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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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Monday, 12 October 15
DRY BULK SHIPPING: MARKETS ARE SLOWLY IMPROVING FROM A VERY LOW LEVEL AS THE DEMAND SIDE FALTERS - HELLENIC SHIPPING NEWS
The dry bulk market is in the midst of a shift in demand patterns, which coupled with a tonnage supply overhang, has been facing headwinds over the ...
Monday, 12 October 15
BDI WEIGHED DOWN BY CAPE
COALspot.com: The BDI (Baltic Dry Index) has come back down again this week. The BDI is a benchmark index used to assess the overall cost of moving ...
Sunday, 11 October 15
TANKER SHIPPING: MORE OPTIMISM IN SIGHT FOR TANKERS IN THE WINTER SEASON - BIMCO
Demand:
2015 has been the year of the tanker. The fundamental improvements with slow supply-side growth for some years coupled with low oil pri ...
Friday, 09 October 15
US WEEKLY COAL OUTPUT UP 1.2 PERCENT TO 17.7 MMST
COALspot.com – United States the world’s second largest coal producer has produced approximately totaled an estimated 17.7 million shor ...
Thursday, 08 October 15
CAPESIZE: MOST PEOPLE AGREE A SPIKE IN RATES WILL HAPPEN; WHEN, HOW LONG AND HOW SUBSTANTIAL? - FEARNLEYS
Cape
Depressives start of the fourth quarter, with c3 approaching USD 12 pmt and c5 presently in the mind 5's. According to Fearnleys ship br ...
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- Renaissance Capital - South Africa
- GMR Energy Limited - India
- The University of Queensland
- Attock Cement Pakistan Limited
- Madhucon Powers Ltd - India
- Ambuja Cements Ltd - India
- Metalloyd Limited - United Kingdom
- Electricity Generating Authority of Thailand
- Makarim & Taira - Indonesia
- PTC India Limited - India
- Indika Energy - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- GAC Shipping (India) Pvt Ltd
- Larsen & Toubro Limited - India
- Electricity Authority, New Zealand
- Mintek Dendrill Indonesia
- Vizag Seaport Private Limited - India
- Eastern Energy - Thailand
- Thai Mozambique Logistica
- Indogreen Group - Indonesia
- Marubeni Corporation - India
- Wilmar Investment Holdings
- CIMB Investment Bank - Malaysia
- Cigading International Bulk Terminal - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Uttam Galva Steels Limited - India
- Kaltim Prima Coal - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Videocon Industries ltd - India
- Semirara Mining Corp, Philippines
- Bukit Baiduri Energy - Indonesia
- PowerSource Philippines DevCo
- Economic Council, Georgia
- Interocean Group of Companies - India
- Semirara Mining and Power Corporation, Philippines
- Jorong Barutama Greston.PT - Indonesia
- GVK Power & Infra Limited - India
- Antam Resourcindo - Indonesia
- Simpson Spence & Young - Indonesia
- Coal and Oil Company - UAE
- Aboitiz Power Corporation - Philippines
- White Energy Company Limited
- Commonwealth Bank - Australia
- Petron Corporation, Philippines
- San Jose City I Power Corp, Philippines
- Siam City Cement - Thailand
- Eastern Coal Council - USA
- Romanian Commodities Exchange
- ASAPP Information Group - India
- Mercator Lines Limited - India
- Oldendorff Carriers - Singapore
- Kobexindo Tractors - Indoneisa
- Jindal Steel & Power Ltd - India
- Bulk Trading Sa - Switzerland
- Orica Australia Pty. Ltd.
