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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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Sunday, 09 June 19
SUPRAMAX: ASIA LOST GROUND; THE INDIAN OCEAN SAW SLOWER ACTIVITY - BALTIC BRIEFING
Capesize
The market continued in an unusually steady ascent last week. With no major news in the market, each day improved on the last, breakin ...
Friday, 07 June 19
KOEN INVITED BIDS FOR 1.87 MILLION TONS OF COAL FOR JULY - OCTOBER 2019 DELIVERY
COALspot.com: South Korea’s KOREA SOUTH-EAST POWER CO., LTD. (KOEN) has issued an international tender for 1,700,000 to 1,870,000 Metric Tons ...
Wednesday, 05 June 19
SHIPPING MARKET INSIGHT - INTERMODAL
The first semester of 2019 started as a fairly positive semester for the offshore sector whilst there was a recovery on crude prices, as well as a ...
Tuesday, 04 June 19
MARPOL ANNEX VI - SULPHUR CAP 2020 - DEMYSTIFYING THE FONAR - SKULD
KNOWLEDGE TO ELEVATE
Fuel Oil Non-Availability Report (FONAR) is primarily a discretionary tool for a Member State to lessen the breach of MAR ...
Monday, 03 June 19
SUPRAMAX: A 61,000 TONNER OPEN NORTH CHINA, FIXING A TRIP VIA INDONESIA, REDELIVERY SOUTHEAST ASIA AT $7,500 - BALTIC BRIEFING
Capesize
The market continued its steady ascent over the past week to improved levels. The TC average opened the previous week at $12,243 and c ...
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- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kobexindo Tractors - Indoneisa
- OPG Power Generation Pvt Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Australian Coal Association
- The University of Queensland
- Indo Tambangraya Megah - Indonesia
- GVK Power & Infra Limited - India
- Intertek Mineral Services - Indonesia
- Global Coal Blending Company Limited - Australia
- Meenaskhi Energy Private Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Ministry of Transport, Egypt
- Electricity Authority, New Zealand
- Georgia Ports Authority, United States
- Sical Logistics Limited - India
- Metalloyd Limited - United Kingdom
- Star Paper Mills Limited - India
- Port Waratah Coal Services - Australia
- Banpu Public Company Limited - Thailand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Borneo Indobara - Indonesia
- Pendopo Energi Batubara - Indonesia
- Kepco SPC Power Corporation, Philippines
- Kideco Jaya Agung - Indonesia
- Maheswari Brothers Coal Limited - India
- Indika Energy - Indonesia
- VISA Power Limited - India
- India Bulls Power Limited - India
- Mjunction Services Limited - India
- Cement Manufacturers Association - India
- TeaM Sual Corporation - Philippines
- Aboitiz Power Corporation - Philippines
- Siam City Cement PLC, Thailand
- Wilmar Investment Holdings
- Kapuas Tunggal Persada - Indonesia
- Coal and Oil Company - UAE
- Bukit Baiduri Energy - Indonesia
- Coalindo Energy - Indonesia
- MS Steel International - UAE
- Interocean Group of Companies - India
- Minerals Council of Australia
- Maharashtra Electricity Regulatory Commission - India
- Grasim Industreis Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Chettinad Cement Corporation Ltd - India
- White Energy Company Limited
- Australian Commodity Traders Exchange
- McConnell Dowell - Australia
- Bhoruka Overseas - Indonesia
- Timah Investasi Mineral - Indoneisa
- Price Waterhouse Coopers - Russia
- Electricity Generating Authority of Thailand
- Sakthi Sugars Limited - India
- Essar Steel Hazira Ltd - India
- Anglo American - United Kingdom
- Sree Jayajothi Cements Limited - India
- Eastern Coal Council - USA
- San Jose City I Power Corp, Philippines
- Kaltim Prima Coal - Indonesia
- Central Java Power - Indonesia
- Global Business Power Corporation, Philippines
- Globalindo Alam Lestari - Indonesia
- Africa Commodities Group - South Africa
- Energy Link Ltd, New Zealand
- Standard Chartered Bank - UAE
- Semirara Mining and Power Corporation, Philippines
- IEA Clean Coal Centre - UK
- Meralco Power Generation, Philippines
- Deloitte Consulting - India
- Singapore Mercantile Exchange
- Mintek Dendrill Indonesia
- Jindal Steel & Power Ltd - India
- Tamil Nadu electricity Board
- Videocon Industries ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Orica Mining Services - Indonesia
- Alfred C Toepfer International GmbH - Germany
- London Commodity Brokers - England
- Manunggal Multi Energi - Indonesia
- CIMB Investment Bank - Malaysia
- Gujarat Electricity Regulatory Commission - India
- Bharathi Cement Corporation - India
- Goldman Sachs - Singapore
- PNOC Exploration Corporation - Philippines
- Vijayanagar Sugar Pvt Ltd - India
- SMC Global Power, Philippines
- Antam Resourcindo - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- CNBM International Corporation - China
- Iligan Light & Power Inc, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- New Zealand Coal & Carbon
- Bukit Asam (Persero) Tbk - Indonesia
- Merrill Lynch Commodities Europe
- Riau Bara Harum - Indonesia
- Thai Mozambique Logistica
- Miang Besar Coal Terminal - Indonesia
- Siam City Cement - Thailand
- Independent Power Producers Association of India
- Orica Australia Pty. Ltd.
