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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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Thursday, 03 November 16
THE INDEX BASED COAL SALES & PURCHASE STRATEGY MAKES MORE EFFICIENT, SAYS 55.17% END-USERS
Considering the current coal market condition, the Index based coal sales & purchase strategy make more efficient was deemed the winner by 57.0 ...
Thursday, 03 November 16
CAPESIZE: BRAZIL/CHINA RATES MOVED TO THE $11 PMT LEVEL; WEST AUSTRALIA/CHINA ROUTE MOVED UP CLOSE TO MID $5 PMT LEVEL - FEARNLEYS
Supramax
In the Atlantic we see a bit more activity than in the eastern hemisphere, says Fearnleys in its latest weekly report. Fhauls via Black ...
Wednesday, 02 November 16
SHIPPING MARKET INSIGHT
A week before the U.S. presidential election, everyone is eager to see the socio-political effects that the result of these elections will have. As ...
Wednesday, 02 November 16
SHIP OPERATING COSTS ARE EXPECTED TO RISE IN BOTH 2016 AND 2017 - MOORE STEPHENS
Vessel operating costs are expected to rise in both 2016 and 2017. Repairs and maintenance and spares are the cost categories which are likely to i ...
Tuesday, 01 November 16
PANAMAX : A FAIR AMOUNT OF SIDEWAYS SHIPPING IN RATES - ALLIED SHIPPING
Capesize
A very sluggish start to the week, with rates dropping considerably as all optimism seems to have evaporated over the weekend. According ...
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- Kepco SPC Power Corporation, Philippines
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- Global Green Power PLC Corporation, Philippines
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- Ceylon Electricity Board - Sri Lanka
- Orica Mining Services - Indonesia
- Neyveli Lignite Corporation Ltd, - India
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- PTC India Limited - India
- GAC Shipping (India) Pvt Ltd
- Sarangani Energy Corporation, Philippines
- Deloitte Consulting - India
- Vijayanagar Sugar Pvt Ltd - India
- London Commodity Brokers - England
- Larsen & Toubro Limited - India
- Sical Logistics Limited - India
- Manunggal Multi Energi - Indonesia
- The State Trading Corporation of India Ltd
- Leighton Contractors Pty Ltd - Australia
- Kideco Jaya Agung - Indonesia
- Tamil Nadu electricity Board
- SN Aboitiz Power Inc, Philippines
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- Indian Energy Exchange, India
- Chamber of Mines of South Africa
- Kaltim Prima Coal - Indonesia
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- Bukit Asam (Persero) Tbk - Indonesia
- Electricity Generating Authority of Thailand
- Maheswari Brothers Coal Limited - India
- Salva Resources Pvt Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Dong Bac Coal Mineral Investment Coporation - Vietnam
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- Samtan Co., Ltd - South Korea
- Semirara Mining and Power Corporation, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Bukit Baiduri Energy - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Ministry of Transport, Egypt
- Kohat Cement Company Ltd. - Pakistan
- Malabar Cements Ltd - India
- Power Finance Corporation Ltd., India
- Cigading International Bulk Terminal - Indonesia
- Africa Commodities Group - South Africa
- Petron Corporation, Philippines
- Merrill Lynch Commodities Europe
- Pendopo Energi Batubara - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Attock Cement Pakistan Limited
- Aditya Birla Group - India
- Romanian Commodities Exchange
- Parliament of New Zealand
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- Altura Mining Limited, Indonesia
- Simpson Spence & Young - Indonesia
- Renaissance Capital - South Africa
- Price Waterhouse Coopers - Russia
- International Coal Ventures Pvt Ltd - India
- Wood Mackenzie - Singapore
- Eastern Energy - Thailand
- Straits Asia Resources Limited - Singapore
- New Zealand Coal & Carbon
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Sindya Power Generating Company Private Ltd
- Cement Manufacturers Association - India
- Semirara Mining Corp, Philippines
- Savvy Resources Ltd - HongKong
- Mintek Dendrill Indonesia
- Star Paper Mills Limited - India
- Indo Tambangraya Megah - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Videocon Industries ltd - India
- Energy Link Ltd, New Zealand
- Indonesian Coal Mining Association
- Aboitiz Power Corporation - Philippines
- Parry Sugars Refinery, India
- Karaikal Port Pvt Ltd - India
- Oldendorff Carriers - Singapore
- Ambuja Cements Ltd - India
- GMR Energy Limited - India
- CIMB Investment Bank - Malaysia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Indogreen Group - Indonesia
