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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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Monday, 09 September 19
ULTRAMAX: ASIA A 58,000-TONNER FIXED DELIVERY FUZHOU, VIA INDONESIA, REDELIVERY CHINA, AT $12,800
Capesize
0px The market reached new heights this week as the 5TC topped $38,014, a level not seen in the sector since 2013. Fridays 5TC closed ...
Wednesday, 04 September 19
SHIPPING MARKET INSIGHT - INTERMODAL
For yet another time, the market seems to have its own drivers. After a very disappointing first half, the recent recovery in the shipping market i ...
Tuesday, 20 August 19
NORDEN HAS BEEN AWARDED A 3-YEAR CONTRACT FOR THE TRANSPORTATION OF COAL FROM INDONESIA TO HONG KONG
NORDEN has been awarded a 3-year contract with a power company in Hong Kong for the transportation of coal from Indonesia to Hong Kong.
...
Tuesday, 20 August 19
THE AUGUST 2019 INDONESIAN COAL PRICE REFERENCE POSTS THE FIRST MONTHLY GAIN SINCE AUGUST 2018
COALspot.com: The Ministry of Energy and Mineral Resources of the Republic of Indonesia has revised up the benchmark price of Indonesian thermal co ...
Monday, 19 August 19
INDONESIAN COAL RUNS, A 82,000DWT SHIP WAS FIXED DELIVERY CHINA VIA INDONESIA, REDELIVERY JAPAN, IN THE MID $16,000S - BALTIC BRIEFING
Capesize
The Capesize market was buoyant in both basins this week, posting gains across the board. After bottoming out the previous week, rates ...
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- Vijayanagar Sugar Pvt Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Uttam Galva Steels Limited - India
- Australian Coal Association
- PowerSource Philippines DevCo
- Ind-Barath Power Infra Limited - India
- Leighton Contractors Pty Ltd - Australia
- Bhoruka Overseas - Indonesia
- MS Steel International - UAE
- Carbofer General Trading SA - India
- Eastern Coal Council - USA
- Jorong Barutama Greston.PT - Indonesia
- Binh Thuan Hamico - Vietnam
- Kaltim Prima Coal - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Metalloyd Limited - United Kingdom
- Commonwealth Bank - Australia
- Kalimantan Lumbung Energi - Indonesia
- Bharathi Cement Corporation - India
- Dalmia Cement Bharat India
- Energy Link Ltd, New Zealand
- Sree Jayajothi Cements Limited - India
- Banpu Public Company Limited - Thailand
- GN Power Mariveles Coal Plant, Philippines
- Rashtriya Ispat Nigam Limited - India
- Karaikal Port Pvt Ltd - India
- Africa Commodities Group - South Africa
- Australian Commodity Traders Exchange
- Coastal Gujarat Power Limited - India
- Simpson Spence & Young - Indonesia
- San Jose City I Power Corp, Philippines
- Meenaskhi Energy Private Limited - India
- India Bulls Power Limited - India
- Price Waterhouse Coopers - Russia
- Energy Development Corp, Philippines
- GMR Energy Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- McConnell Dowell - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Mercuria Energy - Indonesia
- Ambuja Cements Ltd - India
- Central Java Power - Indonesia
- Formosa Plastics Group - Taiwan
- Malabar Cements Ltd - India
- Essar Steel Hazira Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Offshore Bulk Terminal Pte Ltd, Singapore
- Pendopo Energi Batubara - Indonesia
- Ministry of Mines - Canada
- Kideco Jaya Agung - Indonesia
- Standard Chartered Bank - UAE
- Trasteel International SA, Italy
- Bangladesh Power Developement Board
- Bhatia International Limited - India
- Bukit Makmur.PT - Indonesia
- Electricity Generating Authority of Thailand
- Gujarat Sidhee Cement - India
- Bukit Baiduri Energy - Indonesia
- SMC Global Power, Philippines
- Marubeni Corporation - India
- Aboitiz Power Corporation - Philippines
- Xindia Steels Limited - India
- Global Green Power PLC Corporation, Philippines
- VISA Power Limited - India
- Cigading International Bulk Terminal - Indonesia
- Minerals Council of Australia
- IEA Clean Coal Centre - UK
- Meralco Power Generation, Philippines
- Sarangani Energy Corporation, Philippines
- Indo Tambangraya Megah - Indonesia
- Planning Commission, India
- Economic Council, Georgia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- PetroVietnam Power Coal Import and Supply Company
- Antam Resourcindo - Indonesia
- Savvy Resources Ltd - HongKong
- TNB Fuel Sdn Bhd - Malaysia
- Makarim & Taira - Indonesia
- Kumho Petrochemical, South Korea
- Petron Corporation, Philippines
- Krishnapatnam Port Company Ltd. - India
- Oldendorff Carriers - Singapore
- Riau Bara Harum - Indonesia
- Thiess Contractors Indonesia
- PTC India Limited - India
- Sical Logistics Limited - India
- Bhushan Steel Limited - India
