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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, 25 July 18
TANKER MARKET INSIGHT - DIMITRIS KOURTESIS
We are now into the second half of 2018, which so far has not been a fruitful year for tankers. With 2020 quickly approaching we need to consider t ...
Tuesday, 24 July 18
TANKER MARKET : IN TERMS OF TRADE, THE STEPS THAT WERE SLOWLY BEING TAKEN BY OPEC AND RUSSIA - GEORGE LAZARIDIS
Despite the fact that the tanker market still seems to be in the midst of a perfect storm, there are still strong indicators that better sailing da ...
Thursday, 19 July 18
VINACOMIN PRODUCES OVER 20 MLN TONNES OF RAW COAL FROM YEAR'S START - VNA
The Vietnam National Coal and Mineral Industries Group (Vinacomin) has produced over 20 million tonnes of raw coal and 19.3 million of clean coal f ...
Wednesday, 18 July 18
INDONESIA TO AUCTION 16 MINING SITES - JP
Indonesia will soon auction 16 mining sites as no proposal submissions have been submitted by state-owned enterprises (BUMN) and regional administr ...
Wednesday, 18 July 18
SHIPPING MARKET INSIGHT - VASILIS MOIRIS
The new regulations for Chinese flag restricting import of Tier I ships have dominated market sentiment during the past days as buyers have been tr ...
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- Bukit Baiduri Energy - Indonesia
- The Treasury - Australian Government
- Indonesian Coal Mining Association
- Bhushan Steel Limited - India
- Sical Logistics Limited - India
- Dalmia Cement Bharat India
- Ministry of Transport, Egypt
- PetroVietnam Power Coal Import and Supply Company
- Leighton Contractors Pty Ltd - Australia
- Siam City Cement PLC, Thailand
- Electricity Authority, New Zealand
- CIMB Investment Bank - Malaysia
- Oldendorff Carriers - Singapore
- Deloitte Consulting - India
- Sakthi Sugars Limited - India
- Edison Trading Spa - Italy
- Lanco Infratech Ltd - India
- Indogreen Group - Indonesia
- Georgia Ports Authority, United States
- Xindia Steels Limited - India
- Kartika Selabumi Mining - Indonesia
- Malabar Cements Ltd - India
- Ambuja Cements Ltd - India
- Makarim & Taira - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Star Paper Mills Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Chettinad Cement Corporation Ltd - India
- Iligan Light & Power Inc, Philippines
- Trasteel International SA, Italy
- Port Waratah Coal Services - Australia
- Kideco Jaya Agung - Indonesia
- Semirara Mining Corp, Philippines
- Latin American Coal - Colombia
- Directorate Of Revenue Intelligence - India
- TeaM Sual Corporation - Philippines
- International Coal Ventures Pvt Ltd - India
- Meralco Power Generation, Philippines
- Bharathi Cement Corporation - India
- Ind-Barath Power Infra Limited - India
- Price Waterhouse Coopers - Russia
- Straits Asia Resources Limited - Singapore
- Aboitiz Power Corporation - Philippines
- Africa Commodities Group - South Africa
- Ministry of Finance - Indonesia
- Indo Tambangraya Megah - Indonesia
- McConnell Dowell - Australia
- Renaissance Capital - South Africa
- Heidelberg Cement - Germany
- MS Steel International - UAE
- Pipit Mutiara Jaya. PT, Indonesia
- Energy Development Corp, Philippines
- Sree Jayajothi Cements Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Mintek Dendrill Indonesia
- Holcim Trading Pte Ltd - Singapore
- Toyota Tsusho Corporation, Japan
- Planning Commission, India
- GN Power Mariveles Coal Plant, Philippines
- The State Trading Corporation of India Ltd
- Goldman Sachs - Singapore
- Binh Thuan Hamico - Vietnam
- Bukit Makmur.PT - Indonesia
- Altura Mining Limited, Indonesia
- Bayan Resources Tbk. - Indonesia
- Metalloyd Limited - United Kingdom
- Minerals Council of Australia
- Ceylon Electricity Board - Sri Lanka
- Vizag Seaport Private Limited - India
- Agrawal Coal Company - India
- IHS Mccloskey Coal Group - USA
- Tamil Nadu electricity Board
- Siam City Cement - Thailand
- Bhoruka Overseas - Indonesia
- IEA Clean Coal Centre - UK
- Antam Resourcindo - Indonesia
- Parry Sugars Refinery, India
- Gujarat Mineral Development Corp Ltd - India
- Merrill Lynch Commodities Europe
- Therma Luzon, Inc, Philippines
- Kaltim Prima Coal - Indonesia
- Mercuria Energy - Indonesia
- Sojitz Corporation - Japan
- Sindya Power Generating Company Private Ltd
- Posco Energy - South Korea
- PTC India Limited - India
- SMC Global Power, Philippines
- Jaiprakash Power Ventures ltd
- Kapuas Tunggal Persada - Indonesia
- Grasim Industreis Ltd - India
- Mjunction Services Limited - India
- Meenaskhi Energy Private Limited - India
