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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, 11 August 19
ULTRAMAX: A 58,000DWT VESSEL OPEN KEMAMAN FIXED FOR TWO TO THREE LADEN LEGS, REDELIVERY SINGAPORE-JAPAN, AT $12,250 - BALTIC BRIEFING
Capesize
With typhoon Lekima gathering pace, numerous China ports were closed by the end of the week and will likely be for two to three days. ...
Tuesday, 06 August 19
SHIPPING MARKET INSIGHT - INTERMODAL
On the 12th of May four tankers were attacked near the coast of Fujairah. The tankers hit were waiving international flags such as that of No ...
Monday, 05 August 19
SUPRAMAX: COAL FROM INDONESIA TO CHINA PAID AT MID $8,000S ON A 57,000-TONNER DELIVERY SOUTH CHINA - BALTIC BRIEFING
Capesize
Having hit a high of $32,963 early last week, the Capesize 5TC now stands at $25,749. This is over 20% of its value lost in 10 days. C ...
Thursday, 01 August 19
PANAMAX: THE SENTIMENT IN THE MARKET IS STILL POSITIVE FOR THE LONGER TERM - FEARNLEYS
Capesize
Two weeks ago the 5TC index was at 33,000 USD pd. Since then it has fallen off a bit and has stayed around 27,000 USD pd the last week ...
Thursday, 01 August 19
INDIKA ENERGY REVENUES DECLINE DUE TO LOW COAL PRICES
One of the largest Indonesian integrated energy companies PT Indika Energy Tbk posted revenues of US $ 1,380.4 million, down 4.6% compared to US $ ...
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- Coal and Oil Company - UAE
- The University of Queensland
- PNOC Exploration Corporation - Philippines
- Energy Development Corp, Philippines
- Gujarat Electricity Regulatory Commission - India
- Altura Mining Limited, Indonesia
- Kapuas Tunggal Persada - Indonesia
- Malabar Cements Ltd - India
- Mjunction Services Limited - India
- Romanian Commodities Exchange
- Latin American Coal - Colombia
- Kalimantan Lumbung Energi - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Global Green Power PLC Corporation, Philippines
- Xindia Steels Limited - India
- Kartika Selabumi Mining - Indonesia
- Edison Trading Spa - Italy
- Pendopo Energi Batubara - Indonesia
- Bhushan Steel Limited - India
- GN Power Mariveles Coal Plant, Philippines
- TeaM Sual Corporation - Philippines
- Larsen & Toubro Limited - India
- Central Electricity Authority - India
- Indika Energy - Indonesia
- Makarim & Taira - Indonesia
- Savvy Resources Ltd - HongKong
- LBH Netherlands Bv - Netherlands
- Salva Resources Pvt Ltd - India
- Gujarat Sidhee Cement - India
- Lanco Infratech Ltd - India
- IHS Mccloskey Coal Group - USA
- Bukit Baiduri Energy - Indonesia
- SMG Consultants - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Ambuja Cements Ltd - India
- Australian Coal Association
- Jindal Steel & Power Ltd - India
- Sindya Power Generating Company Private Ltd
- Binh Thuan Hamico - Vietnam
- Star Paper Mills Limited - India
- Trasteel International SA, Italy
- Oldendorff Carriers - Singapore
- Posco Energy - South Korea
- Orica Mining Services - Indonesia
- Standard Chartered Bank - UAE
- PTC India Limited - India
- Maheswari Brothers Coal Limited - India
- CNBM International Corporation - China
- Mercuria Energy - Indonesia
- Agrawal Coal Company - India
- Petron Corporation, Philippines
- Alfred C Toepfer International GmbH - Germany
- Indo Tambangraya Megah - Indonesia
- Interocean Group of Companies - India
- Merrill Lynch Commodities Europe
- Chettinad Cement Corporation Ltd - India
- Formosa Plastics Group - Taiwan
- IEA Clean Coal Centre - UK
- TNB Fuel Sdn Bhd - Malaysia
- San Jose City I Power Corp, Philippines
- Sree Jayajothi Cements Limited - India
- Sarangani Energy Corporation, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Attock Cement Pakistan Limited
- Billiton Holdings Pty Ltd - Australia
- Kohat Cement Company Ltd. - Pakistan
- Simpson Spence & Young - Indonesia
- Ministry of Mines - Canada
- OPG Power Generation Pvt Ltd - India
- GAC Shipping (India) Pvt Ltd
- PowerSource Philippines DevCo
- Videocon Industries ltd - India
- Coastal Gujarat Power Limited - India
- PetroVietnam Power Coal Import and Supply Company
- London Commodity Brokers - England
- Meralco Power Generation, Philippines
- Straits Asia Resources Limited - Singapore
- Leighton Contractors Pty Ltd - Australia
- Antam Resourcindo - Indonesia
- Australian Commodity Traders Exchange
- Planning Commission, India
- GVK Power & Infra Limited - India
- SMC Global Power, Philippines
- Semirara Mining Corp, Philippines
- Bulk Trading Sa - Switzerland
- Vizag Seaport Private Limited - India
- Globalindo Alam Lestari - Indonesia
