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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, 16 February 17
IF I PLAN TO UNDERTAKE A CHARTERPARTY WITH AN UNFAMILIAR ENTITY, WHAT STEPS CAN I TAKE TO ENSURE THE CHARTERER WILL PAY THEIR HIRE? - SHIPOWNERS' CLUB
KNOWLEDGE TO ELEVATE
Due to the difficult conditions currently existing in the shipping market, particularly in the offshore sector, Members a ...
Wednesday, 15 February 17
SHIPPING MARKET INSIGHT - INTERMODAL
Looking at the state of the Dry Bulk market exactly a year ago, there is no doubt that there is a significant improvement and despite the fact that ...
Tuesday, 14 February 17
OPTIMISM HAS STARTED TO SLOWLY FLOW BACK INTO THE DRY BULK MARKET - GEORGE LAZARIDIS
Optimism has started to slowly flow back into the dry bulk market, with many in the market showing renewed optimism as the Pacific basin starts to ...
Monday, 13 February 17
COMBINED COAL SALES OF BUMI RESOURCES ROSE TO 87.7 MILLION TONS IN FY'16; UP 10.6 PERCENT Y/Y
COALspot.com: Combined Coal Sales of Bumi Resources rose to 87.7 million tons in FY’16 compared with 79.3 million tons in FY’15. ...
Monday, 13 February 17
THE FREIGHT MARKET CONTINUED TO TUMBLE IN FEBRUARY
COALspot.com: The Freight market was continued its downfall in all segments except Panamax for the week ending 10 February 2017.
The Balt ...
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- Rio Tinto Coal - Australia
- Indo Tambangraya Megah - Indonesia
- The State Trading Corporation of India Ltd
- New Zealand Coal & Carbon
- Ministry of Mines - Canada
- Mercuria Energy - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Aditya Birla Group - India
- Malabar Cements Ltd - India
- Cement Manufacturers Association - India
- Gujarat Mineral Development Corp Ltd - India
- Sinarmas Energy and Mining - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Riau Bara Harum - Indonesia
- Indogreen Group - Indonesia
- Marubeni Corporation - India
- GVK Power & Infra Limited - India
- Iligan Light & Power Inc, Philippines
- Price Waterhouse Coopers - Russia
- SMC Global Power, Philippines
- SN Aboitiz Power Inc, Philippines
- Borneo Indobara - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Heidelberg Cement - Germany
- AsiaOL BioFuels Corp., Philippines
- Xindia Steels Limited - India
- Petron Corporation, Philippines
- Mercator Lines Limited - India
- European Bulk Services B.V. - Netherlands
- Vedanta Resources Plc - India
- Vijayanagar Sugar Pvt Ltd - India
- Siam City Cement - Thailand
- Aboitiz Power Corporation - Philippines
- Dalmia Cement Bharat India
- Globalindo Alam Lestari - Indonesia
- Grasim Industreis Ltd - India
- Karaikal Port Pvt Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Indika Energy - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Sakthi Sugars Limited - India
- Indian Oil Corporation Limited
- IEA Clean Coal Centre - UK
- Global Coal Blending Company Limited - Australia
- Kumho Petrochemical, South Korea
- Directorate General of MIneral and Coal - Indonesia
- Australian Coal Association
- Central Electricity Authority - India
- Anglo American - United Kingdom
- Parliament of New Zealand
- India Bulls Power Limited - India
- PNOC Exploration Corporation - Philippines
- Chamber of Mines of South Africa
- Indian Energy Exchange, India
- Minerals Council of Australia
- Oldendorff Carriers - Singapore
- Sical Logistics Limited - India
- Deloitte Consulting - India
- Electricity Authority, New Zealand
- Goldman Sachs - Singapore
- Sojitz Corporation - Japan
- Madhucon Powers Ltd - India
- Indonesian Coal Mining Association
- Bhoruka Overseas - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Parry Sugars Refinery, India
- Pipit Mutiara Jaya. PT, Indonesia
- Energy Development Corp, Philippines
- Rashtriya Ispat Nigam Limited - India
- Thai Mozambique Logistica
- San Jose City I Power Corp, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bukit Baiduri Energy - Indonesia
- Bayan Resources Tbk. - Indonesia
- LBH Netherlands Bv - Netherlands
- Port Waratah Coal Services - Australia
- ASAPP Information Group - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Global Business Power Corporation, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Manunggal Multi Energi - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Eastern Energy - Thailand
- Karbindo Abesyapradhi - Indoneisa
- Straits Asia Resources Limited - Singapore
- Singapore Mercantile Exchange
- CIMB Investment Bank - Malaysia
- Africa Commodities Group - South Africa
- Holcim Trading Pte Ltd - Singapore
