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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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Tuesday, 19 July 22
DRY BULK MARKET: CAPESIZE MARKET FIRMS THIS WEEK - BALTIC EXCHANGE
Capesize
Firmer sentiment across both basins pushed the Capesize 5TC route average above the $20,000 threshold this week, closing at $24,209. A ...
Tuesday, 19 July 22
WHY SHIPPING MIGHT BE ABOUT TO GET A LITTLE BIT SLOWER - WORLD ECONOMIC FORUM
If shipping is the beating heart of global trade, its pulse is about to get slower.
Faced with uncertainty about which fuels to use in the long ...
Tuesday, 19 July 22
GERMANY'S INCREASED COAL, OIL USE WILL BE TEMPORARY, SCHOLZ SAYS - CNBC
Chancellor Olaf Scholz says Germany’s decision to reactivate coal and oil-fired power plants to relieve energy shortages because of the war i ...
Tuesday, 19 July 22
INDONESIA REMOVES PALM OIL EXPORT LEVY UNTIL AUG. 31 - REUTERS
Indonesia has scrapped its export levy for all palm oil products until Aug. 31 in a fresh attempt to boost exports and ease high inventories, finan ...
Tuesday, 19 July 22
CHINA'S JUNE DAILY COAL OUTPUT JUMPS ON PEAK SUMMER DEMAND - REUTERS
China’s daily coal output in June rose 6.6 per cent from a month earlier as miners cranked up output ahead of peak summer temperatures, when ...
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- Kepco SPC Power Corporation, Philippines
- Eastern Coal Council - USA
- Neyveli Lignite Corporation Ltd, - India
- Grasim Industreis Ltd - India
- Semirara Mining Corp, Philippines
- Indonesian Coal Mining Association
- Indika Energy - Indonesia
- Uttam Galva Steels Limited - India
- Kobexindo Tractors - Indoneisa
- GN Power Mariveles Coal Plant, Philippines
- ASAPP Information Group - India
- Indogreen Group - Indonesia
- Karaikal Port Pvt Ltd - India
- Independent Power Producers Association of India
- European Bulk Services B.V. - Netherlands
- The University of Queensland
- Sakthi Sugars Limited - India
- Bukit Baiduri Energy - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Coalindo Energy - Indonesia
- PNOC Exploration Corporation - Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Therma Luzon, Inc, Philippines
- Ceylon Electricity Board - Sri Lanka
- VISA Power Limited - India
- IHS Mccloskey Coal Group - USA
- Trasteel International SA, Italy
- Kapuas Tunggal Persada - Indonesia
- Port Waratah Coal Services - Australia
- Bukit Asam (Persero) Tbk - Indonesia
- GAC Shipping (India) Pvt Ltd
- Globalindo Alam Lestari - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Sindya Power Generating Company Private Ltd
- Altura Mining Limited, Indonesia
- Central Electricity Authority - India
- Power Finance Corporation Ltd., India
- Toyota Tsusho Corporation, Japan
- Attock Cement Pakistan Limited
- Rio Tinto Coal - Australia
- Sarangani Energy Corporation, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Orica Mining Services - Indonesia
- Ministry of Transport, Egypt
- Maheswari Brothers Coal Limited - India
- International Coal Ventures Pvt Ltd - India
- Bhushan Steel Limited - India
- Gujarat Electricity Regulatory Commission - India
- Romanian Commodities Exchange
- Offshore Bulk Terminal Pte Ltd, Singapore
- San Jose City I Power Corp, Philippines
- Orica Australia Pty. Ltd.
