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