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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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Thursday, 26 April 18
COAL PRICES ARE EXPECTED TO AVERAGE $85/MT IN 2018, DOWN SLIGHTLY FROM 2017 - WORLD BANK
Coal prices rose 4 percent in the first quarter (q/q), following a surge of 34 percent in 2017, mainly due to strong consumption in China spurred b ...
Wednesday, 25 April 18
TANKER MARKET INSIGHT - THEODOROS NTALAKOS
We had the opportunity to be part of Intertanko's Hellenic Mediterranean Panel last week in the SNFCC and to present an outlook on the tanker f ...
Tuesday, 24 April 18
IMPORTING INDONESIAN COAL MAKES SENSE FOR INDIAN COASTAL PLANTS EVEN WHEN IT IS COSTLIER THAN INDIAN - ECONOMIC TIMES
Rising Indonesian coal production and lower Chinese demand have pulled down Indonesian coal prices by 22% over the last 45 days, a trend that augur ...
Tuesday, 24 April 18
IMO AIMS TO HALVE GLOBAL SHIPPING EMISSIONS - BUT WHAT WILL IT COST? - WOOD MACKENZIE
Global bunker fuel costs could rise by up to US$60 billion annually from 2020, in a full compliance scenario, when the International Maritim ...
Tuesday, 24 April 18
TWO 56K-DWT OPEN HONG KONG AND SINGAPORE WERE FIXED FOR INDONESIA COAL TRIPS TO CHINA, AT $9,500 AND $11,000 RESPECTIVELY - BALTIC BRIEFING
Capesize
This week has seen the Cape 5 timecharter weighted average almost double. Similarly, the Brazil to China ore rates climbed over $4.50, f ...
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- Holcim Trading Pte Ltd - Singapore
- Neyveli Lignite Corporation Ltd, - India
- Krishnapatnam Port Company Ltd. - India
- Sarangani Energy Corporation, Philippines
- Independent Power Producers Association of India
- ICICI Bank Limited - India
- Agrawal Coal Company - India
- Gujarat Electricity Regulatory Commission - India
- Grasim Industreis Ltd - India
- Kartika Selabumi Mining - Indonesia
- Malabar Cements Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Coal and Oil Company - UAE
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Miang Besar Coal Terminal - Indonesia
- Carbofer General Trading SA - India
- Maheswari Brothers Coal Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- SMC Global Power, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Eastern Coal Council - USA
- Heidelberg Cement - Germany
- Kepco SPC Power Corporation, Philippines
- VISA Power Limited - India
- Rio Tinto Coal - Australia
- IEA Clean Coal Centre - UK
- OPG Power Generation Pvt Ltd - India
- Uttam Galva Steels Limited - India
- Merrill Lynch Commodities Europe
- Vedanta Resources Plc - India
- Trasteel International SA, Italy
- Globalindo Alam Lestari - Indonesia
- Minerals Council of Australia
- Directorate General of MIneral and Coal - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Australian Commodity Traders Exchange
- Global Green Power PLC Corporation, Philippines
- CIMB Investment Bank - Malaysia
- Maharashtra Electricity Regulatory Commission - India
- Parliament of New Zealand
- Chettinad Cement Corporation Ltd - India
- Central Electricity Authority - India
- Thai Mozambique Logistica
- Kaltim Prima Coal - Indonesia
- The Treasury - Australian Government
- Bangladesh Power Developement Board
- Anglo American - United Kingdom
- Ambuja Cements Ltd - India
- Antam Resourcindo - Indonesia
- Mintek Dendrill Indonesia
- LBH Netherlands Bv - Netherlands
- SMG Consultants - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Kumho Petrochemical, South Korea
- Attock Cement Pakistan Limited
- Timah Investasi Mineral - Indoneisa
- Makarim & Taira - Indonesia
- Australian Coal Association
- Wilmar Investment Holdings
- Altura Mining Limited, Indonesia
- The University of Queensland
- Straits Asia Resources Limited - Singapore
- Marubeni Corporation - India
- Indonesian Coal Mining Association
- TeaM Sual Corporation - Philippines
- Kohat Cement Company Ltd. - Pakistan
- GN Power Mariveles Coal Plant, Philippines
- Africa Commodities Group - South Africa
- TNB Fuel Sdn Bhd - Malaysia
- Global Business Power Corporation, Philippines
- Bhatia International Limited - India
- Videocon Industries ltd - India
- SN Aboitiz Power Inc, Philippines
- GMR Energy Limited - India
- Binh Thuan Hamico - Vietnam
- Thiess Contractors Indonesia
- Larsen & Toubro Limited - India
- Barasentosa Lestari - Indonesia
- International Coal Ventures Pvt Ltd - India
- Siam City Cement PLC, Thailand
- San Jose City I Power Corp, Philippines
- IHS Mccloskey Coal Group - USA
- Indika Energy - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Oldendorff Carriers - Singapore
- Ministry of Finance - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- McConnell Dowell - Australia
