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