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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 February 20
SUPRAMAX: THE ASIAN ARENA STRUGGLED, A 50,000DWT SHIP FIXING A COAL RUN FROM EAST KALIMANTAN TO INDIA AT $2,000 - THE BALTIC BRIEFING
Capesize
The Capesize market endured another dreadful week of calamitous rate level falls, as the usual season low Q1 period combined with rece ...
Friday, 07 February 20
CIL LOOKING TO TAP NON-POWER SECTORS FOR INCREMENTAL COAL, PTI REPORTED
The miner is looking to ramp up production to meet its targets for the current fiscal at a time when the economic slowdown is impacting demand for ...
Friday, 07 February 20
VIRUS - HIT CHINA MAY NEED MORE IMPORTS OF COAL. NOW COMES THE TRICKY PART - SHIPPING IT THERE: REUTERS
China’s domestic coal mines are struggling to ramp up production in the face of the ongoing coronavirus epidemic. That’s a situation th ...
Friday, 07 February 20
CORONAVIRUS IMPACTING THE GLOBAL SHIPPING INDUSTRY - BIMCO
The outbreak of the novel Coronavirus has dented market sentiment and spooked markets around the globe. When China sneezes, we all catch the flu. T ...
Thursday, 06 February 20
CAPE: WEAK SUPPLY/DEMAND RATIO THE STREETS REMAIN BLOODY FOR THE BIG SHIPS - FEARNLEYS
Cape: With still a weak supply/demand ratio the streets remain bloody for the big ships, and actual spot earnings are close to zero on main short-h ...
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- Coastal Gujarat Power Limited - India
- San Jose City I Power Corp, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Wilmar Investment Holdings
- Goldman Sachs - Singapore
- Agrawal Coal Company - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sarangani Energy Corporation, Philippines
- OPG Power Generation Pvt Ltd - India
- Simpson Spence & Young - Indonesia
- Mintek Dendrill Indonesia
- Samtan Co., Ltd - South Korea
- Savvy Resources Ltd - HongKong
- Interocean Group of Companies - India
- Intertek Mineral Services - Indonesia
- Sakthi Sugars Limited - India
- Commonwealth Bank - Australia
- Therma Luzon, Inc, Philippines
- Central Java Power - Indonesia
- Bhoruka Overseas - Indonesia
- Star Paper Mills Limited - India
- Ministry of Finance - Indonesia
- Bhatia International Limited - India
- Miang Besar Coal Terminal - Indonesia
- Formosa Plastics Group - Taiwan
- Altura Mining Limited, Indonesia
- Independent Power Producers Association of India
- GN Power Mariveles Coal Plant, Philippines
- Bukit Makmur.PT - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Sojitz Corporation - Japan
- The Treasury - Australian Government
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bharathi Cement Corporation - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Indian Energy Exchange, India
- The University of Queensland
- Uttam Galva Steels Limited - India
- Billiton Holdings Pty Ltd - Australia
- Bhushan Steel Limited - India
- Kobexindo Tractors - Indoneisa
- Dalmia Cement Bharat India
- SN Aboitiz Power Inc, Philippines
- The State Trading Corporation of India Ltd
- Semirara Mining Corp, Philippines
- Riau Bara Harum - Indonesia
- New Zealand Coal & Carbon
- Africa Commodities Group - South Africa
- Kumho Petrochemical, South Korea
- International Coal Ventures Pvt Ltd - India
- SMC Global Power, Philippines
- Rio Tinto Coal - Australia
- Chettinad Cement Corporation Ltd - India
- Gujarat Sidhee Cement - India
- Siam City Cement PLC, Thailand
- Wood Mackenzie - Singapore
- Cigading International Bulk Terminal - Indonesia
- Xindia Steels Limited - India
- Alfred C Toepfer International GmbH - Germany
- Asmin Koalindo Tuhup - Indonesia
- Pendopo Energi Batubara - Indonesia
- Singapore Mercantile Exchange
- Karbindo Abesyapradhi - Indoneisa
- Bayan Resources Tbk. - Indonesia
- Parliament of New Zealand
- Eastern Coal Council - USA
- ICICI Bank Limited - India
- Standard Chartered Bank - UAE
- Latin American Coal - Colombia
- Global Business Power Corporation, Philippines
- Deloitte Consulting - India
- Georgia Ports Authority, United States
- Videocon Industries ltd - India
- Indogreen Group - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Electricity Generating Authority of Thailand
- Sindya Power Generating Company Private Ltd
- Posco Energy - South Korea
- White Energy Company Limited
- Rashtriya Ispat Nigam Limited - India
- India Bulls Power Limited - India
- Indika Energy - Indonesia
- Economic Council, Georgia
- Anglo American - United Kingdom
- PTC India Limited - India
- Gujarat Electricity Regulatory Commission - India
- Vijayanagar Sugar Pvt Ltd - India
- Malabar Cements Ltd - India
