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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, 04 February 16
CAPESIZE: WEST AUSTRALIAN TO CHINA HAS BEEN CONCLUDED AT US$ 2.85 PMT AND THE C3 MARKET REMAINS INACTIVE - FEARNLEYS
Capesize
As everyone is getting ready for the Chinese new year, already depressed rates are under further pressure.
According to Fearnleys, ...
Wednesday, 03 February 16
DRY BULK MARKET CONTINUES TO BE UNDER PRESSURE - INTERMODAL
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Tuesday, 02 February 16
RECORD EXPORTS THROUGH SOUTH AFRICA'S RICHARDS BAY COAL TERMINAL MADE AT EXPENSE OF SMALLER RIVALS, IHS SAYS
Five percent increase in coal exports through South Africa’s dominant Richards Bay Coal Terminal in 2015 unlikely to accelerate country&rsquo ...
Tuesday, 02 February 16
SETTING ASIDE, STRIKING OUT AND APPEALS TO THE COURT OF APPEAL IN SHIP ARRESTS - RAJAH & TANN ASIA LLP
KNOWLEDGE TO ELEVATE
The Singapore Court of Appeal once again has had to grapple with ship arrest, setting aside and appeals to the Court unde ...
Monday, 01 February 16
DRY BULK SUFFERS FROM POSEIDON'S POTENT PRONGS - CLARKSONS
It has been a grim start to 2016 for the bulkcarrier market, with the Baltic Dry Index sliding to new record lows on almost every day of the year s ...
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- TNB Fuel Sdn Bhd - Malaysia
- Goldman Sachs - Singapore
- Kartika Selabumi Mining - Indonesia
- Bulk Trading Sa - Switzerland
- Sindya Power Generating Company Private Ltd
- Ceylon Electricity Board - Sri Lanka
- Lanco Infratech Ltd - India
- Therma Luzon, Inc, Philippines
- Planning Commission, India
- Bukit Asam (Persero) Tbk - Indonesia
- ICICI Bank Limited - India
- Indonesian Coal Mining Association
- Mercator Lines Limited - India
- Altura Mining Limited, Indonesia
- SN Aboitiz Power Inc, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Global Business Power Corporation, Philippines
- Timah Investasi Mineral - Indoneisa
- Bhushan Steel Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Petron Corporation, Philippines
- Directorate Of Revenue Intelligence - India
- Chettinad Cement Corporation Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Edison Trading Spa - Italy
- Borneo Indobara - Indonesia
- Bukit Makmur.PT - Indonesia
- Alfred C Toepfer International GmbH - Germany
- San Jose City I Power Corp, Philippines
- Metalloyd Limited - United Kingdom
- Siam City Cement - Thailand
- Orica Mining Services - Indonesia
- Power Finance Corporation Ltd., India
- Ministry of Transport, Egypt
- Billiton Holdings Pty Ltd - Australia
- Thiess Contractors Indonesia
- Vizag Seaport Private Limited - India
- Semirara Mining and Power Corporation, Philippines
- Price Waterhouse Coopers - Russia
- GVK Power & Infra Limited - India
- PNOC Exploration Corporation - Philippines
- London Commodity Brokers - England
- TeaM Sual Corporation - Philippines
- International Coal Ventures Pvt Ltd - India
- Straits Asia Resources Limited - Singapore
- GMR Energy Limited - India
- CIMB Investment Bank - Malaysia
- South Luzon Thermal Energy Corporation
- Chamber of Mines of South Africa
- Interocean Group of Companies - India
- Electricity Authority, New Zealand
- Ministry of Finance - Indonesia
- Mintek Dendrill Indonesia
- Kaltim Prima Coal - Indonesia
- McConnell Dowell - Australia
- Kideco Jaya Agung - Indonesia
- Standard Chartered Bank - UAE
- European Bulk Services B.V. - Netherlands
- Sinarmas Energy and Mining - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Carbofer General Trading SA - India
- Sical Logistics Limited - India
- Wilmar Investment Holdings
- Kapuas Tunggal Persada - Indonesia
- ASAPP Information Group - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Offshore Bulk Terminal Pte Ltd, Singapore
- Aboitiz Power Corporation - Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Pendopo Energi Batubara - Indonesia
- Toyota Tsusho Corporation, Japan
- Directorate General of MIneral and Coal - Indonesia
- Kobexindo Tractors - Indoneisa
- The University of Queensland
- Dalmia Cement Bharat India
- Heidelberg Cement - Germany
- Siam City Cement PLC, Thailand
- Binh Thuan Hamico - Vietnam
- Madhucon Powers Ltd - India
- Port Waratah Coal Services - Australia
- Singapore Mercantile Exchange
- Agrawal Coal Company - India
- The Treasury - Australian Government
- Neyveli Lignite Corporation Ltd, - India
- Electricity Generating Authority of Thailand
- Krishnapatnam Port Company Ltd. - India
- Grasim Industreis Ltd - India
- Australian Commodity Traders Exchange
