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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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Friday, 12 May 17
SLOW AND UNEVENTFUL WEEK FOR THE PANAMAX MARKET
Supramax
In the Atlantic, only USG were showing some improvement, where pet-coke cargoes to India was fixed in the range of 19-23k daily and to C ...
Wednesday, 10 May 17
MARKET INSIGHT - INTERMODAL
Up until a few weeks ago, demo deals were being concluded at just a fraction below $400/ldt. Last time we saw demo prices around that level was in ...
Tuesday, 09 May 17
DRY BULK TRADE IS STILL HEAVILY RELIANT ON CHINA - GEORGE LAZARIDIS
We have seen an overall cool down in the dry bulk and tanker markets over the final two weeks of April, sparking worries amongst ship-owners that t ...
Monday, 08 May 17
INDONESIAN COAL PRICE REFERENCE RISES FOR SECOND STRAIGHT MONTH IN MAY
COALspot.com: Indonesian government declared coal benchmark price rose in May, government data showed.
The benchmark price of Indonesian therm ...
Monday, 08 May 17
OCEAN BULK CARGO RATES FALL FURTHER THIS PAST WEEK
COALspot.com: The Freight market continues to slump this past week, with all segments show a negative downward trend week over week.
The Balti ...
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- Semirara Mining Corp, Philippines
- Kobexindo Tractors - Indoneisa
- Coalindo Energy - Indonesia
- Planning Commission, India
- Salva Resources Pvt Ltd - India
- Thai Mozambique Logistica
- New Zealand Coal & Carbon
- The State Trading Corporation of India Ltd
- Bayan Resources Tbk. - Indonesia
- Interocean Group of Companies - India
- Independent Power Producers Association of India
- Metalloyd Limited - United Kingdom
- Essar Steel Hazira Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Directorate Of Revenue Intelligence - India
- Marubeni Corporation - India
- Ministry of Mines - Canada
- VISA Power Limited - India
- Savvy Resources Ltd - HongKong
- Medco Energi Mining Internasional
- Commonwealth Bank - Australia
- Eastern Energy - Thailand
- Star Paper Mills Limited - India
- Indogreen Group - Indonesia
- Sojitz Corporation - Japan
- Indonesian Coal Mining Association
- Rio Tinto Coal - Australia
- Neyveli Lignite Corporation Ltd, - India
- IHS Mccloskey Coal Group - USA
- Minerals Council of Australia
- Wood Mackenzie - Singapore
- Coal and Oil Company - UAE
- Australian Coal Association
- Bangladesh Power Developement Board
- Orica Mining Services - Indonesia
- IEA Clean Coal Centre - UK
- Krishnapatnam Port Company Ltd. - India
- Sindya Power Generating Company Private Ltd
- Vizag Seaport Private Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Barasentosa Lestari - Indonesia
- GVK Power & Infra Limited - India
- Global Business Power Corporation, Philippines
- Singapore Mercantile Exchange
- Kideco Jaya Agung - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Australian Commodity Traders Exchange
- Bhushan Steel Limited - India
- Tamil Nadu electricity Board
- Kumho Petrochemical, South Korea
- India Bulls Power Limited - India
- Mercuria Energy - Indonesia
- ASAPP Information Group - India
- Heidelberg Cement - Germany
- Kohat Cement Company Ltd. - Pakistan
- Rashtriya Ispat Nigam Limited - India
- South Luzon Thermal Energy Corporation
- Bharathi Cement Corporation - India
- Trasteel International SA, Italy
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ceylon Electricity Board - Sri Lanka
- Indo Tambangraya Megah - Indonesia
- Jaiprakash Power Ventures ltd
- The University of Queensland
- Bukit Baiduri Energy - Indonesia
- Riau Bara Harum - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Ministry of Finance - Indonesia
- Mintek Dendrill Indonesia
- Bhatia International Limited - India
- Posco Energy - South Korea
- Thiess Contractors Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Borneo Indobara - Indonesia
- Karaikal Port Pvt Ltd - India
- Sical Logistics Limited - India
- Jindal Steel & Power Ltd - India
- Malabar Cements Ltd - India
- Indian Oil Corporation Limited
- Global Coal Blending Company Limited - Australia
- Orica Australia Pty. Ltd.