- Siam City Cement - Thailand
- OPG Power Generation Pvt Ltd - India
- Interocean Group of Companies - India
- Commonwealth Bank - Australia
- Iligan Light & Power Inc, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Meralco Power Generation, Philippines
- Wilmar Investment Holdings
- Gujarat Electricity Regulatory Commission - India
- Jorong Barutama Greston.PT - Indonesia
- Baramulti Group, Indonesia
- Agrawal Coal Company - India
- Central Java Power - Indonesia
- South Luzon Thermal Energy Corporation
- IHS Mccloskey Coal Group - USA
- VISA Power Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Mjunction Services Limited - India
- Barasentosa Lestari - Indonesia
- Bhushan Steel Limited - India
- Standard Chartered Bank - UAE
- LBH Netherlands Bv - Netherlands
- Port Waratah Coal Services - Australia
- Mercator Lines Limited - India
- Asmin Koalindo Tuhup - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Marubeni Corporation - India
- Siam City Cement PLC, Thailand
- Ministry of Finance - Indonesia
- Trasteel International SA, Italy
- Grasim Industreis Ltd - India
- Carbofer General Trading SA - India
- MS Steel International - UAE
- Timah Investasi Mineral - Indoneisa
- Makarim & Taira - Indonesia
- Kapuas Tunggal Persada - Indonesia
- McConnell Dowell - Australia
- Coalindo Energy - Indonesia
- Planning Commission, India
- Medco Energi Mining Internasional
- Xindia Steels Limited - India
- Thiess Contractors Indonesia
- Heidelberg Cement - Germany
- Minerals Council of Australia
- India Bulls Power Limited - India
- Bharathi Cement Corporation - India
- Petrochimia International Co. Ltd.- Taiwan
- Riau Bara Harum - Indonesia
- Bhoruka Overseas - Indonesia
- Globalindo Alam Lestari - Indonesia
- Indian Oil Corporation Limited
- Bulk Trading Sa - Switzerland
- TeaM Sual Corporation - Philippines
- The Treasury - Australian Government
- Dalmia Cement Bharat India
- Formosa Plastics Group - Taiwan
- CNBM International Corporation - China
- Economic Council, Georgia
- Antam Resourcindo - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Binh Thuan Hamico - Vietnam
- PowerSource Philippines DevCo
- Gujarat Sidhee Cement - India
- Anglo American - United Kingdom
- Thai Mozambique Logistica
- Meenaskhi Energy Private Limited - India
- Kumho Petrochemical, South Korea
- Mercuria Energy - Indonesia
- SMC Global Power, Philippines
- Bayan Resources Tbk. - Indonesia
- Borneo Indobara - Indonesia
- Global Coal Blending Company Limited - Australia
- Bukit Makmur.PT - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Kobexindo Tractors - Indoneisa
- Metalloyd Limited - United Kingdom
- Ind-Barath Power Infra Limited - India
- Vedanta Resources Plc - India
- Toyota Tsusho Corporation, Japan
- Australian Commodity Traders Exchange
- Singapore Mercantile Exchange
- Jaiprakash Power Ventures ltd
- Orica Australia Pty. Ltd.
- Essar Steel Hazira Ltd - India
- Georgia Ports Authority, United States
- San Jose City I Power Corp, Philippines
- Electricity Authority, New Zealand
- Sree Jayajothi Cements Limited - India
- Central Electricity Authority - India
- ASAPP Information Group - India
- Directorate General of MIneral and Coal - Indonesia
- ICICI Bank Limited - India
- Ministry of Mines - Canada
- Bangladesh Power Developement Board
- Banpu Public Company Limited - Thailand
- Posco Energy - South Korea
- Gujarat Mineral Development Corp Ltd - India
- The University of Queensland
- Eastern Coal Council - USA
- Intertek Mineral Services - Indonesia
- Kartika Selabumi Mining - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Bhatia International Limited - India
- Latin American Coal - Colombia
- Pipit Mutiara Jaya. PT, Indonesia
- Directorate Of Revenue Intelligence - India
- Sinarmas Energy and Mining - Indonesia
- Therma Luzon, Inc, Philippines
- Goldman Sachs - Singapore
- Holcim Trading Pte Ltd - Singapore
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Edison Trading Spa - Italy
- Sakthi Sugars Limited - India
- Independent Power Producers Association of India
- White Energy Company Limited
- Australian Coal Association
- Coal and Oil Company - UAE
- European Bulk Services B.V. - Netherlands
- IEA Clean Coal Centre - UK
- Coastal Gujarat Power Limited - India
- Lanco Infratech Ltd - India
- Tata Chemicals Ltd - India
- Global Business Power Corporation, Philippines
- Jindal Steel & Power Ltd - India
- Energy Development Corp, Philippines
- Alfred C Toepfer International GmbH - Germany
- Sojitz Corporation - Japan
- TNB Fuel Sdn Bhd - Malaysia
- GVK Power & Infra Limited - India
- Miang Besar Coal Terminal - Indonesia
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