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