- Energy Link Ltd, New Zealand
- Meenaskhi Energy Private Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Bukit Asam (Persero) Tbk - Indonesia
- Price Waterhouse Coopers - Russia
- Gujarat Mineral Development Corp Ltd - India
- Economic Council, Georgia
- Bangladesh Power Developement Board
- Dalmia Cement Bharat India
- SN Aboitiz Power Inc, Philippines
- Electricity Generating Authority of Thailand
- Independent Power Producers Association of India
- Directorate General of MIneral and Coal - Indonesia
- Essar Steel Hazira Ltd - India
- Kobexindo Tractors - Indoneisa
- White Energy Company Limited
- Bhoruka Overseas - Indonesia
- Uttam Galva Steels Limited - India
- ASAPP Information Group - India
- Siam City Cement - Thailand
- Miang Besar Coal Terminal - Indonesia
- Thai Mozambique Logistica
- Power Finance Corporation Ltd., India
- McConnell Dowell - Australia
- Therma Luzon, Inc, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Georgia Ports Authority, United States
- Mintek Dendrill Indonesia
- Vedanta Resources Plc - India
- Bukit Makmur.PT - Indonesia
- Borneo Indobara - Indonesia
- Commonwealth Bank - Australia
- The Treasury - Australian Government
- Bank of Tokyo Mitsubishi UFJ Ltd
- Eastern Coal Council - USA
- Riau Bara Harum - Indonesia
- Kepco SPC Power Corporation, Philippines
- Karaikal Port Pvt Ltd - India
- The State Trading Corporation of India Ltd
- AsiaOL BioFuels Corp., Philippines
- Krishnapatnam Port Company Ltd. - India
- Africa Commodities Group - South Africa
- CIMB Investment Bank - Malaysia
- Aboitiz Power Corporation - Philippines
- International Coal Ventures Pvt Ltd - India
- Kumho Petrochemical, South Korea
- Siam City Cement PLC, Thailand
- Carbofer General Trading SA - India
- Aditya Birla Group - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- New Zealand Coal & Carbon
- Ministry of Transport, Egypt
- Port Waratah Coal Services - Australia
- Bayan Resources Tbk. - Indonesia
- Indian Energy Exchange, India
- Anglo American - United Kingdom
- Goldman Sachs - Singapore
- Renaissance Capital - South Africa
- Grasim Industreis Ltd - India
- Banpu Public Company Limited - Thailand
- Semirara Mining and Power Corporation, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Directorate Of Revenue Intelligence - India
- Thiess Contractors Indonesia
- Coalindo Energy - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Metalloyd Limited - United Kingdom
- Vijayanagar Sugar Pvt Ltd - India
- Manunggal Multi Energi - Indonesia
- Barasentosa Lestari - Indonesia
- Electricity Authority, New Zealand
- Sical Logistics Limited - India
- Baramulti Group, Indonesia
- Heidelberg Cement - Germany
- Central Java Power - Indonesia
- Wood Mackenzie - Singapore
- Tamil Nadu electricity Board
- Holcim Trading Pte Ltd - Singapore
- Indogreen Group - Indonesia
- Sakthi Sugars Limited - India
- Rashtriya Ispat Nigam Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Singapore Mercantile Exchange
- Bhatia International Limited - India
- Deloitte Consulting - India
- Sinarmas Energy and Mining - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Kaltim Prima Coal - Indonesia
- European Bulk Services B.V. - Netherlands
- Medco Energi Mining Internasional
- Parliament of New Zealand
- Toyota Tsusho Corporation, Japan
- Ceylon Electricity Board - Sri Lanka
- Samtan Co., Ltd - South Korea
- Tata Chemicals Ltd - India
- Wilmar Investment Holdings
- VISA Power Limited - India
- Global Business Power Corporation, Philippines
- Bharathi Cement Corporation - India
- Ind-Barath Power Infra Limited - India
- Indonesian Coal Mining Association
- Rio Tinto Coal - Australia
- ICICI Bank Limited - India
- Parry Sugars Refinery, India
- Global Coal Blending Company Limited - Australia
- Madhucon Powers Ltd - India
- Timah Investasi Mineral - Indoneisa
- Intertek Mineral Services - Indonesia
- GMR Energy Limited - India
- Marubeni Corporation - India
- Iligan Light & Power Inc, Philippines
- Sojitz Corporation - Japan
- Kideco Jaya Agung - Indonesia
- South Luzon Thermal Energy Corporation
- Cement Manufacturers Association - India
- Indian Oil Corporation Limited
- Mercator Lines Limited - India
- Ministry of Finance - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Jaiprakash Power Ventures ltd
- MS Steel International - UAE
- Chamber of Mines of South Africa
- Orica Australia Pty. Ltd.
- India Bulls Power Limited - India
- Minerals Council of Australia
- Eastern Energy - Thailand
- Karbindo Abesyapradhi - Indoneisa
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