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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, 16 July 19
SUPRAMAX: THE ASIAN ARENA WAS SPLIT, WITH A BUILD-UP OF TONNAGE AND LACK OF ENQUIRY IN THE NORTH - BALTIC BRIEFING
Capesize
It was a Brazilian affair with a strong splash of bunkers characterising the Capesize market over the past week. Largely traded in Eur ...
Wednesday, 10 July 19
KOREA SOUTH-EAST POWER INVITES BIDS FOR HCV AND LCV COAL FOR AUGUST 2019 LOADING
COALspot.com: South Korea’s Korea South-East Power Co., Ltd. (KOEN) has issued an international tender for total 460,000 to 500,000 Metric To ...
Wednesday, 10 July 19
SHIPPING MARKET INSIGHT - INTERMODAL
In contrast with the general expectations for the dry bulk market, the sector was not positive or even stable during the past 6 months. The warning ...
Monday, 08 July 19
INDONESIAN COAL PRICE REFERENCE POSTS BIGGEST MONTHLY LOSS SINCE JANUARY 2017
COALspot.com: The Ministry of Energy and Mineral Resources of the Republic of Indonesia has revised down again the benchmark price of Indonesian th ...
Monday, 08 July 19
ULTRAMAX: A 52,000-TONNER OPEN CJK FIXED FOR A TRIP VIA INDONESIA WITH RE-DELIVERY CHINA AT $6,100 - BALTIC BRIEFING
Capesize
The Capesize market surged over the past week, reaching highs not seen since August last year. Widespread activity in both basins saw ...
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- Parliament of New Zealand
- Bharathi Cement Corporation - India
- ICICI Bank Limited - India
- Bhatia International Limited - India
- Rio Tinto Coal - Australia
- Kartika Selabumi Mining - Indonesia
- Mercator Lines Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Carbofer General Trading SA - India
- Ambuja Cements Ltd - India
- Edison Trading Spa - Italy
- GMR Energy Limited - India
- Bhoruka Overseas - Indonesia
- SN Aboitiz Power Inc, Philippines
- Parry Sugars Refinery, India
- IHS Mccloskey Coal Group - USA
- India Bulls Power Limited - India
- The State Trading Corporation of India Ltd
- Petron Corporation, Philippines
- South Luzon Thermal Energy Corporation
- VISA Power Limited - India
- Banpu Public Company Limited - Thailand
- Krishnapatnam Port Company Ltd. - India
- Directorate General of MIneral and Coal - Indonesia
- Agrawal Coal Company - India
- Vijayanagar Sugar Pvt Ltd - India
- Electricity Authority, New Zealand
- GVK Power & Infra Limited - India
- Global Green Power PLC Corporation, Philippines
- New Zealand Coal & Carbon
- Medco Energi Mining Internasional
- Borneo Indobara - Indonesia
- Metalloyd Limited - United Kingdom
- Star Paper Mills Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Timah Investasi Mineral - Indoneisa
- Ceylon Electricity Board - Sri Lanka
- Coal and Oil Company - UAE
- Grasim Industreis Ltd - India
- Samtan Co., Ltd - South Korea
- Coalindo Energy - Indonesia
- SMC Global Power, Philippines
- Heidelberg Cement - Germany
- Oldendorff Carriers - Singapore
- Antam Resourcindo - Indonesia
- Siam City Cement PLC, Thailand
- Posco Energy - South Korea
- Bulk Trading Sa - Switzerland
- Kapuas Tunggal Persada - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Leighton Contractors Pty Ltd - Australia
- Deloitte Consulting - India
- Baramulti Group, Indonesia
- Merrill Lynch Commodities Europe
- Australian Coal Association
- Bukit Asam (Persero) Tbk - Indonesia
- Bhushan Steel Limited - India
- Globalindo Alam Lestari - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Trasteel International SA, Italy
- Ind-Barath Power Infra Limited - India
- Thiess Contractors Indonesia
- Tamil Nadu electricity Board
- Semirara Mining and Power Corporation, Philippines
- Uttam Galva Steels Limited - India
- Ministry of Mines - Canada
- Straits Asia Resources Limited - Singapore
- Larsen & Toubro Limited - India
- Billiton Holdings Pty Ltd - Australia
- CIMB Investment Bank - Malaysia
- Madhucon Powers Ltd - India
- Semirara Mining Corp, Philippines
- Toyota Tsusho Corporation, Japan
- Essar Steel Hazira Ltd - India
- CNBM International Corporation - China
- Economic Council, Georgia
- Mjunction Services Limited - India
- Indian Oil Corporation Limited
- TeaM Sual Corporation - Philippines
- Central Electricity Authority - India
- Bayan Resources Tbk. - Indonesia
- Riau Bara Harum - Indonesia
- Formosa Plastics Group - Taiwan
- Independent Power Producers Association of India
- Jaiprakash Power Ventures ltd
- Port Waratah Coal Services - Australia
- Gujarat Electricity Regulatory Commission - India
- Malabar Cements Ltd - India
- Indonesian Coal Mining Association
