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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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Saturday, 20 October 18
PANAMAX: THE PACIFIC SAW A LARGE VOLUME OF FIXING, WITH INDONESIA AGAIN THE DRIVING FORCE - THE BALTIC BRIEFING
Capesize
A positive end to last week after a shaky start, with a Coaltrans taking participants out of the market early on and with rates slippi ...
Thursday, 18 October 18
SUPRAMAX: INDO/WC INDIA SUPRAS ARE FIXING AROUND MID $14000S P/D BASIS SPORE DELIVERY
Capesize
The volatile Cape market continues this week, especially in the Pacific says Fearnleys in its latest weekly report.
...
Thursday, 18 October 18
COAL SHORTAGE HITS POWER SECTOR AGAIN; HOW INDIA CAN GET ITS PRODUCTION RIGHT - ANIL SWARUP
By convincing states of the value proposition of increased production, the record production of Fy15 & Fy16 can be emulated.
The ...
Thursday, 18 October 18
CHINA POWER REFORM NEUTRAL ON GRIDS, PRESSURES IPP MARGINS - FITCH RATINGS
China's power sector reform has a broadly neutral impact on transmission grids although it will pressure the power producers' margins, says ...
Wednesday, 17 October 18
ESCROW SERVICE FOR BALTIC MEMBERS NOW LIVE
The Baltic Exchange’s Escrow Service for its members to hold deposits for ship sale transactions goes live today (15 October). The service is ...
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- Timah Investasi Mineral - Indoneisa
- The Treasury - Australian Government
- GAC Shipping (India) Pvt Ltd
- Bukit Asam (Persero) Tbk - Indonesia
- GVK Power & Infra Limited - India
- Standard Chartered Bank - UAE
- SN Aboitiz Power Inc, Philippines
- Coal and Oil Company - UAE
- Bhatia International Limited - India
- Mercator Lines Limited - India
- Energy Development Corp, Philippines
- MS Steel International - UAE
- London Commodity Brokers - England
- Mjunction Services Limited - India
- Anglo American - United Kingdom
- Sojitz Corporation - Japan
- TNB Fuel Sdn Bhd - Malaysia
- New Zealand Coal & Carbon
- Karbindo Abesyapradhi - Indoneisa
- Xindia Steels Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Lanco Infratech Ltd - India
- Toyota Tsusho Corporation, Japan
- GMR Energy Limited - India
- Latin American Coal - Colombia
- Parry Sugars Refinery, India
- Larsen & Toubro Limited - India
- Bayan Resources Tbk. - Indonesia
- Wilmar Investment Holdings
- Attock Cement Pakistan Limited
- Kohat Cement Company Ltd. - Pakistan
- TeaM Sual Corporation - Philippines
- Kaltim Prima Coal - Indonesia
- Bukit Baiduri Energy - Indonesia
- Meralco Power Generation, Philippines
- Savvy Resources Ltd - HongKong
- Pipit Mutiara Jaya. PT, Indonesia
- Miang Besar Coal Terminal - Indonesia
- Economic Council, Georgia
- Videocon Industries ltd - India
- Orica Australia Pty. Ltd.
- Heidelberg Cement - Germany
- Tamil Nadu electricity Board
- Central Electricity Authority - India
- Ministry of Finance - Indonesia
- Antam Resourcindo - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Global Coal Blending Company Limited - Australia
- Coalindo Energy - Indonesia
- LBH Netherlands Bv - Netherlands
- Krishnapatnam Port Company Ltd. - India
- Commonwealth Bank - Australia
- Kideco Jaya Agung - Indonesia
- Intertek Mineral Services - Indonesia
- Electricity Authority, New Zealand
- Neyveli Lignite Corporation Ltd, - India
- Semirara Mining Corp, Philippines
- Ministry of Mines - Canada
- Marubeni Corporation - India
- Dalmia Cement Bharat India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- International Coal Ventures Pvt Ltd - India
- Indian Oil Corporation Limited
- Aboitiz Power Corporation - Philippines
- Australian Commodity Traders Exchange
- Deloitte Consulting - India
- OPG Power Generation Pvt Ltd - India
- Mercuria Energy - Indonesia
- Riau Bara Harum - Indonesia
- Global Business Power Corporation, Philippines
- McConnell Dowell - Australia
- Georgia Ports Authority, United States
- Barasentosa Lestari - Indonesia
- Wood Mackenzie - Singapore
- Sinarmas Energy and Mining - Indonesia
- Kartika Selabumi Mining - Indonesia
- Indika Energy - Indonesia
- PNOC Exploration Corporation - Philippines
- Sical Logistics Limited - India
- AsiaOL BioFuels Corp., Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- IHS Mccloskey Coal Group - USA
- Independent Power Producers Association of India
- Borneo Indobara - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- The State Trading Corporation of India Ltd
- Kapuas Tunggal Persada - Indonesia
- Bukit Makmur.PT - Indonesia