- Jindal Steel & Power Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Ind-Barath Power Infra Limited - India
- Petron Corporation, Philippines
- Krishnapatnam Port Company Ltd. - India
- Trasteel International SA, Italy
- Thiess Contractors Indonesia
- Manunggal Multi Energi - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Tata Chemicals Ltd - India
- Aboitiz Power Corporation - Philippines
- SMG Consultants - Indonesia
- Tamil Nadu electricity Board
- Holcim Trading Pte Ltd - Singapore
- TeaM Sual Corporation - Philippines
- Banpu Public Company Limited - Thailand
- LBH Netherlands Bv - Netherlands
- Oldendorff Carriers - Singapore
- Indonesian Coal Mining Association
- Eastern Energy - Thailand
- Meenaskhi Energy Private Limited - India
- Maheswari Brothers Coal Limited - India
- McConnell Dowell - Australia
- PetroVietnam Power Coal Import and Supply Company
- South Luzon Thermal Energy Corporation
- Electricity Authority, New Zealand
- CIMB Investment Bank - Malaysia
- IEA Clean Coal Centre - UK
- IHS Mccloskey Coal Group - USA
- MS Steel International - UAE
- Grasim Industreis Ltd - India
- Vizag Seaport Private Limited - India
- Mercuria Energy - Indonesia
- Renaissance Capital - South Africa
- Vedanta Resources Plc - India
- Chamber of Mines of South Africa
- Kapuas Tunggal Persada - Indonesia
- Energy Link Ltd, New Zealand
- GVK Power & Infra Limited - India
- Timah Investasi Mineral - Indoneisa
- Gujarat Mineral Development Corp Ltd - India
- Straits Asia Resources Limited - Singapore
- Sical Logistics Limited - India
- Heidelberg Cement - Germany
- TNB Fuel Sdn Bhd - Malaysia
- Karaikal Port Pvt Ltd - India
- Marubeni Corporation - India
- Australian Coal Association
- Thai Mozambique Logistica
- Kartika Selabumi Mining - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Salva Resources Pvt Ltd - India
- Edison Trading Spa - Italy
- Ambuja Cements Ltd - India
- Iligan Light & Power Inc, Philippines
- Central Electricity Authority - India
- Indo Tambangraya Megah - Indonesia
- Global Coal Blending Company Limited - Australia
- Ministry of Transport, Egypt
- London Commodity Brokers - England
- CNBM International Corporation - China
- Romanian Commodities Exchange
- European Bulk Services B.V. - Netherlands
- Medco Energi Mining Internasional
- Sree Jayajothi Cements Limited - India
- Metalloyd Limited - United Kingdom
- Jorong Barutama Greston.PT - Indonesia
- Bangladesh Power Developement Board
- Madhucon Powers Ltd - India
- Energy Development Corp, Philippines
- Bulk Trading Sa - Switzerland
- Planning Commission, India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Barasentosa Lestari - Indonesia
- Kaltim Prima Coal - Indonesia
- PowerSource Philippines DevCo
- Directorate Of Revenue Intelligence - India
- Sinarmas Energy and Mining - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- PNOC Exploration Corporation - Philippines
- Toyota Tsusho Corporation, Japan
- Price Waterhouse Coopers - Russia
- Minerals Council of Australia
- Orica Australia Pty. Ltd.
- GMR Energy Limited - India
- Makarim & Taira - Indonesia
- ASAPP Information Group - India
- Binh Thuan Hamico - Vietnam
- Cement Manufacturers Association - India
- Directorate General of MIneral and Coal - Indonesia
- Baramulti Group, Indonesia
- Carbofer General Trading SA - India
- Port Waratah Coal Services - Australia
- GAC Shipping (India) Pvt Ltd
- Leighton Contractors Pty Ltd - Australia
- Coal and Oil Company - UAE
- Mjunction Services Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Larsen & Toubro Limited - India
- Global Green Power PLC Corporation, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Orica Mining Services - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Power Finance Corporation Ltd., India
- Essar Steel Hazira Ltd - India
- Indian Oil Corporation Limited
- Antam Resourcindo - Indonesia
- Ceylon Electricity Board - Sri Lanka
- AsiaOL BioFuels Corp., Philippines
- VISA Power Limited - India
- Lanco Infratech Ltd - India
- Kideco Jaya Agung - Indonesia
- Meralco Power Generation, Philippines
- Coalindo Energy - Indonesia
- Mercator Lines Limited - India
- Borneo Indobara - Indonesia
- Australian Commodity Traders Exchange
- Bukit Baiduri Energy - Indonesia
- Attock Cement Pakistan Limited
- Merrill Lynch Commodities Europe
- Siam City Cement - Thailand
- Jaiprakash Power Ventures ltd
- Aditya Birla Group - India
- Kohat Cement Company Ltd. - Pakistan
- Kepco SPC Power Corporation, Philippines
- Globalindo Alam Lestari - Indonesia
- Parry Sugars Refinery, India
- Ministry of Mines - Canada
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