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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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- Jorong Barutama Greston.PT - Indonesia
- Indo Tambangraya Megah - Indonesia
- Dalmia Cement Bharat India
- Vedanta Resources Plc - India
- Mjunction Services Limited - India
- PowerSource Philippines DevCo
- Aditya Birla Group - India
- Larsen & Toubro Limited - India
- Star Paper Mills Limited - India
- Cigading International Bulk Terminal - Indonesia
- Sakthi Sugars Limited - India
- India Bulls Power Limited - India
- Coal and Oil Company - UAE
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Savvy Resources Ltd - HongKong
- Renaissance Capital - South Africa
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Uttam Galva Steels Limited - India
- Lanco Infratech Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Bharathi Cement Corporation - India
- Manunggal Multi Energi - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bukit Baiduri Energy - Indonesia
- Maheswari Brothers Coal Limited - India
- Electricity Generating Authority of Thailand
- Alfred C Toepfer International GmbH - Germany
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Heidelberg Cement - Germany
- Gujarat Electricity Regulatory Commission - India
- Miang Besar Coal Terminal - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Vizag Seaport Private Limited - India
- Australian Coal Association
- VISA Power Limited - India
- Wilmar Investment Holdings
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- Ambuja Cements Ltd - India
- The University of Queensland
- Indian Energy Exchange, India
- Borneo Indobara - Indonesia
- Edison Trading Spa - Italy
- Coastal Gujarat Power Limited - India
- Kartika Selabumi Mining - Indonesia
- The State Trading Corporation of India Ltd
- Gujarat Mineral Development Corp Ltd - India
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- PTC India Limited - India
- Deloitte Consulting - India
- Vijayanagar Sugar Pvt Ltd - India
- Energy Development Corp, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Ind-Barath Power Infra Limited - India
- Energy Link Ltd, New Zealand
- Australian Commodity Traders Exchange
- Makarim & Taira - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Asmin Koalindo Tuhup - Indonesia
- Mintek Dendrill Indonesia
- Jindal Steel & Power Ltd - India
- Simpson Spence & Young - Indonesia
- Global Business Power Corporation, Philippines
- SN Aboitiz Power Inc, Philippines
- SMC Global Power, Philippines
- Global Green Power PLC Corporation, Philippines
- Cement Manufacturers Association - India
- Salva Resources Pvt Ltd - India
- Formosa Plastics Group - Taiwan
- New Zealand Coal & Carbon
- Aboitiz Power Corporation - Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Metalloyd Limited - United Kingdom
- South Luzon Thermal Energy Corporation
- Bhoruka Overseas - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Timah Investasi Mineral - Indoneisa
- Global Coal Blending Company Limited - Australia
- Africa Commodities Group - South Africa
- IHS Mccloskey Coal Group - USA
- Bukit Asam (Persero) Tbk - Indonesia
- Bhatia International Limited - India
- Eastern Coal Council - USA
- Romanian Commodities Exchange
- Grasim Industreis Ltd - India
- London Commodity Brokers - England
- Indogreen Group - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Trasteel International SA, Italy
- Commonwealth Bank - Australia
- TeaM Sual Corporation - Philippines
- Bayan Resources Tbk. - Indonesia
- Carbofer General Trading SA - India
- Sree Jayajothi Cements Limited - India
- CIMB Investment Bank - Malaysia
- Economic Council, Georgia
- Indonesian Coal Mining Association
- Agrawal Coal Company - India
- Kobexindo Tractors - Indoneisa
- Leighton Contractors Pty Ltd - Australia
- ICICI Bank Limited - India
- Madhucon Powers Ltd - India
- Intertek Mineral Services - Indonesia
- Orica Australia Pty. Ltd.