- South Luzon Thermal Energy Corporation
- Medco Energi Mining Internasional
- Tata Chemicals Ltd - India
- Kideco Jaya Agung - Indonesia
- Price Waterhouse Coopers - Russia
- Iligan Light & Power Inc, Philippines
- Electricity Generating Authority of Thailand
- Mercator Lines Limited - India
- Indian Energy Exchange, India
- Indogreen Group - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Aboitiz Power Corporation - Philippines
- Ceylon Electricity Board - Sri Lanka
- Power Finance Corporation Ltd., India
- Toyota Tsusho Corporation, Japan
- The State Trading Corporation of India Ltd
- Lanco Infratech Ltd - India
- Riau Bara Harum - Indonesia
- Standard Chartered Bank - UAE
- Port Waratah Coal Services - Australia
- Goldman Sachs - Singapore
- Karaikal Port Pvt Ltd - India
- Kobexindo Tractors - Indoneisa
- Essar Steel Hazira Ltd - India
- Intertek Mineral Services - Indonesia
- Salva Resources Pvt Ltd - India
- London Commodity Brokers - England
- Aditya Birla Group - India
- Edison Trading Spa - Italy
- AsiaOL BioFuels Corp., Philippines
- Economic Council, Georgia
- Dalmia Cement Bharat India
- CNBM International Corporation - China
- Cigading International Bulk Terminal - Indonesia
- Madhucon Powers Ltd - India
- Sical Logistics Limited - India
- Pendopo Energi Batubara - Indonesia
- PTC India Limited - India
- Deloitte Consulting - India
- Orica Australia Pty. Ltd.
- Energy Link Ltd, New Zealand
- Bukit Baiduri Energy - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Baramulti Group, Indonesia
- Bharathi Cement Corporation - India
- Formosa Plastics Group - Taiwan
- Latin American Coal - Colombia
- GAC Shipping (India) Pvt Ltd
- ASAPP Information Group - India
- PNOC Exploration Corporation - Philippines
- European Bulk Services B.V. - Netherlands
- Cement Manufacturers Association - India
- Vizag Seaport Private Limited - India
- Chamber of Mines of South Africa
- Borneo Indobara - Indonesia
- Meenaskhi Energy Private Limited - India
- Sindya Power Generating Company Private Ltd
- Wood Mackenzie - Singapore
- Indian Oil Corporation Limited
- Tamil Nadu electricity Board
- Directorate Of Revenue Intelligence - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Renaissance Capital - South Africa
- Billiton Holdings Pty Ltd - Australia
- PowerSource Philippines DevCo
- White Energy Company Limited
- Bhushan Steel Limited - India
- Alfred C Toepfer International GmbH - Germany
- Star Paper Mills Limited - India
- Bhoruka Overseas - Indonesia
- Jindal Steel & Power Ltd - India
- Bukit Makmur.PT - Indonesia
- Ministry of Mines - Canada
- Coastal Gujarat Power Limited - India
- Bulk Trading Sa - Switzerland
- Xindia Steels Limited - India
- Rashtriya Ispat Nigam Limited - India
- New Zealand Coal & Carbon
- Semirara Mining and Power Corporation, Philippines
- Simpson Spence & Young - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Singapore Mercantile Exchange
- Coalindo Energy - Indonesia
- Planning Commission, India
- Therma Luzon, Inc, Philippines
- Central Java Power - Indonesia
- Orica Mining Services - Indonesia
- Savvy Resources Ltd - HongKong
- Semirara Mining Corp, Philippines
- Kapuas Tunggal Persada - Indonesia
- Electricity Authority, New Zealand
- India Bulls Power Limited - India
- Indo Tambangraya Megah - Indonesia
- Sojitz Corporation - Japan
- Bayan Resources Tbk. - Indonesia
- Sakthi Sugars Limited - India
- Ministry of Transport, Egypt
- Gujarat Sidhee Cement - India
- Jaiprakash Power Ventures ltd
- Jorong Barutama Greston.PT - Indonesia
- Mercuria Energy - Indonesia
- Romanian Commodities Exchange
- MS Steel International - UAE
- Mjunction Services Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Georgia Ports Authority, United States
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Commonwealth Bank - Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Petron Corporation, Philippines
- Banpu Public Company Limited - Thailand
- Interocean Group of Companies - India
- Manunggal Multi Energi - Indonesia
- Energy Development Corp, Philippines
- Meralco Power Generation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Sree Jayajothi Cements Limited - India
- GVK Power & Infra Limited - India
- Eastern Energy - Thailand
- Pipit Mutiara Jaya. PT, Indonesia
- Ind-Barath Power Infra Limited - India
- Metalloyd Limited - United Kingdom
- Global Coal Blending Company Limited - Australia
- Posco Energy - South Korea
- PetroVietnam Power Coal Import and Supply Company
- Samtan Co., Ltd - South Korea
- Parry Sugars Refinery, India
- Petrochimia International Co. Ltd.- Taiwan
- Siam City Cement - Thailand
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