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