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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, 12 February 15
DRY BULK OWNERS SCRAP MORE VESSELS, AS MARKET REACHES HISTORICAL LOWS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market has reached historical lows this week, with the Baltic Dry Index (BDI) now trading at levels below operating expense levels for ...
Thursday, 12 February 15
INDONESIAN COAL PRICE REFERENCE INCHED DOWN 1.44% IN FEBRUARY
COALspot.com - The Ministry of Energy & Mineral Resources of Indonesia revised down Indonesian coal bench mark price this month to US$ 62.92 pe ...
Thursday, 12 February 15
NEWBUILDING ORDERING ACTIVITY DRAGS ON, AS OWNERS ARE LOOKING FOR LOWER PRICES - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
Ship owners appear to be waiting for lower prices in their dealings with Asian shipyards, as the dry bulk market is at historical lows. According t ...
Wednesday, 11 February 15
DRY BULK MARKET REMAINED UNDER PRESSURE : STABILIZING CAPE MARKET HARDLY HELPED SENTIMENT
COALspot.com: The Dry Bulk market remained under pressure last week, while the stabilizing Cape market hardly helped sentiment.
Greece based s ...
Wednesday, 11 February 15
BDI HITTING THE ALL-TIME LOW; FFA MARKETS NOT SHOWING ANY POSITIVE SIGNS
With the BDI hitting the all-time low and with FFA markets not showing any positive signs for a possible recovery in the near future, pessimism is ...
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- Kumho Petrochemical, South Korea
- Posco Energy - South Korea
- Global Coal Blending Company Limited - Australia
- Edison Trading Spa - Italy
- Riau Bara Harum - Indonesia
- Singapore Mercantile Exchange
- Bhushan Steel Limited - India
- London Commodity Brokers - England
- Videocon Industries ltd - India
- Globalindo Alam Lestari - Indonesia
- Thai Mozambique Logistica
- Tata Chemicals Ltd - India
- Port Waratah Coal Services - Australia
- Bukit Asam (Persero) Tbk - Indonesia
- Minerals Council of Australia
- Kepco SPC Power Corporation, Philippines
- Aboitiz Power Corporation - Philippines
- Ceylon Electricity Board - Sri Lanka
- Toyota Tsusho Corporation, Japan
- Vijayanagar Sugar Pvt Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Independent Power Producers Association of India
- Pipit Mutiara Jaya. PT, Indonesia
- Barasentosa Lestari - Indonesia
- Wood Mackenzie - Singapore
- Commonwealth Bank - Australia
- Heidelberg Cement - Germany
- Kartika Selabumi Mining - Indonesia
- Power Finance Corporation Ltd., India
- Vedanta Resources Plc - India
- Grasim Industreis Ltd - India
- Baramulti Group, Indonesia
- Malabar Cements Ltd - India
- Parliament of New Zealand
- Merrill Lynch Commodities Europe
- Neyveli Lignite Corporation Ltd, - India
- Central Java Power - Indonesia
- Kaltim Prima Coal - Indonesia
- MS Steel International - UAE
- PNOC Exploration Corporation - Philippines
- Chamber of Mines of South Africa
- Manunggal Multi Energi - Indonesia
- Iligan Light & Power Inc, Philippines
- Trasteel International SA, Italy
- TNB Fuel Sdn Bhd - Malaysia
- Uttam Galva Steels Limited - India
- Siam City Cement - Thailand
- SMC Global Power, Philippines
- SMG Consultants - Indonesia
- OPG Power Generation Pvt Ltd - India
- IHS Mccloskey Coal Group - USA
- Jorong Barutama Greston.PT - Indonesia
- Orica Australia Pty. Ltd.