- Uttam Galva Steels Limited - India
- Gujarat Electricity Regulatory Commission - India
- Alfred C Toepfer International GmbH - Germany
- Standard Chartered Bank - UAE
- Salva Resources Pvt Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Maheswari Brothers Coal Limited - India
- PNOC Exploration Corporation - Philippines
- GVK Power & Infra Limited - India
- Sinarmas Energy and Mining - Indonesia
- Australian Commodity Traders Exchange
- Aditya Birla Group - India
- Manunggal Multi Energi - Indonesia
- San Jose City I Power Corp, Philippines
- AsiaOL BioFuels Corp., Philippines
- Wood Mackenzie - Singapore
- Bulk Trading Sa - Switzerland
- Asmin Koalindo Tuhup - Indonesia
- Baramulti Group, Indonesia
- ASAPP Information Group - India
- Wilmar Investment Holdings
- Energy Link Ltd, New Zealand
- Mercator Lines Limited - India
- White Energy Company Limited
- Orica Mining Services - Indonesia
- Intertek Mineral Services - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Economic Council, Georgia
- Vijayanagar Sugar Pvt Ltd - India
- Pendopo Energi Batubara - Indonesia
- Larsen & Toubro Limited - India
- Petron Corporation, Philippines
- Karbindo Abesyapradhi - Indoneisa
- The University of Queensland
- Kobexindo Tractors - Indoneisa
- Vedanta Resources Plc - India
- Barasentosa Lestari - Indonesia
- Attock Cement Pakistan Limited
- Krishnapatnam Port Company Ltd. - India
- Billiton Holdings Pty Ltd - Australia
- Semirara Mining and Power Corporation, Philippines
- Gujarat Sidhee Cement - India
- Maharashtra Electricity Regulatory Commission - India
- Formosa Plastics Group - Taiwan
- South Luzon Thermal Energy Corporation
- Australian Coal Association
- Cigading International Bulk Terminal - Indonesia
- New Zealand Coal & Carbon
- VISA Power Limited - India
- Global Business Power Corporation, Philippines
- Central Electricity Authority - India
- Bahari Cakrawala Sebuku - Indonesia
- Eastern Energy - Thailand
- Central Java Power - Indonesia
- India Bulls Power Limited - India
- Videocon Industries ltd - India
- SN Aboitiz Power Inc, Philippines
- Romanian Commodities Exchange
- Kumho Petrochemical, South Korea
- Coal and Oil Company - UAE
- Commonwealth Bank - Australia
- Timah Investasi Mineral - Indoneisa
- Thai Mozambique Logistica
- Power Finance Corporation Ltd., India
- Carbofer General Trading SA - India
- Interocean Group of Companies - India
- Rashtriya Ispat Nigam Limited - India
- Singapore Mercantile Exchange
- Anglo American - United Kingdom
- Electricity Generating Authority of Thailand
- LBH Netherlands Bv - Netherlands
- Global Coal Blending Company Limited - Australia
- GMR Energy Limited - India
- Miang Besar Coal Terminal - Indonesia
- Borneo Indobara - Indonesia
- Medco Energi Mining Internasional
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Samtan Co., Ltd - South Korea
- Independent Power Producers Association of India
- ICICI Bank Limited - India
- OPG Power Generation Pvt Ltd - India
- Eastern Coal Council - USA
- Kohat Cement Company Ltd. - Pakistan
- Bukit Asam (Persero) Tbk - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Indian Energy Exchange, India
- Rio Tinto Coal - Australia
- Parliament of New Zealand
- Bank of Tokyo Mitsubishi UFJ Ltd
- Cement Manufacturers Association - India
- Global Green Power PLC Corporation, Philippines
- Indika Energy - Indonesia
- Globalindo Alam Lestari - Indonesia
- Ministry of Mines - Canada
- Coastal Gujarat Power Limited - India
- Indian Oil Corporation Limited
- Tata Chemicals Ltd - India
- CNBM International Corporation - China
- Savvy Resources Ltd - HongKong
- Kalimantan Lumbung Energi - Indonesia
- SMG Consultants - Indonesia
- Riau Bara Harum - Indonesia
- Madhucon Powers Ltd - India
- Bangladesh Power Developement Board
- Marubeni Corporation - India
- Directorate General of MIneral and Coal - Indonesia
- Thiess Contractors Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Orica Australia Pty. Ltd.
- London Commodity Brokers - England
- Essar Steel Hazira Ltd - India
- Sarangani Energy Corporation, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Banpu Public Company Limited - Thailand
- GAC Shipping (India) Pvt Ltd
- Coalindo Energy - Indonesia
- Chamber of Mines of South Africa
- Bhatia International Limited - India
- PowerSource Philippines DevCo
- Kepco SPC Power Corporation, Philippines
- European Bulk Services B.V. - Netherlands
- Karaikal Port Pvt Ltd - India
- Jindal Steel & Power Ltd - India
- Simpson Spence & Young - Indonesia
- Jorong Barutama Greston.PT - Indonesia
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