- PTC India Limited - India
- Latin American Coal - Colombia
- Leighton Contractors Pty Ltd - Australia
- Kartika Selabumi Mining - Indonesia
- Directorate Of Revenue Intelligence - India
- Interocean Group of Companies - India
- Barasentosa Lestari - Indonesia
- ICICI Bank Limited - India
- Bangladesh Power Developement Board
- Renaissance Capital - South Africa
- Independent Power Producers Association of India
- Sindya Power Generating Company Private Ltd
- Star Paper Mills Limited - India
- Semirara Mining and Power Corporation, Philippines
- Bharathi Cement Corporation - India
- Therma Luzon, Inc, Philippines
- TeaM Sual Corporation - Philippines
- Planning Commission, India
- CNBM International Corporation - China
- Kepco SPC Power Corporation, Philippines
- Australian Commodity Traders Exchange
- Kideco Jaya Agung - Indonesia
- Power Finance Corporation Ltd., India
- Billiton Holdings Pty Ltd - Australia
- The Treasury - Australian Government
- Ind-Barath Power Infra Limited - India
- Wood Mackenzie - Singapore
- Medco Energi Mining Internasional
- Metalloyd Limited - United Kingdom
- Coal and Oil Company - UAE
- Banpu Public Company Limited - Thailand
- Pendopo Energi Batubara - Indonesia
- SMG Consultants - Indonesia
- Savvy Resources Ltd - HongKong
- GMR Energy Limited - India
- Samtan Co., Ltd - South Korea
- Thiess Contractors Indonesia
- South Luzon Thermal Energy Corporation
- Toyota Tsusho Corporation, Japan
- Carbofer General Trading SA - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bhushan Steel Limited - India
- Uttam Galva Steels Limited - India
- Electricity Generating Authority of Thailand
- GAC Shipping (India) Pvt Ltd
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Maheswari Brothers Coal Limited - India
- Miang Besar Coal Terminal - Indonesia
- MS Steel International - UAE
- Coastal Gujarat Power Limited - India
- Siam City Cement PLC, Thailand
- The University of Queensland
- Standard Chartered Bank - UAE
- Chettinad Cement Corporation Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Orica Mining Services - Indonesia
- Salva Resources Pvt Ltd - India
- Ministry of Finance - Indonesia
- Kaltim Prima Coal - Indonesia
- Intertek Mineral Services - Indonesia
- Eastern Coal Council - USA
- Central Java Power - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- TNB Fuel Sdn Bhd - Malaysia
- Semirara Mining Corp, Philippines
- Vizag Seaport Private Limited - India
- Mjunction Services Limited - India
- Bulk Trading Sa - Switzerland
- Energy Link Ltd, New Zealand
- Merrill Lynch Commodities Europe
- Meenaskhi Energy Private Limited - India
- Jindal Steel & Power Ltd - India
- Mintek Dendrill Indonesia
- Gujarat Sidhee Cement - India
- PowerSource Philippines DevCo
- Larsen & Toubro Limited - India
- Bukit Makmur.PT - Indonesia
- Sree Jayajothi Cements Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Global Green Power PLC Corporation, Philippines
- Wilmar Investment Holdings
- Bahari Cakrawala Sebuku - Indonesia
- Coalindo Energy - Indonesia
- Tata Chemicals Ltd - India
- Agrawal Coal Company - India
- Sarangani Energy Corporation, Philippines
- McConnell Dowell - Australia
- IHS Mccloskey Coal Group - USA
- Kapuas Tunggal Persada - Indonesia
- Edison Trading Spa - Italy
- Orica Australia Pty. Ltd.
- Videocon Industries ltd - India
- VISA Power Limited - India
- Antam Resourcindo - Indonesia
- Georgia Ports Authority, United States
- Lanco Infratech Ltd - India
- Simpson Spence & Young - Indonesia
- Essar Steel Hazira Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Kobexindo Tractors - Indoneisa
- Tamil Nadu electricity Board
- Jaiprakash Power Ventures ltd
- Commonwealth Bank - Australia
- Timah Investasi Mineral - Indoneisa
- White Energy Company Limited
- Trasteel International SA, Italy
- Baramulti Group, Indonesia
- Altura Mining Limited, Indonesia
- Binh Thuan Hamico - Vietnam
- Posco Energy - South Korea
- Ministry of Transport, Egypt
- Meralco Power Generation, Philippines
- Attock Cement Pakistan Limited
- OPG Power Generation Pvt Ltd - India
- Romanian Commodities Exchange
- Formosa Plastics Group - Taiwan
- Gujarat Electricity Regulatory Commission - India
- Bhatia International Limited - India
- Economic Council, Georgia
- Ceylon Electricity Board - Sri Lanka
- International Coal Ventures Pvt Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Makarim & Taira - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- London Commodity Brokers - England
- Ambuja Cements Ltd - India
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