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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, 29 September 16
FREIGHT RATES MIGHT CONTINUE TO SLIDE NEXT WEEK DUE TO HOLIDAYS IN CHINA
Supramax
Flat start to week followed by a slight gain in rates for Supramaxes, says Fearnleys in its latest weekly report.
According to Fear ...
Wednesday, 28 September 16
WITHOUT A DOUBT FREIGHT RATES HAVE MOVED UP A BIT TO HEALTHIER LEVELS - INTERMODAL
As we are approaching Q4, it is interesting to perform a review of the last nine months with respect to the second-hand prices of Supramax and Pana ...
Tuesday, 27 September 16
THE CAPESIZE RATE OF INCREASE HAS BEEN IMPRESSIVE, UP 39% W/W AND 123% MONTH TO DATE - ALLIED
The Dry bulk market has seen a rare shine in its performance as the capesize sector manages to rally at an unprecedented rate compared to its perfo ...
Monday, 26 September 16
COAL PRICES HAVE BEEN MOVING STEADILY HIGHER AFTER YEARS OF DECLINE
COALspot.com: A rally in thermal coal prices over the past few months, after years of decline, is still continuing and it is expected to rally at l ...
Monday, 26 September 16
THE FREIGHT MARKET WAS FIRM; ALL SEGMENTS WERE UP THIS PAST WEEK
COALspot.com: The Baltic Exchange, tracking rates for ships carrying dry bulk commodities rose and ending in a positive note this past week. The BD ...
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- Central Electricity Authority - India
- Independent Power Producers Association of India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Eastern Coal Council - USA
- Ind-Barath Power Infra Limited - India
- Vizag Seaport Private Limited - India
- Sical Logistics Limited - India
- International Coal Ventures Pvt Ltd - India
- Australian Coal Association
- Bharathi Cement Corporation - India
- Power Finance Corporation Ltd., India
- Central Java Power - Indonesia
- Star Paper Mills Limited - India
- Larsen & Toubro Limited - India
- SN Aboitiz Power Inc, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Wood Mackenzie - Singapore
- Sinarmas Energy and Mining - Indonesia
- Antam Resourcindo - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Marubeni Corporation - India
- Medco Energi Mining Internasional
- San Jose City I Power Corp, Philippines
- Dalmia Cement Bharat India
- Latin American Coal - Colombia
- Minerals Council of Australia
- Bukit Baiduri Energy - Indonesia
- OPG Power Generation Pvt Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Ambuja Cements Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Posco Energy - South Korea
- Krishnapatnam Port Company Ltd. - India
- Goldman Sachs - Singapore
- Bangladesh Power Developement Board
- Price Waterhouse Coopers - Russia
- London Commodity Brokers - England
- Billiton Holdings Pty Ltd - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kobexindo Tractors - Indoneisa
- Ministry of Transport, Egypt
- Ministry of Finance - Indonesia
- Deloitte Consulting - India
- Gujarat Mineral Development Corp Ltd - India
- Port Waratah Coal Services - Australia
- Chamber of Mines of South Africa
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Altura Mining Limited, Indonesia
- The Treasury - Australian Government
- Sindya Power Generating Company Private Ltd
- Parliament of New Zealand
- Attock Cement Pakistan Limited
- Meralco Power Generation, Philippines
- Standard Chartered Bank - UAE
- New Zealand Coal & Carbon
- Coal and Oil Company - UAE
- Indo Tambangraya Megah - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Global Business Power Corporation, Philippines
- Indian Energy Exchange, India
- Oldendorff Carriers - Singapore
- Salva Resources Pvt Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Anglo American - United Kingdom
- Global Coal Blending Company Limited - Australia
- Coastal Gujarat Power Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- McConnell Dowell - Australia
- Ministry of Mines - Canada
- South Luzon Thermal Energy Corporation
- Toyota Tsusho Corporation, Japan
- CNBM International Corporation - China
- Jorong Barutama Greston.PT - Indonesia
- Economic Council, Georgia
- PTC India Limited - India
- Georgia Ports Authority, United States
- Siam City Cement PLC, Thailand
- The State Trading Corporation of India Ltd
- Agrawal Coal Company - India
- Riau Bara Harum - Indonesia
- Simpson Spence & Young - Indonesia
- Aditya Birla Group - India
- Kartika Selabumi Mining - Indonesia
- Coalindo Energy - Indonesia
- Leighton Contractors Pty Ltd - Australia
- SMC Global Power, Philippines
- Tata Chemicals Ltd - India