- Georgia Ports Authority, United States
- Bukit Makmur.PT - Indonesia
- PTC India Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Timah Investasi Mineral - Indoneisa
- Energy Link Ltd, New Zealand
- Makarim & Taira - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Coastal Gujarat Power Limited - India
- Essar Steel Hazira Ltd - India
- Bukit Baiduri Energy - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Meenaskhi Energy Private Limited - India
- IEA Clean Coal Centre - UK
- Mintek Dendrill Indonesia
- Eastern Coal Council - USA
- Sojitz Corporation - Japan
- Petron Corporation, Philippines
- Bhoruka Overseas - Indonesia
- Ministry of Transport, Egypt
- Binh Thuan Hamico - Vietnam
- Bulk Trading Sa - Switzerland
- CNBM International Corporation - China
- Sree Jayajothi Cements Limited - India
- Samtan Co., Ltd - South Korea
- Rio Tinto Coal - Australia
- Ministry of Mines - Canada
- Altura Mining Limited, Indonesia
- Gujarat Electricity Regulatory Commission - India
- Pendopo Energi Batubara - Indonesia
- Thiess Contractors Indonesia
- Miang Besar Coal Terminal - Indonesia
- Therma Luzon, Inc, Philippines
- LBH Netherlands Bv - Netherlands
- Marubeni Corporation - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Xindia Steels Limited - India
- Indo Tambangraya Megah - Indonesia
- Star Paper Mills Limited - India
- Formosa Plastics Group - Taiwan
- PowerSource Philippines DevCo
- Sakthi Sugars Limited - India
- Deloitte Consulting - India
- Interocean Group of Companies - India
- TeaM Sual Corporation - Philippines
- Ind-Barath Power Infra Limited - India
- Cement Manufacturers Association - India
- Economic Council, Georgia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Mjunction Services Limited - India
- Electricity Authority, New Zealand
- Planning Commission, India
- ASAPP Information Group - India
- Romanian Commodities Exchange
- Sarangani Energy Corporation, Philippines
- GVK Power & Infra Limited - India
- Siam City Cement PLC, Thailand
- Straits Asia Resources Limited - Singapore
- New Zealand Coal & Carbon
- Sical Logistics Limited - India
- Antam Resourcindo - Indonesia
- Borneo Indobara - Indonesia
- Lanco Infratech Ltd - India
- Electricity Generating Authority of Thailand
- Indian Oil Corporation Limited
- Asmin Koalindo Tuhup - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Sindya Power Generating Company Private Ltd
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- The State Trading Corporation of India Ltd
- McConnell Dowell - Australia
- Renaissance Capital - South Africa
- Rashtriya Ispat Nigam Limited - India
- Global Green Power PLC Corporation, Philippines
- Eastern Energy - Thailand
- The University of Queensland
- Intertek Mineral Services - Indonesia
- India Bulls Power Limited - India
- Agrawal Coal Company - India
- Gujarat Mineral Development Corp Ltd - India
- Metalloyd Limited - United Kingdom
- Salva Resources Pvt Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Gujarat Sidhee Cement - India
- Mercator Lines Limited - India
- International Coal Ventures Pvt Ltd - India
- Indika Energy - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Leighton Contractors Pty Ltd - Australia
- GN Power Mariveles Coal Plant, Philippines
- Meralco Power Generation, Philippines
- Energy Development Corp, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Oldendorff Carriers - Singapore
- Ambuja Cements Ltd - India
- Price Waterhouse Coopers - Russia
- Bharathi Cement Corporation - India
- Semirara Mining and Power Corporation, Philippines
- Chettinad Cement Corporation Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- CIMB Investment Bank - Malaysia
- Goldman Sachs - Singapore
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- European Bulk Services B.V. - Netherlands
- Attock Cement Pakistan Limited
- Central Electricity Authority - India
- Latin American Coal - Colombia
- Billiton Holdings Pty Ltd - Australia
- Madhucon Powers Ltd - India
- Maheswari Brothers Coal Limited - India
- Directorate Of Revenue Intelligence - India
- Holcim Trading Pte Ltd - Singapore
- Cigading International Bulk Terminal - Indonesia
- Tamil Nadu electricity Board
- Vizag Seaport Private Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- VISA Power Limited - India
- Ministry of Finance - Indonesia
- Medco Energi Mining Internasional
- The Treasury - Australian Government
- GMR Energy Limited - India
- ICICI Bank Limited - India
- Aditya Birla Group - India
- Africa Commodities Group - South Africa
- Larsen & Toubro Limited - India
- Mercuria Energy - Indonesia
- Carbofer General Trading SA - India
- Kobexindo Tractors - Indoneisa
- San Jose City I Power Corp, Philippines
- Savvy Resources Ltd - HongKong
- Indonesian Coal Mining Association
- Anglo American - United Kingdom
- Asia Pacific Energy Resources Ventures Inc, Philippines
- GAC Shipping (India) Pvt Ltd
- Jindal Steel & Power Ltd - India
- Bangladesh Power Developement Board
- Coal and Oil Company - UAE
- SN Aboitiz Power Inc, Philippines
- Standard Chartered Bank - UAE
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bhatia International Limited - India
- South Luzon Thermal Energy Corporation
- Banpu Public Company Limited - Thailand
- Alfred C Toepfer International GmbH - Germany
- Indogreen Group - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Kideco Jaya Agung - Indonesia
- Semirara Mining Corp, Philippines
- Dalmia Cement Bharat India
- Global Business Power Corporation, Philippines
- Wilmar Investment Holdings
- Jaiprakash Power Ventures ltd
- Kalimantan Lumbung Energi - Indonesia
- Coalindo Energy - Indonesia
- Simpson Spence & Young - Indonesia
- Indian Energy Exchange, India
- Australian Coal Association
- Bayan Resources Tbk. - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Orica Mining Services - Indonesia
- Australian Commodity Traders Exchange
- Karaikal Port Pvt Ltd - India
- White Energy Company Limited
- Parry Sugars Refinery, India
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