- Sojitz Corporation - Japan
- Bulk Trading Sa - Switzerland
- Indian Oil Corporation Limited
- Bhatia International Limited - India
- Bangladesh Power Developement Board
- International Coal Ventures Pvt Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Kartika Selabumi Mining - Indonesia
- Agrawal Coal Company - India
- Straits Asia Resources Limited - Singapore
- Wood Mackenzie - Singapore
- Directorate Of Revenue Intelligence - India
- Renaissance Capital - South Africa
- Vedanta Resources Plc - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Oldendorff Carriers - Singapore
- Edison Trading Spa - Italy
- Kohat Cement Company Ltd. - Pakistan
- Tata Chemicals Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Indonesian Coal Mining Association
- Trasteel International SA, Italy
- Commonwealth Bank - Australia
- Medco Energi Mining Internasional
- Baramulti Group, Indonesia
- Bukit Makmur.PT - Indonesia
- Sindya Power Generating Company Private Ltd
- Vizag Seaport Private Limited - India
- IHS Mccloskey Coal Group - USA
- Bhushan Steel Limited - India
- European Bulk Services B.V. - Netherlands
- Parry Sugars Refinery, India
- Power Finance Corporation Ltd., India
- Barasentosa Lestari - Indonesia
- Coastal Gujarat Power Limited - India
- Makarim & Taira - Indonesia
- Aditya Birla Group - India
- Ambuja Cements Ltd - India
- Energy Development Corp, Philippines
- Parliament of New Zealand
- Larsen & Toubro Limited - India
- PetroVietnam Power Coal Import and Supply Company
- SMG Consultants - Indonesia
- Sarangani Energy Corporation, Philippines
- Savvy Resources Ltd - HongKong
- Toyota Tsusho Corporation, Japan
- Attock Cement Pakistan Limited
- Rio Tinto Coal - Australia
- Semirara Mining Corp, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Petron Corporation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Mercator Lines Limited - India
- The Treasury - Australian Government
- Thiess Contractors Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- LBH Netherlands Bv - Netherlands
- Krishnapatnam Port Company Ltd. - India
- Economic Council, Georgia
- GMR Energy Limited - India
- Central Electricity Authority - India
- Uttam Galva Steels Limited - India
- South Luzon Thermal Energy Corporation
- Indian Energy Exchange, India
- AsiaOL BioFuels Corp., Philippines
- Marubeni Corporation - India
- Global Green Power PLC Corporation, Philippines
- Posco Energy - South Korea
- Salva Resources Pvt Ltd - India
- Planning Commission, India
- Bayan Resources Tbk. - Indonesia
- Holcim Trading Pte Ltd - Singapore
- PTC India Limited - India
- GAC Shipping (India) Pvt Ltd
- Rashtriya Ispat Nigam Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Therma Luzon, Inc, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- The State Trading Corporation of India Ltd
- Binh Thuan Hamico - Vietnam
- Jaiprakash Power Ventures ltd
- Madhucon Powers Ltd - India
- Eastern Energy - Thailand
- Xindia Steels Limited - India
- Latin American Coal - Colombia
- Dalmia Cement Bharat India
- Indogreen Group - Indonesia
- Malabar Cements Ltd - India
- Lanco Infratech Ltd - India
- Carbofer General Trading SA - India
- Neyveli Lignite Corporation Ltd, - India
- Heidelberg Cement - Germany
- Samtan Co., Ltd - South Korea
- ICICI Bank Limited - India
- Formosa Plastics Group - Taiwan
- PowerSource Philippines DevCo
- SN Aboitiz Power Inc, Philippines
- Chamber of Mines of South Africa
- Mercuria Energy - Indonesia
- Ministry of Finance - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Bahari Cakrawala Sebuku - Indonesia
- Romanian Commodities Exchange
- Pipit Mutiara Jaya. PT, Indonesia
- Ministry of Mines - Canada
- Kumho Petrochemical, South Korea
- Altura Mining Limited, Indonesia
- ASAPP Information Group - India
- Simpson Spence & Young - Indonesia
- Ind-Barath Power Infra Limited - India
- Gujarat Sidhee Cement - India
- Karaikal Port Pvt Ltd - India
- Billiton Holdings Pty Ltd - Australia
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