- Samtan Co., Ltd - South Korea
- Eastern Energy - Thailand
- Indian Oil Corporation Limited
- Banpu Public Company Limited - Thailand
- Heidelberg Cement - Germany
- Vedanta Resources Plc - India
- Romanian Commodities Exchange
- Baramulti Group, Indonesia
- GVK Power & Infra Limited - India
- Alfred C Toepfer International GmbH - Germany
- Commonwealth Bank - Australia
- Jaiprakash Power Ventures ltd
- Orica Mining Services - Indonesia
- Electricity Generating Authority of Thailand
- Interocean Group of Companies - India
- Timah Investasi Mineral - Indoneisa
- Kumho Petrochemical, South Korea
- Maharashtra Electricity Regulatory Commission - India
- Energy Link Ltd, New Zealand
- Lanco Infratech Ltd - India
- Kepco SPC Power Corporation, Philippines
- Energy Development Corp, Philippines
- Cement Manufacturers Association - India
- ASAPP Information Group - India
- GAC Shipping (India) Pvt Ltd
- Borneo Indobara - Indonesia
- Kaltim Prima Coal - Indonesia
- Aboitiz Power Corporation - Philippines
- Mercuria Energy - Indonesia
- Bukit Makmur.PT - Indonesia
- India Bulls Power Limited - India
- Binh Thuan Hamico - Vietnam
- Pipit Mutiara Jaya. PT, Indonesia
- VISA Power Limited - India
- Rio Tinto Coal - Australia
- Semirara Mining Corp, Philippines
- Videocon Industries ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Karbindo Abesyapradhi - Indoneisa
- IEA Clean Coal Centre - UK
- Carbofer General Trading SA - India
- Malabar Cements Ltd - India
- Bhoruka Overseas - Indonesia
- Intertek Mineral Services - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- White Energy Company Limited
- Barasentosa Lestari - Indonesia
- Directorate Of Revenue Intelligence - India
- PNOC Exploration Corporation - Philippines
- Maheswari Brothers Coal Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Ceylon Electricity Board - Sri Lanka
- MS Steel International - UAE
- Xindia Steels Limited - India
- Rashtriya Ispat Nigam Limited - India
- TeaM Sual Corporation - Philippines
- Mjunction Services Limited - India
- Jindal Steel & Power Ltd - India
- Petron Corporation, Philippines
- Thiess Contractors Indonesia
- Sojitz Corporation - Japan
- Madhucon Powers Ltd - India
- Makarim & Taira - Indonesia
- Straits Asia Resources Limited - Singapore
- Parry Sugars Refinery, India
- The University of Queensland
- Therma Luzon, Inc, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Indonesian Coal Mining Association
- PowerSource Philippines DevCo
- Merrill Lynch Commodities Europe
- Pendopo Energi Batubara - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Sakthi Sugars Limited - India
- Bhushan Steel Limited - India
- Grasim Industreis Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Bhatia International Limited - India
- Meenaskhi Energy Private Limited - India
- Renaissance Capital - South Africa
- European Bulk Services B.V. - Netherlands
- SMG Consultants - Indonesia
- Manunggal Multi Energi - Indonesia
- Kideco Jaya Agung - Indonesia
- Mintek Dendrill Indonesia
- Electricity Authority, New Zealand
- Indika Energy - Indonesia
- Metalloyd Limited - United Kingdom
- Globalindo Alam Lestari - Indonesia
- Bulk Trading Sa - Switzerland
- Gujarat Sidhee Cement - India
- Indogreen Group - Indonesia
- Sree Jayajothi Cements Limited - India
- Formosa Plastics Group - Taiwan
- Iligan Light & Power Inc, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Bahari Cakrawala Sebuku - Indonesia
- Sarangani Energy Corporation, Philippines
- Global Green Power PLC Corporation, Philippines
- Orica Australia Pty. Ltd.
- Karaikal Port Pvt Ltd - India
- ICICI Bank Limited - India
- Uttam Galva Steels Limited - India
- Essar Steel Hazira Ltd - India
- Bayan Resources Tbk. - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- IHS Mccloskey Coal Group - USA
- Africa Commodities Group - South Africa
- Australian Commodity Traders Exchange
- Kalimantan Lumbung Energi - Indonesia
- CIMB Investment Bank - Malaysia
- Chettinad Cement Corporation Ltd - India
- Trasteel International SA, Italy
- Savvy Resources Ltd - HongKong
- LBH Netherlands Bv - Netherlands
- Thai Mozambique Logistica
- Cigading International Bulk Terminal - Indonesia
- Edison Trading Spa - Italy
- GMR Energy Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Siam City Cement - Thailand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Tamil Nadu electricity Board
- Mercator Lines Limited - India
- Wilmar Investment Holdings
- Singapore Mercantile Exchange
- Planning Commission, India
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