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