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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, 13 June 18
SHIPPING MARKET INSIGHT - SOPHIE COTZIAS
2018 marks quite a few milestones for Greek Shipping. No need to detail again the greatness of Greek Shipping or the singular position that Greek s ...
Monday, 11 June 18
AUSTRALIAN COAL PRICES HIT 6-YEAR HIGH AS ASIA DEMAND SPIKES - REUTERS
Australian thermal coal prices have risen to their highest level since 2012 as hot weather across North Asia spurs buying ahead of the peak summer ...
Monday, 11 June 18
ANALYSING A NEW AGE OF AUTONOMOUS VESSELS - IMO
The International Maritime Organization answers the questions of Government Europa on how the next generation of autonomous vessels can be regulate ...
Friday, 08 June 18
AUSTRALIAN THERMAL COAL PRICES SURGE AS ASIA DEMAND HEATS UP - REUTERS
Australian thermal coal prices have hit their highest level since late 2016 as the market heats up on strong demand across North Asia and China in ...
Wednesday, 06 June 18
SHIPPING MARKET INSIGHT - KATERINA RESTIS
As observed last month the price of oil hit its highest level since November 2014 reaching $80 per barrel. Global oil demand growth for 2018 was sl ...
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- Thiess Contractors Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Mintek Dendrill Indonesia
- Orica Mining Services - Indonesia
- Commonwealth Bank - Australia
- Energy Development Corp, Philippines
- Billiton Holdings Pty Ltd - Australia
- Indogreen Group - Indonesia
- Bharathi Cement Corporation - India
- Cigading International Bulk Terminal - Indonesia
- Indian Energy Exchange, India
- Sojitz Corporation - Japan
- Altura Mining Limited, Indonesia
- Wood Mackenzie - Singapore
- Leighton Contractors Pty Ltd - Australia
- The State Trading Corporation of India Ltd
- Global Business Power Corporation, Philippines
- Gujarat Electricity Regulatory Commission - India
- Energy Link Ltd, New Zealand
- Petrochimia International Co. Ltd.- Taiwan
- Neyveli Lignite Corporation Ltd, - India
- Jindal Steel & Power Ltd - India
- Mjunction Services Limited - India
- Kartika Selabumi Mining - Indonesia
- Makarim & Taira - Indonesia
- The University of Queensland
- Chamber of Mines of South Africa
- GN Power Mariveles Coal Plant, Philippines
- Bukit Makmur.PT - Indonesia
- Sindya Power Generating Company Private Ltd
- Orica Australia Pty. Ltd.
- Romanian Commodities Exchange
- Jaiprakash Power Ventures ltd
- Power Finance Corporation Ltd., India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Pendopo Energi Batubara - Indonesia
- Salva Resources Pvt Ltd - India
- ICICI Bank Limited - India
- CIMB Investment Bank - Malaysia
- The Treasury - Australian Government
- Madhucon Powers Ltd - India
- Australian Coal Association
- Binh Thuan Hamico - Vietnam
- OPG Power Generation Pvt Ltd - India
- New Zealand Coal & Carbon
- Price Waterhouse Coopers - Russia
- Kumho Petrochemical, South Korea
- White Energy Company Limited
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- San Jose City I Power Corp, Philippines
- Bayan Resources Tbk. - Indonesia
- GAC Shipping (India) Pvt Ltd
- Global Green Power PLC Corporation, Philippines
- Wilmar Investment Holdings
- International Coal Ventures Pvt Ltd - India
- Metalloyd Limited - United Kingdom
- Ceylon Electricity Board - Sri Lanka
- Ambuja Cements Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- GMR Energy Limited - India
- Indian Oil Corporation Limited
- Star Paper Mills Limited - India
- Savvy Resources Ltd - HongKong
- Bangladesh Power Developement Board
- Indonesian Coal Mining Association
- Sakthi Sugars Limited - India
- Agrawal Coal Company - India
- Coalindo Energy - Indonesia
- Thai Mozambique Logistica
- Lanco Infratech Ltd - India
- VISA Power Limited - India
- Bhushan Steel Limited - India
- Sarangani Energy Corporation, Philippines
- GVK Power & Infra Limited - India
- Marubeni Corporation - India
- Kideco Jaya Agung - Indonesia
- South Luzon Thermal Energy Corporation
- Renaissance Capital - South Africa
- Therma Luzon, Inc, Philippines
- Alfred C Toepfer International GmbH - Germany
- Baramulti Group, Indonesia
- Sical Logistics Limited - India
- Ministry of Mines - Canada
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Antam Resourcindo - Indonesia
- Riau Bara Harum - Indonesia
- IEA Clean Coal Centre - UK
- Heidelberg Cement - Germany
- Tamil Nadu electricity Board
- Gujarat Sidhee Cement - India
- Maheswari Brothers Coal Limited - India
- Coal and Oil Company - UAE