- Eastern Energy - Thailand
- Chamber of Mines of South Africa
- Posco Energy - South Korea
- Merrill Lynch Commodities Europe
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- IEA Clean Coal Centre - UK
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Latin American Coal - Colombia
- Billiton Holdings Pty Ltd - Australia
- Bhushan Steel Limited - India
- Kepco SPC Power Corporation, Philippines
- Sindya Power Generating Company Private Ltd
- Maharashtra Electricity Regulatory Commission - India
- Tamil Nadu electricity Board
- Kalimantan Lumbung Energi - Indonesia
- Baramulti Group, Indonesia
- Mercator Lines Limited - India
- GVK Power & Infra Limited - India
- Samtan Co., Ltd - South Korea
- Meralco Power Generation, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Bulk Trading Sa - Switzerland
- San Jose City I Power Corp, Philippines
- Georgia Ports Authority, United States
- Kohat Cement Company Ltd. - Pakistan
- Wood Mackenzie - Singapore
- Indika Energy - Indonesia
- Attock Cement Pakistan Limited
- Interocean Group of Companies - India
- Siam City Cement PLC, Thailand
- Power Finance Corporation Ltd., India
- Riau Bara Harum - Indonesia
- Singapore Mercantile Exchange
- Antam Resourcindo - Indonesia
- Iligan Light & Power Inc, Philippines
- GAC Shipping (India) Pvt Ltd
- Ministry of Finance - Indonesia
- Semirara Mining Corp, Philippines
- Oldendorff Carriers - Singapore
- MS Steel International - UAE
- CNBM International Corporation - China
- Parry Sugars Refinery, India
- Electricity Authority, New Zealand
- Kapuas Tunggal Persada - Indonesia
- Bukit Makmur.PT - Indonesia
- Central Java Power - Indonesia
- Indian Oil Corporation Limited
- GMR Energy Limited - India
- Jaiprakash Power Ventures ltd
- European Bulk Services B.V. - Netherlands
- Binh Thuan Hamico - Vietnam
- Altura Mining Limited, Indonesia
- Marubeni Corporation - India
- Straits Asia Resources Limited - Singapore
- Directorate General of MIneral and Coal - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Malabar Cements Ltd - India
- SMG Consultants - Indonesia
- Banpu Public Company Limited - Thailand
- Minerals Council of Australia
- Thiess Contractors Indonesia
- ASAPP Information Group - India
- Sarangani Energy Corporation, Philippines
- Rio Tinto Coal - Australia
- Semirara Mining and Power Corporation, Philippines
- International Coal Ventures Pvt Ltd - India
- Petron Corporation, Philippines
- Xindia Steels Limited - India
- Tata Chemicals Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Sical Logistics Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Independent Power Producers Association of India
- Essar Steel Hazira Ltd - India
- Thai Mozambique Logistica
- Standard Chartered Bank - UAE
- Bangladesh Power Developement Board
- Goldman Sachs - Singapore
- Toyota Tsusho Corporation, Japan
- Karaikal Port Pvt Ltd - India
- Kideco Jaya Agung - Indonesia
- Videocon Industries ltd - India
- Kaltim Prima Coal - Indonesia
- Ministry of Mines - Canada
- Central Electricity Authority - India
- PNOC Exploration Corporation - Philippines
- Meenaskhi Energy Private Limited - India
- Medco Energi Mining Internasional
- Ministry of Transport, Egypt
- Gujarat Sidhee Cement - India
- OPG Power Generation Pvt Ltd - India
- Orica Mining Services - Indonesia
- The Treasury - Australian Government
- Pendopo Energi Batubara - Indonesia
- LBH Netherlands Bv - Netherlands
- Therma Luzon, Inc, Philippines
- Siam City Cement - Thailand
- Port Waratah Coal Services - Australia
- Barasentosa Lestari - Indonesia
- Parliament of New Zealand
- Coalindo Energy - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Chettinad Cement Corporation Ltd - India
- McConnell Dowell - Australia
- Directorate Of Revenue Intelligence - India
- Planning Commission, India
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- PetroVietnam Power Coal Import and Supply Company
- Anglo American - United Kingdom
- White Energy Company Limited
- Price Waterhouse Coopers - Russia
- Mercuria Energy - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Sojitz Corporation - Japan
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