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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, 21 February 18
SHIPPING MARKET INSIGHT - KONSTANTINOS KONTOMICHIS
2017 proved to be a relatively good year with positive margins for the Dry Bulk market. Especially during the last quarter of the year everyone can ...
Tuesday, 20 February 18
INDIA: COAL IMPORT RISES BY 12 PER CENT TO 18 MILLION TONNES IN JANUARY - PTI
The country’s coal import increased by 12.4 per cent to 18.49 million tonnes (MT) in January, against 16.
44 MT in the same month of the ...
Monday, 19 February 18
JOINT INSURANCE - WHY SHOULD YOU CARE? - SKULD
KNOWLEDGE TO ELEVATE
It is neither controversial nor new to say that co-assureds under a joint insurance policy cannot claim against each othe ...
Friday, 16 February 18
U.S. WEEKLY COAL OUTPUT DOWN 4.5 PER CENT WEEK OVER WEEK, EIA DATA SHOWS
COALspot.com – U.S., the world’s second largest coal producers have produced approximately totaled an estimated 15.2 million short tons ...
Thursday, 15 February 18
INDIA: THERMAL POWER PLANTS UNDER STRESS ON RISING COAL, FREIGHT COSTS - BUSINESS STANDARD
Coal-based power plants are feeling the heat of spike in thermal grade coal prices and railway freight costs.
Prices of thermal grade coal sin ...
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- ASAPP Information Group - India
- Australian Commodity Traders Exchange
- Tata Chemicals Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Larsen & Toubro Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Mercator Lines Limited - India
- Parry Sugars Refinery, India
- Chamber of Mines of South Africa
- Timah Investasi Mineral - Indoneisa
- White Energy Company Limited
- Metalloyd Limited - United Kingdom
- Thiess Contractors Indonesia
- Krishnapatnam Port Company Ltd. - India
- New Zealand Coal & Carbon
- Dalmia Cement Bharat India
- Central Java Power - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Semirara Mining and Power Corporation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- McConnell Dowell - Australia
- Romanian Commodities Exchange
- Coalindo Energy - Indonesia
- Ministry of Transport, Egypt
- Bukit Baiduri Energy - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Bukit Makmur.PT - Indonesia
- Parliament of New Zealand
- Indika Energy - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Billiton Holdings Pty Ltd - Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Indogreen Group - Indonesia
- Bhushan Steel Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Rashtriya Ispat Nigam Limited - India
- Medco Energi Mining Internasional
- Gujarat Sidhee Cement - India
- The Treasury - Australian Government
- Ind-Barath Power Infra Limited - India
- Electricity Generating Authority of Thailand
- SMG Consultants - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Attock Cement Pakistan Limited
- Bayan Resources Tbk. - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Salva Resources Pvt Ltd - India
- Planning Commission, India
- Kaltim Prima Coal - Indonesia
- Price Waterhouse Coopers - Russia
- Trasteel International SA, Italy
- Bukit Asam (Persero) Tbk - Indonesia
- Binh Thuan Hamico - Vietnam
- European Bulk Services B.V. - Netherlands
- Tamil Nadu electricity Board
- Independent Power Producers Association of India
- Renaissance Capital - South Africa
- Miang Besar Coal Terminal - Indonesia
- Energy Link Ltd, New Zealand
- Intertek Mineral Services - Indonesia
- Karaikal Port Pvt Ltd - India
- Edison Trading Spa - Italy
- Singapore Mercantile Exchange
- Cigading International Bulk Terminal - Indonesia
- Australian Coal Association
- GMR Energy Limited - India
- Indonesian Coal Mining Association
- Alfred C Toepfer International GmbH - Germany
- Economic Council, Georgia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Thai Mozambique Logistica
- OPG Power Generation Pvt Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Semirara Mining Corp, Philippines
- Xindia Steels Limited - India
- PNOC Exploration Corporation - Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Malabar Cements Ltd - India
- Anglo American - United Kingdom
- Barasentosa Lestari - Indonesia
- GAC Shipping (India) Pvt Ltd
- Samtan Co., Ltd - South Korea
- Agrawal Coal Company - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kapuas Tunggal Persada - Indonesia
- Rio Tinto Coal - Australia
- Latin American Coal - Colombia
- Savvy Resources Ltd - HongKong
- Mjunction Services Limited - India
- Cement Manufacturers Association - India
- Sinarmas Energy and Mining - Indonesia
- Madhucon Powers Ltd - India
- Vedanta Resources Plc - India
- Lanco Infratech Ltd - India
- Makarim & Taira - Indonesia
- Siam City Cement - Thailand
- Ceylon Electricity Board - Sri Lanka
- Oldendorff Carriers - Singapore
- Star Paper Mills Limited - India
- MS Steel International - UAE
- Riau Bara Harum - Indonesia
- Jindal Steel & Power Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Eastern Coal Council - USA
- Altura Mining Limited, Indonesia
- Kideco Jaya Agung - Indonesia
- Port Waratah Coal Services - Australia
- Heidelberg Cement - Germany
- Straits Asia Resources Limited - Singapore
- Jorong Barutama Greston.PT - Indonesia
- Orica Australia Pty. Ltd.
