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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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Saturday, 28 March 15
THE DRY BULK FLEET AT BREAKING POINT - CLARKSONS
The severe oversupply in the bulkcarrier fleet has contributed to the current trough in the dry bulk market, putting considerable financial pressur ...
Friday, 27 March 15
INDONESIA: NEW REGULATION REQUIRES LETTER OF CREDIT FOR EXPORT OF PRODUCTS FROM NATURAL RESOURCES
The Minister of Trade issued Ministerial Regulation No. 04/M-DAG/PER/1/2015 (“Regulation No. 4/2015”) on 5 January 2015. Regulati ...
Friday, 27 March 15
WEEKLY U.S COAL OUTPUT FALLS 1.7% W-W; 7.9% Y-Y
COALspot.com – United States the world's one of the largest coal producers, produced approximately totaled an estimated 18.2 million ...
Thursday, 26 March 15
CHINA IRON ORE IMPORT FOR THE FIRST 2 MONTHS DECLINED BY 1.2 % Y-O-Y; PANAMAX AUSSIE/CHINA ROUNDS BEING FIXED IN THE $4 -5K RANGE - FEARNLEYS
Handy
There has been more activity in both hemispheres this week. Especially the USG market has picked up with more cargoes for prompter dates en ...
Thursday, 26 March 15
RATES FOR THE SMALLER SIZE SEGMENT CONTINUED TO IMPROVE LAST WEEK - INTERMODAL
To see green across the board is a rare occurrence in the Dry Bulk market nowadays and while the upside in which last week closed off is not of the ...
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- Offshore Bulk Terminal Pte Ltd, Singapore
- Orica Mining Services - Indonesia
- Africa Commodities Group - South Africa
- Bharathi Cement Corporation - India
- LBH Netherlands Bv - Netherlands
- Semirara Mining and Power Corporation, Philippines
- Antam Resourcindo - Indonesia
- Indogreen Group - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Kalimantan Lumbung Energi - Indonesia
- Rio Tinto Coal - Australia
- Formosa Plastics Group - Taiwan
- Ministry of Transport, Egypt
- Meralco Power Generation, Philippines
- Altura Mining Limited, Indonesia
- Indonesian Coal Mining Association
- Energy Link Ltd, New Zealand
- Indo Tambangraya Megah - Indonesia
- Iligan Light & Power Inc, Philippines
- Global Business Power Corporation, Philippines
- Eastern Energy - Thailand
- Global Green Power PLC Corporation, Philippines
- Uttam Galva Steels Limited - India
- McConnell Dowell - Australia
- Chettinad Cement Corporation Ltd - India
- Pendopo Energi Batubara - Indonesia
- Bangladesh Power Developement Board
- Malabar Cements Ltd - India
- Electricity Generating Authority of Thailand
- Commonwealth Bank - Australia
- Directorate Of Revenue Intelligence - India
- India Bulls Power Limited - India
- Rashtriya Ispat Nigam Limited - India
- International Coal Ventures Pvt Ltd - India
- Gujarat Sidhee Cement - India
- Cigading International Bulk Terminal - Indonesia
- Riau Bara Harum - Indonesia
- Bhatia International Limited - India
- Carbofer General Trading SA - India
- PowerSource Philippines DevCo
- SN Aboitiz Power Inc, Philippines
- Vedanta Resources Plc - India
- London Commodity Brokers - England
- Neyveli Lignite Corporation Ltd, - India
- Eastern Coal Council - USA
- Kideco Jaya Agung - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Banpu Public Company Limited - Thailand
- Leighton Contractors Pty Ltd - Australia
- Price Waterhouse Coopers - Russia
- Power Finance Corporation Ltd., India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- TNB Fuel Sdn Bhd - Malaysia
- Maharashtra Electricity Regulatory Commission - India
- Borneo Indobara - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Coastal Gujarat Power Limited - India
- Cement Manufacturers Association - India
- Bhushan Steel Limited - India
- Manunggal Multi Energi - Indonesia
- Maheswari Brothers Coal Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Salva Resources Pvt Ltd - India
- Essar Steel Hazira Ltd - India
- Lanco Infratech Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Jaiprakash Power Ventures ltd
- Mercuria Energy - Indonesia
- TeaM Sual Corporation - Philippines
- Sinarmas Energy and Mining - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Simpson Spence & Young - Indonesia
- Aboitiz Power Corporation - Philippines
- The State Trading Corporation of India Ltd
- Intertek Mineral Services - Indonesia
- Globalindo Alam Lestari - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- PTC India Limited - India
- San Jose City I Power Corp, Philippines
- Mintek Dendrill Indonesia
- South Luzon Thermal Energy Corporation
- SMC Global Power, Philippines
- Orica Australia Pty. Ltd.
