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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, 05 September 18
ASIAN DEMAND COULD CREATE DEFICIT IN GLOBAL LNG MARKET - FITCH RATINGS
Growing gas demand from Asia, particularly from China, could swing the liquefied natural gas (LNG) market into a deficit by 2022-2025, Fitch Rating ...
Tuesday, 04 September 18
SUPRAMAX: THE ASIAN SECTOR REMAINED ACTIVE WITH RATES STILL FIRM ESPECIALLY IN SE ASIA - BALTIC BRIEFING
Capesize
A turnaround in fortunes for the big ships, with a few slower days in the market. A build-up of tonnage and a lack of Brazil cargoes r ...
Thursday, 30 August 18
SUPRAMAX: CIS COAL TO FAR EAST WENT AT MID TENS AND TO SE ASIA AT CA USD 8000 - FEARNLEYS
Capesize
There was a slow start this week with holiday in UK on Monday. The index has been slowly coming off since then; The C5 route has seen ...
Wednesday, 29 August 18
MID-YEAR FY19 POWER OUTLOOK: IMPORTED COAL REQUIREMENT TO INCREASE DURING REMAINING FY19: IND-RA
India Ratings and Research (Ind-Ra) has maintained a stable-to-negative outlook on the Indian power sector for the remaining FY19, despite a rise i ...
Wednesday, 29 August 18
IMPACT ON CHARTERPARTIES - TIME TO ACT NOW : NORTH P&I CLUB
KNOWLEDGE TO ELEVATE
The challenges introduced by the global sulphur cap are not exclusively technical. The new limits are likely to impact co ...
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- Medco Energi Mining Internasional
- Bhatia International Limited - India
- Planning Commission, India
- Attock Cement Pakistan Limited
- The State Trading Corporation of India Ltd
- Pipit Mutiara Jaya. PT, Indonesia
- Goldman Sachs - Singapore
- Kartika Selabumi Mining - Indonesia
- Port Waratah Coal Services - Australia
- Latin American Coal - Colombia
- Sical Logistics Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Straits Asia Resources Limited - Singapore
- Ministry of Transport, Egypt
- Rio Tinto Coal - Australia
- GN Power Mariveles Coal Plant, Philippines
- Bangladesh Power Developement Board
- Renaissance Capital - South Africa
- Altura Mining Limited, Indonesia
- Jindal Steel & Power Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Star Paper Mills Limited - India
- Cement Manufacturers Association - India
- Sojitz Corporation - Japan
- Siam City Cement - Thailand
- Sindya Power Generating Company Private Ltd
- Cigading International Bulk Terminal - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Eastern Coal Council - USA
- Chamber of Mines of South Africa
- Electricity Authority, New Zealand
- Parry Sugars Refinery, India
- Indogreen Group - Indonesia
- Binh Thuan Hamico - Vietnam
- South Luzon Thermal Energy Corporation
- Barasentosa Lestari - Indonesia
- Holcim Trading Pte Ltd - Singapore
- PTC India Limited - India
- PetroVietnam Power Coal Import and Supply Company
- ASAPP Information Group - India
- Australian Commodity Traders Exchange
- Tata Chemicals Ltd - India
- Wilmar Investment Holdings
- Carbofer General Trading SA - India
- Commonwealth Bank - Australia
- Banpu Public Company Limited - Thailand
- Malabar Cements Ltd - India
- TeaM Sual Corporation - Philippines
- Kobexindo Tractors - Indoneisa
- Central Electricity Authority - India
- Georgia Ports Authority, United States
- Marubeni Corporation - India
- GVK Power & Infra Limited - India
- Energy Development Corp, Philippines
- Ambuja Cements Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Indian Energy Exchange, India
- International Coal Ventures Pvt Ltd - India
- Bayan Resources Tbk. - Indonesia
- Electricity Generating Authority of Thailand
- Timah Investasi Mineral - Indoneisa
- Indonesian Coal Mining Association
- Mjunction Services Limited - India
- Anglo American - United Kingdom
- Ministry of Mines - Canada
- Parliament of New Zealand
- Romanian Commodities Exchange
- Karaikal Port Pvt Ltd - India
- Savvy Resources Ltd - HongKong
- Heidelberg Cement - Germany
- Grasim Industreis Ltd - India
- ICICI Bank Limited - India
- GMR Energy Limited - India
- McConnell Dowell - Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Interocean Group of Companies - India
- Posco Energy - South Korea
- Globalindo Alam Lestari - Indonesia
- SMG Consultants - Indonesia
- SMC Global Power, Philippines
- Therma Luzon, Inc, Philippines
- GAC Shipping (India) Pvt Ltd
- Agrawal Coal Company - India
- Krishnapatnam Port Company Ltd. - India
- Essar Steel Hazira Ltd - India
- Chettinad Cement Corporation Ltd - India
- Bukit Makmur.PT - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Economic Council, Georgia