- Central Electricity Authority - India
- Kohat Cement Company Ltd. - Pakistan
- Coal and Oil Company - UAE
- Indo Tambangraya Megah - Indonesia
- Africa Commodities Group - South Africa
- Mercuria Energy - Indonesia
- Latin American Coal - Colombia
- Tata Chemicals Ltd - India
- PowerSource Philippines DevCo
- Vedanta Resources Plc - India
- Attock Cement Pakistan Limited
- Baramulti Group, Indonesia
- CNBM International Corporation - China
- Energy Development Corp, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Meenaskhi Energy Private Limited - India
- Bangladesh Power Developement Board
- Economic Council, Georgia
- SMC Global Power, Philippines
- Uttam Galva Steels Limited - India
- LBH Netherlands Bv - Netherlands
- Samtan Co., Ltd - South Korea
- Bayan Resources Tbk. - Indonesia
- Wood Mackenzie - Singapore
- Kepco SPC Power Corporation, Philippines
- Holcim Trading Pte Ltd - Singapore
- VISA Power Limited - India
- Semirara Mining Corp, Philippines
- OPG Power Generation Pvt Ltd - India
- Global Green Power PLC Corporation, Philippines
- Ambuja Cements Ltd - India
- Larsen & Toubro Limited - India
- The State Trading Corporation of India Ltd
- Rio Tinto Coal - Australia
- Trasteel International SA, Italy
- Savvy Resources Ltd - HongKong
- Antam Resourcindo - Indonesia
- Indogreen Group - Indonesia
- Australian Coal Association
- Miang Besar Coal Terminal - Indonesia
- Oldendorff Carriers - Singapore
- Intertek Mineral Services - Indonesia
- Bharathi Cement Corporation - India
- Romanian Commodities Exchange
- Parry Sugars Refinery, India
- Malabar Cements Ltd - India
- Renaissance Capital - South Africa
- Bahari Cakrawala Sebuku - Indonesia
- Manunggal Multi Energi - Indonesia
- Coastal Gujarat Power Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Salva Resources Pvt Ltd - India
- Barasentosa Lestari - Indonesia
- Formosa Plastics Group - Taiwan
- Bukit Baiduri Energy - Indonesia
- Globalindo Alam Lestari - Indonesia
- Essar Steel Hazira Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Deloitte Consulting - India
- Marubeni Corporation - India
- Medco Energi Mining Internasional
- IEA Clean Coal Centre - UK
- Ind-Barath Power Infra Limited - India
- Karaikal Port Pvt Ltd - India
- Eastern Coal Council - USA
- New Zealand Coal & Carbon
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Global Coal Blending Company Limited - Australia
- Leighton Contractors Pty Ltd - Australia
- Mjunction Services Limited - India
- Central Java Power - Indonesia
- Bhatia International Limited - India
- AsiaOL BioFuels Corp., Philippines
- Indian Energy Exchange, India
- Independent Power Producers Association of India
- Petrochimia International Co. Ltd.- Taiwan
- Maheswari Brothers Coal Limited - India
- Georgia Ports Authority, United States
- GAC Shipping (India) Pvt Ltd
- Parliament of New Zealand
- Thai Mozambique Logistica
- Videocon Industries ltd - India
- Merrill Lynch Commodities Europe
- Minerals Council of Australia
- Iligan Light & Power Inc, Philippines
- Tamil Nadu electricity Board
- Makarim & Taira - Indonesia
- PTC India Limited - India
- Orica Australia Pty. Ltd.
- MS Steel International - UAE
- Star Paper Mills Limited - India
- Cement Manufacturers Association - India
- Jindal Steel & Power Ltd - India
- India Bulls Power Limited - India
- Sojitz Corporation - Japan
- Sree Jayajothi Cements Limited - India
- Sarangani Energy Corporation, Philippines
- Rashtriya Ispat Nigam Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Eastern Energy - Thailand
- Jaiprakash Power Ventures ltd
- Bhoruka Overseas - Indonesia
- Kumho Petrochemical, South Korea
- IHS Mccloskey Coal Group - USA
- GN Power Mariveles Coal Plant, Philippines
- Riau Bara Harum - Indonesia
- Aditya Birla Group - India
- Meralco Power Generation, Philippines
- Banpu Public Company Limited - Thailand
- Anglo American - United Kingdom
- White Energy Company Limited
- Kalimantan Lumbung Energi - Indonesia
- Posco Energy - South Korea
- Sakthi Sugars Limited - India
- SMG Consultants - Indonesia
- Indian Oil Corporation Limited
- Gujarat Electricity Regulatory Commission - India
- Simpson Spence & Young - Indonesia
- Indika Energy - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Ministry of Mines - Canada
- Energy Link Ltd, New Zealand
- Jorong Barutama Greston.PT - Indonesia
- Coalindo Energy - Indonesia
- Xindia Steels Limited - India
- Gujarat Sidhee Cement - India
- Maharashtra Electricity Regulatory Commission - India
- Commonwealth Bank - Australia
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