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