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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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Tuesday, 04 August 15
SHIPPING CYCLES - A CHESS GAME YOU DON'T WANT TO LOSE - CLARKSONS
Ingmar Bergman’s classic movie The Seventh Seal is about a knight who, during the Black Death, challenges Death to a chess match, in the hope ...
Monday, 03 August 15
NEWCASTLE COAL SWAPS DECLINE FURTHER THIS PAST WEEK
COALspot.com: API 5 FOB Newcastle Coal swap for 4Q’ 2015 delivery down $ 1.92 per MT (-4.22%) month over month to US$ 43.58 per mt. The swap ...
Monday, 03 August 15
CFR SOUTH CHINA COAL SWAPS SLIDE THIS WEEK
COALspot.com: API 8 CFR South China Coal swap for 4Q’ 2015 delivery declined US$ 1.64 (3.14%) per MT month over month.
A commodity swap ...
Sunday, 02 August 15
CAPESIZE RATES PUSH BDI UPWARD
COALspot.com: The freight market was buoyant this week as BDI rose 4.14 pct to 1131 points. The cape index was also increased 16.50 pct 2209 points ...
Saturday, 01 August 15
DRY BULK MARKET KEEPS ITS MOMENTUM, AS OUTLOOK IMPROVES - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
Although conditions remain more than challenging, especially from an economic point of view (aka China’s stock worries), the dry bulk market ...
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- Altura Mining Limited, Indonesia
- Parry Sugars Refinery, India
- Bhushan Steel Limited - India
- Bayan Resources Tbk. - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Petrochimia International Co. Ltd.- Taiwan
- Eastern Energy - Thailand
- Neyveli Lignite Corporation Ltd, - India
- Sojitz Corporation - Japan
- Indo Tambangraya Megah - Indonesia
- Independent Power Producers Association of India
- Jindal Steel & Power Ltd - India
- Lanco Infratech Ltd - India
- IEA Clean Coal Centre - UK
- Chamber of Mines of South Africa
- Planning Commission, India
- Standard Chartered Bank - UAE
- Bhoruka Overseas - Indonesia
- Formosa Plastics Group - Taiwan
- McConnell Dowell - Australia
- Port Waratah Coal Services - Australia
- Ministry of Finance - Indonesia
- Uttam Galva Steels Limited - India
- Ceylon Electricity Board - Sri Lanka
- Asia Pacific Energy Resources Ventures Inc, Philippines
- White Energy Company Limited
- Jaiprakash Power Ventures ltd
- Madhucon Powers Ltd - India
- Bhatia International Limited - India
- Therma Luzon, Inc, Philippines
- CIMB Investment Bank - Malaysia
- VISA Power Limited - India
- Barasentosa Lestari - Indonesia
- Posco Energy - South Korea
- Price Waterhouse Coopers - Russia
- Trasteel International SA, Italy
- Goldman Sachs - Singapore
- Toyota Tsusho Corporation, Japan
- Global Coal Blending Company Limited - Australia
- Straits Asia Resources Limited - Singapore
- Maheswari Brothers Coal Limited - India
- Grasim Industreis Ltd - India
- Minerals Council of Australia
- The State Trading Corporation of India Ltd
- ICICI Bank Limited - India
- Renaissance Capital - South Africa
- Karbindo Abesyapradhi - Indoneisa
- Central Electricity Authority - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bharathi Cement Corporation - India
- Thiess Contractors Indonesia
- Indika Energy - Indonesia
- Chettinad Cement Corporation Ltd - India
- Agrawal Coal Company - India
- The University of Queensland
- Marubeni Corporation - India
- Krishnapatnam Port Company Ltd. - India
- Heidelberg Cement - Germany
- Kartika Selabumi Mining - Indonesia
- Malabar Cements Ltd - India
- ASAPP Information Group - India
- Star Paper Mills Limited - India
- Ministry of Mines - Canada
- Romanian Commodities Exchange
- Sakthi Sugars Limited - India
- Directorate General of MIneral and Coal - Indonesia
- South Luzon Thermal Energy Corporation
- GVK Power & Infra Limited - India
- Sinarmas Energy and Mining - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Antam Resourcindo - Indonesia
- Essar Steel Hazira Ltd - India
- Australian Coal Association
- Manunggal Multi Energi - Indonesia
- Singapore Mercantile Exchange
- Indonesian Coal Mining Association
- Bukit Makmur.PT - Indonesia
- Coastal Gujarat Power Limited - India
- Siam City Cement - Thailand
- International Coal Ventures Pvt Ltd - India
- Bangladesh Power Developement Board
- Sindya Power Generating Company Private Ltd
- Meenaskhi Energy Private Limited - India
- New Zealand Coal & Carbon
- Kumho Petrochemical, South Korea
- Rashtriya Ispat Nigam Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- SMG Consultants - Indonesia
- Videocon Industries ltd - India
- Wood Mackenzie - Singapore
