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