- Antam Resourcindo - Indonesia
- Vizag Seaport Private Limited - India
- CIMB Investment Bank - Malaysia
- Neyveli Lignite Corporation Ltd, - India
- Uttam Galva Steels Limited - India
- Kobexindo Tractors - Indoneisa
- Bangladesh Power Developement Board
- Coastal Gujarat Power Limited - India
- Kepco SPC Power Corporation, Philippines
- Mercuria Energy - Indonesia
- Orica Mining Services - Indonesia
- Energy Development Corp, Philippines
- Goldman Sachs - Singapore
- Kumho Petrochemical, South Korea
- TeaM Sual Corporation - Philippines
- Sindya Power Generating Company Private Ltd
- Ambuja Cements Ltd - India
- Standard Chartered Bank - UAE
- Videocon Industries ltd - India
- IEA Clean Coal Centre - UK
- Electricity Authority, New Zealand
- Georgia Ports Authority, United States
- Marubeni Corporation - India
- London Commodity Brokers - England
- GVK Power & Infra Limited - India
- Wood Mackenzie - Singapore
- Mintek Dendrill Indonesia
- Directorate Of Revenue Intelligence - India
- Wilmar Investment Holdings
- Borneo Indobara - Indonesia
- VISA Power Limited - India
- Iligan Light & Power Inc, Philippines
- PowerSource Philippines DevCo
- SN Aboitiz Power Inc, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Pendopo Energi Batubara - Indonesia
- Jaiprakash Power Ventures ltd
- Interocean Group of Companies - India
- Chettinad Cement Corporation Ltd - India
- Posco Energy - South Korea
- Indian Energy Exchange, India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- IHS Mccloskey Coal Group - USA
- Formosa Plastics Group - Taiwan
- Power Finance Corporation Ltd., India
- Simpson Spence & Young - Indonesia
- Eastern Energy - Thailand
- Global Green Power PLC Corporation, Philippines
- Central Electricity Authority - India
- Manunggal Multi Energi - Indonesia
- The State Trading Corporation of India Ltd
- LBH Netherlands Bv - Netherlands
- Grasim Industreis Ltd - India
- Bhoruka Overseas - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Minerals Council of Australia
- Leighton Contractors Pty Ltd - Australia
- Global Coal Blending Company Limited - Australia
- CNBM International Corporation - China
- Offshore Bulk Terminal Pte Ltd, Singapore
- Africa Commodities Group - South Africa
- Merrill Lynch Commodities Europe
- Sical Logistics Limited - India
- Sree Jayajothi Cements Limited - India
- PTC India Limited - India
- SMC Global Power, Philippines
- Toyota Tsusho Corporation, Japan
- Sojitz Corporation - Japan
- Sakthi Sugars Limited - India
- Deloitte Consulting - India
- Commonwealth Bank - Australia
- Bulk Trading Sa - Switzerland
- India Bulls Power Limited - India
- Therma Luzon, Inc, Philippines
- Essar Steel Hazira Ltd - India
- Aditya Birla Group - India
- San Jose City I Power Corp, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Indian Oil Corporation Limited
- Aboitiz Power Corporation - Philippines
- Petron Corporation, Philippines
- Banpu Public Company Limited - Thailand
- Siam City Cement PLC, Thailand
- Bhatia International Limited - India
- Baramulti Group, Indonesia
- International Coal Ventures Pvt Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Bharathi Cement Corporation - India
- Carbofer General Trading SA - India
- Kartika Selabumi Mining - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Maheswari Brothers Coal Limited - India
- Global Business Power Corporation, Philippines
- Coal and Oil Company - UAE
- Meenaskhi Energy Private Limited - India
- Meralco Power Generation, Philippines
- Sarangani Energy Corporation, Philippines
- Ministry of Mines - Canada
- Ministry of Finance - Indonesia
- ICICI Bank Limited - India
- South Luzon Thermal Energy Corporation
- Indo Tambangraya Megah - Indonesia
- Globalindo Alam Lestari - Indonesia
- The University of Queensland
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