- Savvy Resources Ltd - HongKong
- Global Business Power Corporation, Philippines
- Larsen & Toubro Limited - India
- GAC Shipping (India) Pvt Ltd
- Thai Mozambique Logistica
- PNOC Exploration Corporation - Philippines
- Economic Council, Georgia
- PowerSource Philippines DevCo
- Orica Mining Services - Indonesia
- Wilmar Investment Holdings
- Coalindo Energy - Indonesia
- Georgia Ports Authority, United States
- Sarangani Energy Corporation, Philippines
- Petron Corporation, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kepco SPC Power Corporation, Philippines
- Mercator Lines Limited - India
- European Bulk Services B.V. - Netherlands
- Parliament of New Zealand
- Tata Chemicals Ltd - India
- Australian Commodity Traders Exchange
- Deloitte Consulting - India
- Carbofer General Trading SA - India
- Gujarat Mineral Development Corp Ltd - India
- Xindia Steels Limited - India
- Timah Investasi Mineral - Indoneisa
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Aditya Birla Group - India
- Leighton Contractors Pty Ltd - Australia
- Kapuas Tunggal Persada - Indonesia
- Pendopo Energi Batubara - Indonesia
- Eastern Coal Council - USA
- Kaltim Prima Coal - Indonesia
- Intertek Mineral Services - Indonesia
- Anglo American - United Kingdom
- Indogreen Group - Indonesia
- Mintek Dendrill Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Energy Link Ltd, New Zealand
- Globalindo Alam Lestari - Indonesia
- Dalmia Cement Bharat India
- PTC India Limited - India
- Bukit Baiduri Energy - Indonesia
- Indian Oil Corporation Limited
- Siam City Cement PLC, Thailand
- Vizag Seaport Private Limited - India
- Kideco Jaya Agung - Indonesia
- Banpu Public Company Limited - Thailand
- Alfred C Toepfer International GmbH - Germany
- Cement Manufacturers Association - India
- TeaM Sual Corporation - Philippines
- Aboitiz Power Corporation - Philippines
- Power Finance Corporation Ltd., India
- Bahari Cakrawala Sebuku - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Edison Trading Spa - Italy
- Semirara Mining and Power Corporation, Philippines
- Simpson Spence & Young - Indonesia
- Bulk Trading Sa - Switzerland
- Kobexindo Tractors - Indoneisa
- Interocean Group of Companies - India
- SMC Global Power, Philippines
- Oldendorff Carriers - Singapore
- Latin American Coal - Colombia
- Metalloyd Limited - United Kingdom
- Central Java Power - Indonesia
- Global Green Power PLC Corporation, Philippines
- Ministry of Transport, Egypt
- London Commodity Brokers - England
- Commonwealth Bank - Australia
- Kalimantan Lumbung Energi - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Salva Resources Pvt Ltd - India
- India Bulls Power Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Africa Commodities Group - South Africa
- SN Aboitiz Power Inc, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Makarim & Taira - Indonesia
- Merrill Lynch Commodities Europe
- Asmin Koalindo Tuhup - Indonesia
- Semirara Mining Corp, Philippines
- OPG Power Generation Pvt Ltd - India
- Indian Energy Exchange, India
- Meralco Power Generation, Philippines
- Gujarat Electricity Regulatory Commission - India
- Directorate Of Revenue Intelligence - India
- Tamil Nadu electricity Board
- Sree Jayajothi Cements Limited - India
- Binh Thuan Hamico - Vietnam
- MS Steel International - UAE
- The Treasury - Australian Government
- PetroVietnam Power Coal Import and Supply Company
- Electricity Authority, New Zealand
- Electricity Generating Authority of Thailand
- San Jose City I Power Corp, Philippines
- Mercuria Energy - Indonesia
- Coal and Oil Company - UAE
- Baramulti Group, Indonesia
- Iligan Light & Power Inc, Philippines
- Medco Energi Mining Internasional
- Offshore Bulk Terminal Pte Ltd, Singapore
- Holcim Trading Pte Ltd - Singapore
- Borneo Indobara - Indonesia
- CNBM International Corporation - China
- TNB Fuel Sdn Bhd - Malaysia
- Samtan Co., Ltd - South Korea
- Ind-Barath Power Infra Limited - India
- Mjunction Services Limited - India
- Billiton Holdings Pty Ltd - Australia
- IHS Mccloskey Coal Group - USA
- Riau Bara Harum - Indonesia
- Orica Australia Pty. Ltd.
- Ambuja Cements Ltd - India
- Sical Logistics Limited - India
- Gujarat Sidhee Cement - India
- Vedanta Resources Plc - India
- Karaikal Port Pvt Ltd - India
- Energy Development Corp, Philippines
- LBH Netherlands Bv - Netherlands
- Jorong Barutama Greston.PT - Indonesia
- Attock Cement Pakistan Limited
- Cigading International Bulk Terminal - Indonesia
- Rio Tinto Coal - Australia
- GMR Energy Limited - India
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