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