- Kohat Cement Company Ltd. - Pakistan
- Gujarat Electricity Regulatory Commission - India
- Gujarat Sidhee Cement - India
- Banpu Public Company Limited - Thailand
- TNB Fuel Sdn Bhd - Malaysia
- Star Paper Mills Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Global Coal Blending Company Limited - Australia
- Wood Mackenzie - Singapore
- Borneo Indobara - Indonesia
- Bhatia International Limited - India
- Barasentosa Lestari - Indonesia
- Ministry of Mines - Canada
- Dalmia Cement Bharat India
- Singapore Mercantile Exchange
- Bahari Cakrawala Sebuku - Indonesia
- Global Business Power Corporation, Philippines
- Parry Sugars Refinery, India
- Sical Logistics Limited - India
- Sojitz Corporation - Japan
- Indo Tambangraya Megah - Indonesia
- Merrill Lynch Commodities Europe
- Meralco Power Generation, Philippines
- Bhushan Steel Limited - India
- GN Power Mariveles Coal Plant, Philippines
- LBH Netherlands Bv - Netherlands
- Minerals Council of Australia
- Samtan Co., Ltd - South Korea
- Mercuria Energy - Indonesia
- Kideco Jaya Agung - Indonesia
- Sakthi Sugars Limited - India
- Formosa Plastics Group - Taiwan
- Planning Commission, India
- Bukit Asam (Persero) Tbk - Indonesia
- Posco Energy - South Korea
- Kepco SPC Power Corporation, Philippines
- Altura Mining Limited, Indonesia
- IHS Mccloskey Coal Group - USA
- South Luzon Thermal Energy Corporation
- Manunggal Multi Energi - Indonesia
- Latin American Coal - Colombia
- McConnell Dowell - Australia
- Savvy Resources Ltd - HongKong
- Krishnapatnam Port Company Ltd. - India
- Tamil Nadu electricity Board
- Standard Chartered Bank - UAE
- VISA Power Limited - India
- Australian Commodity Traders Exchange
- Agrawal Coal Company - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Globalindo Alam Lestari - Indonesia
- Maheswari Brothers Coal Limited - India
- India Bulls Power Limited - India
- Billiton Holdings Pty Ltd - Australia
- Cement Manufacturers Association - India
- Energy Link Ltd, New Zealand
- Central Java Power - Indonesia
- Port Waratah Coal Services - Australia
- TeaM Sual Corporation - Philippines
- Indian Energy Exchange, India
- Georgia Ports Authority, United States
- CNBM International Corporation - China
- Bukit Makmur.PT - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Siam City Cement PLC, Thailand
- IEA Clean Coal Centre - UK
- Trasteel International SA, Italy
- Sree Jayajothi Cements Limited - India
- Medco Energi Mining Internasional
- Kalimantan Lumbung Energi - Indonesia
- Baramulti Group, Indonesia
- Karaikal Port Pvt Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Gujarat Mineral Development Corp Ltd - India
- International Coal Ventures Pvt Ltd - India
- Directorate Of Revenue Intelligence - India
- Deloitte Consulting - India
- Pipit Mutiara Jaya. PT, Indonesia
- Essar Steel Hazira Ltd - India
- Energy Development Corp, Philippines
- Lanco Infratech Ltd - India
- New Zealand Coal & Carbon
- Sarangani Energy Corporation, Philippines
- Australian Coal Association
- Ceylon Electricity Board - Sri Lanka
- Iligan Light & Power Inc, Philippines
- European Bulk Services B.V. - Netherlands
- Power Finance Corporation Ltd., India
- Edison Trading Spa - Italy
- Kumho Petrochemical, South Korea
- Miang Besar Coal Terminal - Indonesia
- Malabar Cements Ltd - India
- Vedanta Resources Plc - India
- Petrochimia International Co. Ltd.- Taiwan
- Bangladesh Power Developement Board
- SN Aboitiz Power Inc, Philippines
- Rashtriya Ispat Nigam Limited - India
- Central Electricity Authority - India
- Binh Thuan Hamico - Vietnam
- AsiaOL BioFuels Corp., Philippines
- Tata Chemicals Ltd - India
- Toyota Tsusho Corporation, Japan
- Anglo American - United Kingdom
- PetroVietnam Power Coal Import and Supply Company
- Maharashtra Electricity Regulatory Commission - India
- Meenaskhi Energy Private Limited - India
- The Treasury - Australian Government
- Vijayanagar Sugar Pvt Ltd - India
- Ind-Barath Power Infra Limited - India
- Indonesian Coal Mining Association
- Kapuas Tunggal Persada - Indonesia
- Chettinad Cement Corporation Ltd - India
- SMG Consultants - Indonesia
- Riau Bara Harum - Indonesia
- OPG Power Generation Pvt Ltd - India
- Heidelberg Cement - Germany
- Africa Commodities Group - South Africa
- Timah Investasi Mineral - Indoneisa
- Chamber of Mines of South Africa
- Leighton Contractors Pty Ltd - Australia
- Salva Resources Pvt Ltd - India
- Bayan Resources Tbk. - Indonesia
- Aditya Birla Group - India
- Xindia Steels Limited - India
- Pendopo Energi Batubara - Indonesia
- London Commodity Brokers - England
- Asmin Koalindo Tuhup - Indonesia
- Bhoruka Overseas - Indonesia
- Rio Tinto Coal - Australia
- Grasim Industreis Ltd - India
- ICICI Bank Limited - India
- SMC Global Power, Philippines
- PNOC Exploration Corporation - Philippines
- The State Trading Corporation of India Ltd
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Thiess Contractors Indonesia
- MS Steel International - UAE
- Jaiprakash Power Ventures ltd
- Bharathi Cement Corporation - India
- Independent Power Producers Association of India
- Intertek Mineral Services - Indonesia
- Ministry of Transport, Egypt
- Price Waterhouse Coopers - Russia
- Indian Oil Corporation Limited
- Parliament of New Zealand
- Coastal Gujarat Power Limited - India
- Coalindo Energy - Indonesia
- Therma Luzon, Inc, Philippines
- Goldman Sachs - Singapore
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sindya Power Generating Company Private Ltd
- Orica Mining Services - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Carbofer General Trading SA - India
- Mjunction Services Limited - India
- Ministry of Finance - Indonesia
- Global Green Power PLC Corporation, Philippines
- Kartika Selabumi Mining - Indonesia
- Straits Asia Resources Limited - Singapore
- Holcim Trading Pte Ltd - Singapore
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