- Makarim & Taira - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Economic Council, Georgia
- Kumho Petrochemical, South Korea
- Tamil Nadu electricity Board
- Sree Jayajothi Cements Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Petron Corporation, Philippines
- Romanian Commodities Exchange
- Parry Sugars Refinery, India
- Ind-Barath Power Infra Limited - India
- Electricity Authority, New Zealand
- Australian Coal Association
- Oldendorff Carriers - Singapore
- Straits Asia Resources Limited - Singapore
- Bukit Baiduri Energy - Indonesia
- Global Coal Blending Company Limited - Australia
- Parliament of New Zealand
- Meenaskhi Energy Private Limited - India
- Kartika Selabumi Mining - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bukit Makmur.PT - Indonesia
- Coalindo Energy - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Binh Thuan Hamico - Vietnam
- Sarangani Energy Corporation, Philippines
- Toyota Tsusho Corporation, Japan
- Wilmar Investment Holdings
- ICICI Bank Limited - India
- The University of Queensland
- CIMB Investment Bank - Malaysia
- Petrochimia International Co. Ltd.- Taiwan
- Madhucon Powers Ltd - India
- Minerals Council of Australia
- Attock Cement Pakistan Limited
- Standard Chartered Bank - UAE
- Kapuas Tunggal Persada - Indonesia
- Marubeni Corporation - India
- Bukit Asam (Persero) Tbk - Indonesia
- Central Java Power - Indonesia
- Interocean Group of Companies - India
- Directorate General of MIneral and Coal - Indonesia
- Larsen & Toubro Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Mercator Lines Limited - India
- Central Electricity Authority - India
- PNOC Exploration Corporation - Philippines
- Grasim Industreis Ltd - India
- Port Waratah Coal Services - Australia
- Thai Mozambique Logistica
- Billiton Holdings Pty Ltd - Australia
- Wood Mackenzie - Singapore
- Australian Commodity Traders Exchange
- Ceylon Electricity Board - Sri Lanka
- VISA Power Limited - India
- Miang Besar Coal Terminal - Indonesia
- Dalmia Cement Bharat India
- Aditya Birla Group - India
- Sojitz Corporation - Japan
- GVK Power & Infra Limited - India
- Vizag Seaport Private Limited - India
- Gujarat Electricity Regulatory Commission - India
- Edison Trading Spa - Italy
- Mjunction Services Limited - India
- IEA Clean Coal Centre - UK
- Independent Power Producers Association of India
- Planning Commission, India
- Kaltim Prima Coal - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Karaikal Port Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- IHS Mccloskey Coal Group - USA
- Deloitte Consulting - India
- Therma Luzon, Inc, Philippines
- Coal and Oil Company - UAE
- White Energy Company Limited
- Asmin Koalindo Tuhup - Indonesia
- European Bulk Services B.V. - Netherlands
- Metalloyd Limited - United Kingdom
- GAC Shipping (India) Pvt Ltd
- ASAPP Information Group - India
- Xindia Steels Limited - India
- Kobexindo Tractors - Indoneisa
- PetroVietnam Power Coal Import and Supply Company
- Anglo American - United Kingdom
- Trasteel International SA, Italy
- The Treasury - Australian Government
- Bayan Resources Tbk. - Indonesia
- Tata Chemicals Ltd - India
- GMR Energy Limited - India
- Jindal Steel & Power Ltd - India
- MS Steel International - UAE
- Thiess Contractors Indonesia
- Sindya Power Generating Company Private Ltd
- Energy Development Corp, Philippines
- Siam City Cement - Thailand
- Goldman Sachs - Singapore
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Star Paper Mills Limited - India
- Singapore Mercantile Exchange
- Videocon Industries ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Baramulti Group, Indonesia
- Semirara Mining Corp, Philippines
- Ambuja Cements Ltd - India
- Ministry of Mines - Canada
- Chamber of Mines of South Africa
- Indian Oil Corporation Limited
- Vijayanagar Sugar Pvt Ltd - India
- Barasentosa Lestari - Indonesia
- Medco Energi Mining Internasional
- Sakthi Sugars Limited - India
- Kepco SPC Power Corporation, Philippines
- Posco Energy - South Korea
- Latin American Coal - Colombia
- Timah Investasi Mineral - Indoneisa
- Merrill Lynch Commodities Europe
- Savvy Resources Ltd - HongKong
- Karbindo Abesyapradhi - Indoneisa
- CNBM International Corporation - China
- New Zealand Coal & Carbon
- Heidelberg Cement - Germany
- Ministry of Finance - Indonesia
- SMG Consultants - Indonesia
- Georgia Ports Authority, United States
- Indika Energy - Indonesia
- Sical Logistics Limited - India
- Renaissance Capital - South Africa
- Agrawal Coal Company - India
- Bhoruka Overseas - Indonesia
- Siam City Cement PLC, Thailand
- OPG Power Generation Pvt Ltd - India
- Samtan Co., Ltd - South Korea
- Indian Energy Exchange, India
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