- Formosa Plastics Group - Taiwan
- Bulk Trading Sa - Switzerland
- Vijayanagar Sugar Pvt Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Samtan Co., Ltd - South Korea
- Ministry of Finance - Indonesia
- Malabar Cements Ltd - India
- Independent Power Producers Association of India
- Electricity Authority, New Zealand
- Siam City Cement - Thailand
- Banpu Public Company Limited - Thailand
- Ind-Barath Power Infra Limited - India
- Sree Jayajothi Cements Limited - India
- Ministry of Transport, Egypt
- Medco Energi Mining Internasional
- Port Waratah Coal Services - Australia
- Cement Manufacturers Association - India
- India Bulls Power Limited - India
- Bukit Baiduri Energy - Indonesia
- Straits Asia Resources Limited - Singapore
- TeaM Sual Corporation - Philippines
- Eastern Energy - Thailand
- Parliament of New Zealand
- Posco Energy - South Korea
- Bhoruka Overseas - Indonesia
- SMG Consultants - Indonesia
- Simpson Spence & Young - Indonesia
- Krishnapatnam Port Company Ltd. - India
- LBH Netherlands Bv - Netherlands
- Aboitiz Power Corporation - Philippines
- Intertek Mineral Services - Indonesia
- Attock Cement Pakistan Limited
- Iligan Light & Power Inc, Philippines
- Kohat Cement Company Ltd. - Pakistan
- CNBM International Corporation - China
- IHS Mccloskey Coal Group - USA
- Kobexindo Tractors - Indoneisa
- Eastern Coal Council - USA
- Meralco Power Generation, Philippines
- Manunggal Multi Energi - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Mercator Lines Limited - India
- Toyota Tsusho Corporation, Japan
- Vedanta Resources Plc - India
- TNB Fuel Sdn Bhd - Malaysia
- Coastal Gujarat Power Limited - India
- PowerSource Philippines DevCo
- Kapuas Tunggal Persada - Indonesia
- Central Electricity Authority - India
- Videocon Industries ltd - India
- Carbofer General Trading SA - India
- Georgia Ports Authority, United States
- Siam City Cement PLC, Thailand
- Indika Energy - Indonesia
- Edison Trading Spa - Italy
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Latin American Coal - Colombia
- Parry Sugars Refinery, India
- Tata Chemicals Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- ASAPP Information Group - India
- Planning Commission, India
- Global Coal Blending Company Limited - Australia
- Chettinad Cement Corporation Ltd - India
- Minerals Council of Australia
- Standard Chartered Bank - UAE
- PNOC Exploration Corporation - Philippines
- Grasim Industreis Ltd - India
- London Commodity Brokers - England
- Barasentosa Lestari - Indonesia
- Singapore Mercantile Exchange
- MS Steel International - UAE
- Interocean Group of Companies - India
- Anglo American - United Kingdom
- Timah Investasi Mineral - Indoneisa
- Maharashtra Electricity Regulatory Commission - India
- Bhatia International Limited - India
- Xindia Steels Limited - India
- Kaltim Prima Coal - Indonesia
- Mercuria Energy - Indonesia
- SMC Global Power, Philippines
- PTC India Limited - India
- Vizag Seaport Private Limited - India
- Sinarmas Energy and Mining - Indonesia
- Deloitte Consulting - India
- Directorate General of MIneral and Coal - Indonesia
- Africa Commodities Group - South Africa
- Holcim Trading Pte Ltd - Singapore
- Offshore Bulk Terminal Pte Ltd, Singapore
- Semirara Mining Corp, Philippines
- Kepco SPC Power Corporation, Philippines
- Indo Tambangraya Megah - Indonesia
- Merrill Lynch Commodities Europe
- Uttam Galva Steels Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Essar Steel Hazira Ltd - India
- Directorate Of Revenue Intelligence - India
- Aditya Birla Group - India
- Semirara Mining and Power Corporation, Philippines
- Central Java Power - Indonesia
- Petron Corporation, Philippines
- Goldman Sachs - Singapore
- Trasteel International SA, Italy
- PetroVietnam Power Coal Import and Supply Company
- Dalmia Cement Bharat India
- McConnell Dowell - Australia
- Gujarat Mineral Development Corp Ltd - India
- Rio Tinto Coal - Australia
- Australian Commodity Traders Exchange
- Larsen & Toubro Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- SN Aboitiz Power Inc, Philippines
- Miang Besar Coal Terminal - Indonesia
- Borneo Indobara - Indonesia
- Economic Council, Georgia
- European Bulk Services B.V. - Netherlands
- Electricity Generating Authority of Thailand
- AsiaOL BioFuels Corp., Philippines
- Meenaskhi Energy Private Limited - India
- Oldendorff Carriers - Singapore
- Globalindo Alam Lestari - Indonesia
- Karaikal Port Pvt Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
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