- GAC Shipping (India) Pvt Ltd
- Maheswari Brothers Coal Limited - India
- Gujarat Mineral Development Corp Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Indika Energy - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Central Java Power - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- LBH Netherlands Bv - Netherlands
- Neyveli Lignite Corporation Ltd, - India
- The University of Queensland
- Vedanta Resources Plc - India
- Chamber of Mines of South Africa
- Australian Commodity Traders Exchange
- Ministry of Transport, Egypt
- Kaltim Prima Coal - Indonesia
- OPG Power Generation Pvt Ltd - India
- Videocon Industries ltd - India
- Electricity Generating Authority of Thailand
- Bahari Cakrawala Sebuku - Indonesia
- Latin American Coal - Colombia
- Miang Besar Coal Terminal - Indonesia
- Eastern Energy - Thailand
- Altura Mining Limited, Indonesia
- The Treasury - Australian Government
- Jindal Steel & Power Ltd - India
- Planning Commission, India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Iligan Light & Power Inc, Philippines
- Karaikal Port Pvt Ltd - India
- Gujarat Sidhee Cement - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bangladesh Power Developement Board
- Savvy Resources Ltd - HongKong
- Therma Luzon, Inc, Philippines
- AsiaOL BioFuels Corp., Philippines
- Jorong Barutama Greston.PT - Indonesia
- PowerSource Philippines DevCo
- Renaissance Capital - South Africa
- GN Power Mariveles Coal Plant, Philippines
- Sree Jayajothi Cements Limited - India
- Sinarmas Energy and Mining - Indonesia
- Meenaskhi Energy Private Limited - India
- European Bulk Services B.V. - Netherlands
- Attock Cement Pakistan Limited
- SMG Consultants - Indonesia
- MS Steel International - UAE
- Sindya Power Generating Company Private Ltd
- Anglo American - United Kingdom
- Kohat Cement Company Ltd. - Pakistan
- Wood Mackenzie - Singapore
- Cement Manufacturers Association - India
- Indo Tambangraya Megah - Indonesia
- McConnell Dowell - Australia
- Energy Development Corp, Philippines
- Kumho Petrochemical, South Korea
- Sical Logistics Limited - India
- Power Finance Corporation Ltd., India
- PTC India Limited - India
- Commonwealth Bank - Australia
- Meralco Power Generation, Philippines
- Coastal Gujarat Power Limited - India
- Kepco SPC Power Corporation, Philippines
- Lanco Infratech Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- ASAPP Information Group - India
- Directorate Of Revenue Intelligence - India
- Petrochimia International Co. Ltd.- Taiwan
- Minerals Council of Australia
- Marubeni Corporation - India
- Alfred C Toepfer International GmbH - Germany
- Simpson Spence & Young - Indonesia
- White Energy Company Limited
- Manunggal Multi Energi - Indonesia
- Kobexindo Tractors - Indoneisa
- Energy Link Ltd, New Zealand
- Indian Energy Exchange, India
- Singapore Mercantile Exchange
- Rashtriya Ispat Nigam Limited - India
- Goldman Sachs - Singapore
- Standard Chartered Bank - UAE
- London Commodity Brokers - England
- Africa Commodities Group - South Africa
- Dalmia Cement Bharat India
- San Jose City I Power Corp, Philippines
- Aboitiz Power Corporation - Philippines
- Georgia Ports Authority, United States
- Eastern Coal Council - USA
- Binh Thuan Hamico - Vietnam
- Wilmar Investment Holdings
- Holcim Trading Pte Ltd - Singapore
- Global Coal Blending Company Limited - Australia
- Mercuria Energy - Indonesia
- Salva Resources Pvt Ltd - India
- Xindia Steels Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Sakthi Sugars Limited - India
- Siam City Cement - Thailand
- Romanian Commodities Exchange
- Global Business Power Corporation, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Tata Chemicals Ltd - India
- Makarim & Taira - Indonesia
- Barasentosa Lestari - Indonesia
- Vizag Seaport Private Limited - India
- Kideco Jaya Agung - Indonesia
- Interocean Group of Companies - India
- Sojitz Corporation - Japan
- Chettinad Cement Corporation Ltd - India
- Mintek Dendrill Indonesia
- International Coal Ventures Pvt Ltd - India
- Pendopo Energi Batubara - Indonesia
- IEA Clean Coal Centre - UK
- Price Waterhouse Coopers - Russia
- Thai Mozambique Logistica
- Aditya Birla Group - India
- Bukit Baiduri Energy - Indonesia
- PNOC Exploration Corporation - Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sarangani Energy Corporation, Philippines
- Intertek Mineral Services - Indonesia
- Bukit Makmur.PT - Indonesia
- Orica Australia Pty. Ltd.
- Ministry of Finance - Indonesia
- Indogreen Group - Indonesia
- Orica Mining Services - Indonesia
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