan
- Marubeni Corporation - India
- VISA Power Limited - India
- AsiaOL BioFuels Corp., Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- London Commodity Brokers - England
- Asmin Koalindo Tuhup - Indonesia
- Bharathi Cement Corporation - India
- SMG Consultants - Indonesia
- International Coal Ventures Pvt Ltd - India
- GAC Shipping (India) Pvt Ltd
- Larsen & Toubro Limited - India
- Iligan Light & Power Inc, Philippines
- Coastal Gujarat Power Limited - India
- TeaM Sual Corporation - Philippines
- CIMB Investment Bank - Malaysia
- Power Finance Corporation Ltd., India
- Bukit Makmur.PT - Indonesia
- Global Coal Blending Company Limited - Australia
- India Bulls Power Limited - India
- Bangladesh Power Developement Board
- SMC Global Power, Philippines
- Kobexindo Tractors - Indoneisa
- Sical Logistics Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Attock Cement Pakistan Limited
- New Zealand Coal & Carbon
- Bulk Trading Sa - Switzerland
- Ministry of Mines - Canada
- Independent Power Producers Association of India
- Chettinad Cement Corporation Ltd - India
- Rio Tinto Coal - Australia
- Alfred C Toepfer International GmbH - Germany
- Merrill Lynch Commodities Europe
- Global Business Power Corporation, Philippines
- Baramulti Group, Indonesia
- Kideco Jaya Agung - Indonesia
- Lanco Infratech Ltd - India
- Sojitz Corporation - Japan
- Jorong Barutama Greston.PT - Indonesia
- IHS Mccloskey Coal Group - USA
- OPG Power Generation Pvt Ltd - India
- Formosa Plastics Group - Taiwan
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Coalindo Energy - Indonesia
- Edison Trading Spa - Italy
- Vedanta Resources Plc - India
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