- Jindal Steel & Power Ltd - India
- Riau Bara Harum - Indonesia
- Indian Oil Corporation Limited
- The State Trading Corporation of India Ltd
- Ministry of Mines - Canada
- Star Paper Mills Limited - India
- Planning Commission, India
- Australian Commodity Traders Exchange
- Miang Besar Coal Terminal - Indonesia
- Electricity Authority, New Zealand
- Barasentosa Lestari - Indonesia
- Straits Asia Resources Limited - Singapore
- SMC Global Power, Philippines
- Siam City Cement PLC, Thailand
- Kumho Petrochemical, South Korea
- Coal and Oil Company - UAE
- Ministry of Finance - Indonesia
- Mintek Dendrill Indonesia
- Petron Corporation, Philippines
- Iligan Light & Power Inc, Philippines
- Directorate Of Revenue Intelligence - India
- Agrawal Coal Company - India
- SMG Consultants - Indonesia
- Cigading International Bulk Terminal - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Sojitz Corporation - Japan
- Merrill Lynch Commodities Europe
- Antam Resourcindo - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Billiton Holdings Pty Ltd - Australia
- Coastal Gujarat Power Limited - India
- Chettinad Cement Corporation Ltd - India
- Central Java Power - Indonesia
- Kartika Selabumi Mining - Indonesia
- Economic Council, Georgia
- Price Waterhouse Coopers - Russia
- Maharashtra Electricity Regulatory Commission - India
- OPG Power Generation Pvt Ltd - India
- Simpson Spence & Young - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- PTC India Limited - India
- Baramulti Group, Indonesia
- Cement Manufacturers Association - India
- Alfred C Toepfer International GmbH - Germany
- Banpu Public Company Limited - Thailand
- Krishnapatnam Port Company Ltd. - India
- Petrochimia International Co. Ltd.- Taiwan
- Georgia Ports Authority, United States
- Leighton Contractors Pty Ltd - Australia
- India Bulls Power Limited - India
- Mercuria Energy - Indonesia
- IEA Clean Coal Centre - UK
- Formosa Plastics Group - Taiwan
- Gujarat Sidhee Cement - India
- CIMB Investment Bank - Malaysia
- TeaM Sual Corporation - Philippines
- Dalmia Cement Bharat India
- Holcim Trading Pte Ltd - Singapore
- Jorong Barutama Greston.PT - Indonesia
- Australian Coal Association
- Kideco Jaya Agung - Indonesia
- Parry Sugars Refinery, India
- New Zealand Coal & Carbon
- Manunggal Multi Energi - Indonesia
- Makarim & Taira - Indonesia
- London Commodity Brokers - England
- Meenaskhi Energy Private Limited - India
- Eastern Energy - Thailand
- Tamil Nadu electricity Board
- Kaltim Prima Coal - Indonesia
- Edison Trading Spa - Italy
- Madhucon Powers Ltd - India
- Vedanta Resources Plc - India
- Tata Chemicals Ltd - India
- Marubeni Corporation - India
- Videocon Industries ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sical Logistics Limited - India
- Lanco Infratech Ltd - India
- Ambuja Cements Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Binh Thuan Hamico - Vietnam
- PowerSource Philippines DevCo
- Latin American Coal - Colombia
- South Luzon Thermal Energy Corporation
- GVK Power & Infra Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Renaissance Capital - South Africa
- Singapore Mercantile Exchange
- Bangladesh Power Developement Board
- Standard Chartered Bank - UAE
- Aditya Birla Group - India
- ICICI Bank Limited - India
- Africa Commodities Group - South Africa
- Indo Tambangraya Megah - Indonesia
- Savvy Resources Ltd - HongKong
- Commonwealth Bank - Australia
- Interocean Group of Companies - India
- The Treasury - Australian Government
- Metalloyd Limited - United Kingdom
- Global Business Power Corporation, Philippines
- Bharathi Cement Corporation - India
- Bhoruka Overseas - Indonesia
- Meralco Power Generation, Philippines
- MS Steel International - UAE
- Thiess Contractors Indonesia
- CNBM International Corporation - China
- Gujarat Mineral Development Corp Ltd - India
- Larsen & Toubro Limited - India
- Global Green Power PLC Corporation, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Pendopo Energi Batubara - Indonesia
- Parliament of New Zealand
- Salva Resources Pvt Ltd - India
- Bhatia International Limited - India
- Wood Mackenzie - Singapore
- Carbofer General Trading SA - India
- Rashtriya Ispat Nigam Limited - India
- Heidelberg Cement - Germany
- Xindia Steels Limited - India
- Energy Development Corp, Philippines
- Sree Jayajothi Cements Limited - India
- Aboitiz Power Corporation - Philippines
- Goldman Sachs - Singapore
- Siam City Cement - Thailand
- McConnell Dowell - Australia
- Global Coal Blending Company Limited - Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bukit Makmur.PT - Indonesia
- Chamber of Mines of South Africa
- Medco Energi Mining Internasional
- Kalimantan Lumbung Energi - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Borneo Indobara - Indonesia
- Timah Investasi Mineral - Indoneisa
- White Energy Company Limited
- Intertek Mineral Services - Indonesia
- Essar Steel Hazira Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Asmin Koalindo Tuhup - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Electricity Generating Authority of Thailand
- Oldendorff Carriers - Singapore
- Karbindo Abesyapradhi - Indoneisa
- Posco Energy - South Korea
- Bayan Resources Tbk. - Indonesia
- Anglo American - United Kingdom
- LBH Netherlands Bv - Netherlands
- Vizag Seaport Private Limited - India
- Thai Mozambique Logistica
- Indian Energy Exchange, India
- GMR Energy Limited - India
- Jaiprakash Power Ventures ltd
- Malabar Cements Ltd - India
- Wilmar Investment Holdings
- Ind-Barath Power Infra Limited - India
- Deloitte Consulting - India
- SN Aboitiz Power Inc, Philippines
- Energy Link Ltd, New Zealand
- Samtan Co., Ltd - South Korea
- Minerals Council of Australia
- Mercator Lines Limited - India
- Mjunction Services Limited - India
- Bulk Trading Sa - Switzerland
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