- Sindya Power Generating Company Private Ltd
- Jaiprakash Power Ventures ltd
- Essar Steel Hazira Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Straits Asia Resources Limited - Singapore
- Formosa Plastics Group - Taiwan
- White Energy Company Limited
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ministry of Transport, Egypt
- Indonesian Coal Mining Association
- Coastal Gujarat Power Limited - India
- Posco Energy - South Korea
- ICICI Bank Limited - India
- VISA Power Limited - India
- Oldendorff Carriers - Singapore
- Global Green Power PLC Corporation, Philippines
- Singapore Mercantile Exchange
- Indian Energy Exchange, India
- South Luzon Thermal Energy Corporation
- Bhoruka Overseas - Indonesia
- Jindal Steel & Power Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Trasteel International SA, Italy
- Electricity Generating Authority of Thailand
- The University of Queensland
- Port Waratah Coal Services - Australia
- Chettinad Cement Corporation Ltd - India
- Simpson Spence & Young - Indonesia
- ASAPP Information Group - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Maheswari Brothers Coal Limited - India
- Kepco SPC Power Corporation, Philippines
- Medco Energi Mining Internasional
- Uttam Galva Steels Limited - India
- Bhushan Steel Limited - India
- Cement Manufacturers Association - India
- Merrill Lynch Commodities Europe
- Petron Corporation, Philippines
- Thiess Contractors Indonesia
- Kobexindo Tractors - Indoneisa
- Petrochimia International Co. Ltd.- Taiwan
- Binh Thuan Hamico - Vietnam
- Rio Tinto Coal - Australia
- Karaikal Port Pvt Ltd - India
- Goldman Sachs - Singapore
- Bulk Trading Sa - Switzerland
- CNBM International Corporation - China
- Renaissance Capital - South Africa
- Price Waterhouse Coopers - Russia
- Australian Coal Association
- Baramulti Group, Indonesia
- Directorate Of Revenue Intelligence - India
- PetroVietnam Power Coal Import and Supply Company
- Tata Chemicals Ltd - India
- Siam City Cement PLC, Thailand
- Indo Tambangraya Megah - Indonesia
- Energy Link Ltd, New Zealand
- Iligan Light & Power Inc, Philippines
- Planning Commission, India
- Globalindo Alam Lestari - Indonesia
- SMG Consultants - Indonesia
- San Jose City I Power Corp, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Madhucon Powers Ltd - India
- Grasim Industreis Ltd - India
- Siam City Cement - Thailand
- Sree Jayajothi Cements Limited - India
- Alfred C Toepfer International GmbH - Germany
- Orica Mining Services - Indonesia
- Manunggal Multi Energi - Indonesia
- Samtan Co., Ltd - South Korea
- Vedanta Resources Plc - India
- Sakthi Sugars Limited - India
- Ind-Barath Power Infra Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Altura Mining Limited, Indonesia
- IEA Clean Coal Centre - UK
- Semirara Mining and Power Corporation, Philippines
- Jorong Barutama Greston.PT - Indonesia
- PTC India Limited - India
- Chamber of Mines of South Africa
- Interocean Group of Companies - India
- Gujarat Mineral Development Corp Ltd - India
- Indogreen Group - Indonesia
- India Bulls Power Limited - India
- Ambuja Cements Ltd - India
- Sarangani Energy Corporation, Philippines
- Mintek Dendrill Indonesia
- Bharathi Cement Corporation - India
- Romanian Commodities Exchange
- Central Java Power - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Star Paper Mills Limited - India
- Eastern Coal Council - USA
- PowerSource Philippines DevCo
- Banpu Public Company Limited - Thailand
- Parliament of New Zealand
- Metalloyd Limited - United Kingdom
- Billiton Holdings Pty Ltd - Australia
- Thai Mozambique Logistica
- Pendopo Energi Batubara - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Eastern Energy - Thailand
- GN Power Mariveles Coal Plant, Philippines
- Carbofer General Trading SA - India
- Cigading International Bulk Terminal - Indonesia
- Gujarat Sidhee Cement - India
- Makarim & Taira - Indonesia
- Meenaskhi Energy Private Limited - India
- European Bulk Services B.V. - Netherlands
- Agrawal Coal Company - India
- Bangladesh Power Developement Board
- Malabar Cements Ltd - India
- Power Finance Corporation Ltd., India
- Salva Resources Pvt Ltd - India
- Leighton Contractors Pty Ltd - Australia
- SMC Global Power, Philippines
- Ceylon Electricity Board - Sri Lanka
- Kumho Petrochemical, South Korea
- Aditya Birla Group - India
- Africa Commodities Group - South Africa
- Minerals Council of Australia
- Edison Trading Spa - Italy
- Vizag Seaport Private Limited - India
- Therma Luzon, Inc, Philippines
- CIMB Investment Bank - Malaysia
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