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