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