- Bulk Trading Sa - Switzerland
- Cement Manufacturers Association - India
- Sinarmas Energy and Mining - Indonesia
- Deloitte Consulting - India
- McConnell Dowell - Australia
- Bukit Asam (Persero) Tbk - Indonesia
- GMR Energy Limited - India
- Gujarat Electricity Regulatory Commission - India
- SN Aboitiz Power Inc, Philippines
- Chamber of Mines of South Africa
- Maharashtra Electricity Regulatory Commission - India
- White Energy Company Limited
- International Coal Ventures Pvt Ltd - India
- Ministry of Transport, Egypt
- Makarim & Taira - Indonesia
- Kapuas Tunggal Persada - Indonesia
- CIMB Investment Bank - Malaysia
- LBH Netherlands Bv - Netherlands
- Mjunction Services Limited - India
- Sakthi Sugars Limited - India
- Electricity Generating Authority of Thailand
- Alfred C Toepfer International GmbH - Germany
- Energy Development Corp, Philippines
- Mercator Lines Limited - India
- Larsen & Toubro Limited - India
- Global Green Power PLC Corporation, Philippines
- Altura Mining Limited, Indonesia
- Aboitiz Power Corporation - Philippines
- Binh Thuan Hamico - Vietnam
- Bahari Cakrawala Sebuku - Indonesia
- Siam City Cement PLC, Thailand
- Ambuja Cements Ltd - India
- Oldendorff Carriers - Singapore
- Baramulti Group, Indonesia
- PTC India Limited - India
- Timah Investasi Mineral - Indoneisa
- SMG Consultants - Indonesia
- Power Finance Corporation Ltd., India
- Eastern Coal Council - USA
- Kartika Selabumi Mining - Indonesia
- Siam City Cement - Thailand
- Economic Council, Georgia
- Semirara Mining and Power Corporation, Philippines
- TeaM Sual Corporation - Philippines
- Sree Jayajothi Cements Limited - India
- PowerSource Philippines DevCo
- Aditya Birla Group - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- PNOC Exploration Corporation - Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Iligan Light & Power Inc, Philippines
- Agrawal Coal Company - India
- Kaltim Prima Coal - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- CNBM International Corporation - China
- Meralco Power Generation, Philippines
- Lanco Infratech Ltd - India
- Merrill Lynch Commodities Europe
- Grasim Industreis Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Romanian Commodities Exchange
- Formosa Plastics Group - Taiwan
- Ind-Barath Power Infra Limited - India
- Tata Chemicals Ltd - India
- Georgia Ports Authority, United States
- Pendopo Energi Batubara - Indonesia
- Parliament of New Zealand
- Dalmia Cement Bharat India
- Edison Trading Spa - Italy
- Videocon Industries ltd - India
- Electricity Authority, New Zealand
- Miang Besar Coal Terminal - Indonesia
- Wilmar Investment Holdings
- Globalindo Alam Lestari - Indonesia
- Central Electricity Authority - India
- Indika Energy - Indonesia
- Petron Corporation, Philippines
- Kepco SPC Power Corporation, Philippines
- Port Waratah Coal Services - Australia
- Madhucon Powers Ltd - India
- Chettinad Cement Corporation Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Gujarat Mineral Development Corp Ltd - India
- London Commodity Brokers - England
- Renaissance Capital - South Africa
- OPG Power Generation Pvt Ltd - India
- GAC Shipping (India) Pvt Ltd
- The Treasury - Australian Government
- ICICI Bank Limited - India
- Indian Energy Exchange, India
- Leighton Contractors Pty Ltd - Australia
- Bhoruka Overseas - Indonesia
- Central Java Power - Indonesia
- Intertek Mineral Services - Indonesia
- Toyota Tsusho Corporation, Japan
- Parry Sugars Refinery, India
- Meenaskhi Energy Private Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Attock Cement Pakistan Limited
- Gujarat Sidhee Cement - India
- Energy Link Ltd, New Zealand
- Vijayanagar Sugar Pvt Ltd - India
- Xindia Steels Limited - India
- European Bulk Services B.V. - Netherlands
- Therma Luzon, Inc, Philippines
- Sarangani Energy Corporation, Philippines
- MS Steel International - UAE
- Carbofer General Trading SA - India
- Latin American Coal - Colombia
- Standard Chartered Bank - UAE
- Vedanta Resources Plc - India
- Coastal Gujarat Power Limited - India
- SMC Global Power, Philippines
- Straits Asia Resources Limited - Singapore
- Goldman Sachs - Singapore
- Africa Commodities Group - South Africa
- AsiaOL BioFuels Corp., Philippines
- Uttam Galva Steels Limited - India
- Simpson Spence & Young - Indonesia
- Manunggal Multi Energi - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Banpu Public Company Limited - Thailand
- San Jose City I Power Corp, Philippines
- Billiton Holdings Pty Ltd - Australia
- Bukit Makmur.PT - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Cigading International Bulk Terminal - Indonesia
- Maheswari Brothers Coal Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Anglo American - United Kingdom
- Price Waterhouse Coopers - Russia
- Antam Resourcindo - Indonesia
- Samtan Co., Ltd - South Korea
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