- Australian Coal Association
- Borneo Indobara - Indonesia
- Power Finance Corporation Ltd., India
- Indo Tambangraya Megah - Indonesia
- Kaltim Prima Coal - Indonesia
- Sarangani Energy Corporation, Philippines
- Leighton Contractors Pty Ltd - Australia
- Vijayanagar Sugar Pvt Ltd - India
- Energy Link Ltd, New Zealand
- Petrochimia International Co. Ltd.- Taiwan
- PNOC Exploration Corporation - Philippines
- Thiess Contractors Indonesia
- Riau Bara Harum - Indonesia
- Sakthi Sugars Limited - India
- Bukit Baiduri Energy - Indonesia
- CIMB Investment Bank - Malaysia
- Global Coal Blending Company Limited - Australia
- Standard Chartered Bank - UAE
- Maharashtra Electricity Regulatory Commission - India
- Thai Mozambique Logistica
- Aditya Birla Group - India
- Xindia Steels Limited - India
- Kapuas Tunggal Persada - Indonesia
- Bhoruka Overseas - Indonesia
- Directorate Of Revenue Intelligence - India
- Pendopo Energi Batubara - Indonesia
- The Treasury - Australian Government
- Ministry of Finance - Indonesia
- Intertek Mineral Services - Indonesia
- CNBM International Corporation - China
- Independent Power Producers Association of India
- Petron Corporation, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Toyota Tsusho Corporation, Japan
- Coastal Gujarat Power Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Africa Commodities Group - South Africa
- Samtan Co., Ltd - South Korea
- Larsen & Toubro Limited - India
- Siam City Cement PLC, Thailand
- Bhushan Steel Limited - India
- IEA Clean Coal Centre - UK
- Global Business Power Corporation, Philippines
- Meralco Power Generation, Philippines
- Kideco Jaya Agung - Indonesia
- Metalloyd Limited - United Kingdom
- Rashtriya Ispat Nigam Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Oldendorff Carriers - Singapore
- Tamil Nadu electricity Board
- Ind-Barath Power Infra Limited - India
- London Commodity Brokers - England
- Videocon Industries ltd - India
- Makarim & Taira - Indonesia
- Sree Jayajothi Cements Limited - India
- European Bulk Services B.V. - Netherlands
- Coal and Oil Company - UAE
- Gujarat Electricity Regulatory Commission - India
- Directorate General of MIneral and Coal - Indonesia
- Maheswari Brothers Coal Limited - India
- Madhucon Powers Ltd - India
- The University of Queensland
- Formosa Plastics Group - Taiwan
- Lanco Infratech Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Edison Trading Spa - Italy
- Baramulti Group, Indonesia
- Bulk Trading Sa - Switzerland
- Trasteel International SA, Italy
- White Energy Company Limited
- PowerSource Philippines DevCo
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- New Zealand Coal & Carbon
- Mercator Lines Limited - India
- Singapore Mercantile Exchange
- IHS Mccloskey Coal Group - USA
- Indian Oil Corporation Limited
- Deloitte Consulting - India
- VISA Power Limited - India
- Antam Resourcindo - Indonesia
- Central Java Power - Indonesia
- Gujarat Sidhee Cement - India
- Kumho Petrochemical, South Korea
- Mintek Dendrill Indonesia
- Uttam Galva Steels Limited - India
- Vedanta Resources Plc - India
- Jaiprakash Power Ventures ltd
- Bharathi Cement Corporation - India
- Eastern Energy - Thailand
- LBH Netherlands Bv - Netherlands
- Sinarmas Energy and Mining - Indonesia
- Mercuria Energy - Indonesia
- Price Waterhouse Coopers - Russia
- Indika Energy - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- India Bulls Power Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Meenaskhi Energy Private Limited - India
- Wood Mackenzie - Singapore
- Minerals Council of Australia
- Aboitiz Power Corporation - Philippines
- Neyveli Lignite Corporation Ltd, - India
- Orica Australia Pty. Ltd.
- TNB Fuel Sdn Bhd - Malaysia
- Simpson Spence & Young - Indonesia
- Billiton Holdings Pty Ltd - Australia
- MS Steel International - UAE
- SN Aboitiz Power Inc, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Iligan Light & Power Inc, Philippines
- Coalindo Energy - Indonesia
- Global Green Power PLC Corporation, Philippines
- Kepco SPC Power Corporation, Philippines
- San Jose City I Power Corp, Philippines
- Salva Resources Pvt Ltd - India
- Merrill Lynch Commodities Europe
- OPG Power Generation Pvt Ltd - India
- Manunggal Multi Energi - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Dalmia Cement Bharat India
- Semirara Mining Corp, Philippines
- Orica Mining Services - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Ceylon Electricity Board - Sri Lanka
- Vizag Seaport Private Limited - India
- Karbindo Abesyapradhi - Indoneisa
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