- Kohat Cement Company Ltd. - Pakistan
- SN Aboitiz Power Inc, Philippines
- Videocon Industries ltd - India
- Iligan Light & Power Inc, Philippines
- The Treasury - Australian Government
- Aditya Birla Group - India
- Ministry of Finance - Indonesia
- Indonesian Coal Mining Association
- CNBM International Corporation - China
- Eastern Energy - Thailand
- Tamil Nadu electricity Board
- Indogreen Group - Indonesia
- Semirara Mining Corp, Philippines
- Vizag Seaport Private Limited - India
- Jindal Steel & Power Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Interocean Group of Companies - India
- Power Finance Corporation Ltd., India
- New Zealand Coal & Carbon
- Sindya Power Generating Company Private Ltd
- GAC Shipping (India) Pvt Ltd
- Kobexindo Tractors - Indoneisa
- Kepco SPC Power Corporation, Philippines
- Medco Energi Mining Internasional
- Karbindo Abesyapradhi - Indoneisa
- Madhucon Powers Ltd - India
- Cement Manufacturers Association - India
- Goldman Sachs - Singapore
- Coal and Oil Company - UAE
- Parry Sugars Refinery, India
- LBH Netherlands Bv - Netherlands
- Independent Power Producers Association of India
- Toyota Tsusho Corporation, Japan
- Ministry of Transport, Egypt
- Heidelberg Cement - Germany
- ICICI Bank Limited - India
- Maheswari Brothers Coal Limited - India
- Wood Mackenzie - Singapore
- Gujarat Mineral Development Corp Ltd - India
- Agrawal Coal Company - India
- Indian Energy Exchange, India
- Latin American Coal - Colombia
- OPG Power Generation Pvt Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Wilmar Investment Holdings
- White Energy Company Limited
- Globalindo Alam Lestari - Indonesia
- Bulk Trading Sa - Switzerland
- Siam City Cement - Thailand
- Therma Luzon, Inc, Philippines
- Global Coal Blending Company Limited - Australia
- Anglo American - United Kingdom
- Indika Energy - Indonesia
- Georgia Ports Authority, United States
- Orica Australia Pty. Ltd.
- London Commodity Brokers - England
- Electricity Authority, New Zealand
- Tata Chemicals Ltd - India
- Central Electricity Authority - India
- Sakthi Sugars Limited - India
- Coalindo Energy - Indonesia
- PNOC Exploration Corporation - Philippines
- Holcim Trading Pte Ltd - Singapore
- SMG Consultants - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Renaissance Capital - South Africa
- Timah Investasi Mineral - Indoneisa
- Manunggal Multi Energi - Indonesia
- Intertek Mineral Services - Indonesia
- Salva Resources Pvt Ltd - India
- Star Paper Mills Limited - India
- Billiton Holdings Pty Ltd - Australia
- Mercator Lines Limited - India
- The State Trading Corporation of India Ltd
- Directorate Of Revenue Intelligence - India
- Orica Mining Services - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Singapore Mercantile Exchange
- Pipit Mutiara Jaya. PT, Indonesia
- TeaM Sual Corporation - Philippines
- Baramulti Group, Indonesia
- Indian Oil Corporation Limited
- Directorate General of MIneral and Coal - Indonesia
- Rio Tinto Coal - Australia
- Grasim Industreis Ltd - India
- Jaiprakash Power Ventures ltd
- Thai Mozambique Logistica
- Ceylon Electricity Board - Sri Lanka
- Semirara Mining and Power Corporation, Philippines
- Port Waratah Coal Services - Australia
- Larsen & Toubro Limited - India
- Straits Asia Resources Limited - Singapore
- CIMB Investment Bank - Malaysia
- Barasentosa Lestari - Indonesia
- Sojitz Corporation - Japan
- Bayan Resources Tbk. - Indonesia
- Mintek Dendrill Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Altura Mining Limited, Indonesia
- Lanco Infratech Ltd - India
- Vedanta Resources Plc - India
- Posco Energy - South Korea
- Bank of Tokyo Mitsubishi UFJ Ltd
- Mjunction Services Limited - India
- Borneo Indobara - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Merrill Lynch Commodities Europe
- Edison Trading Spa - Italy
- Romanian Commodities Exchange
- Bukit Asam (Persero) Tbk - Indonesia
- Siam City Cement PLC, Thailand
- Samtan Co., Ltd - South Korea
- Chamber of Mines of South Africa
- Miang Besar Coal Terminal - Indonesia
- ASAPP Information Group - India
- Chettinad Cement Corporation Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- The University of Queensland
- Attock Cement Pakistan Limited
- Maharashtra Electricity Regulatory Commission - India
- Parliament of New Zealand
- Kartika Selabumi Mining - Indonesia
- International Coal Ventures Pvt Ltd - India
- Global Business Power Corporation, Philippines
- GVK Power & Infra Limited - India
- IHS Mccloskey Coal Group - USA
- Deloitte Consulting - India
- South Luzon Thermal Energy Corporation
- European Bulk Services B.V. - Netherlands
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