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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, 16 October 14
PANAMAX OWNERS RECEIVE A PREMIUM FOR GOING TO INDIA VIA INDONESIA - FEARNLEYS AS
Handy
The Handy/Supra market continues to slide in both hemispheres, said Fearnleys AS in its latest week report. In the Atlantic we see rates co ...
Thursday, 16 October 14
ARE WE GOING TO SHOOT OURSELVES IN THE FOOT ONCE AGAIN? - PANOS MAKRINOS
As the East part of our globe was coming back from its October holidays last week, everyone expected that the Dry Bulk market would follow suit and ...
Wednesday, 15 October 14
PANAMAX: ACTIVITY IN THE PACIFIC WAS UNIMPRESSIVE
The Dry Bulk market noted another weekly decline last week, while the BDI moved below 1,000 points taking down with it expectations that a post hol ...
Wednesday, 15 October 14
INDONESIAN COAL PRICE REFERENCE FELL TO FRESH MULTI-YEAR LOWS IN OCTOBER
COALspot.com - The Ministry of Energy & Mineral Resources of Indonesia revised down the coal bench mark price once again in October 2014.
...
Wednesday, 15 October 14
DRY BULK SHIPPING: RATE IMPROVEMENTS ARRIVED AS FORECAST, BUT UNCERTAINTY MOUNTS FOR 2015 DEMAND - BIMCO
BIMCO released its latest short term assessment of the dry bulk market, estimating that over the October-November period, the level of Capesize TC ...
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- CNBM International Corporation - China
- Kaltim Prima Coal - Indonesia
- IHS Mccloskey Coal Group - USA
- Karbindo Abesyapradhi - Indoneisa
- Attock Cement Pakistan Limited
- Cement Manufacturers Association - India
- New Zealand Coal & Carbon
- Ministry of Mines - Canada
- Australian Commodity Traders Exchange
- Jorong Barutama Greston.PT - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Anglo American - United Kingdom
- Sindya Power Generating Company Private Ltd
- Bukit Asam (Persero) Tbk - Indonesia
- Kepco SPC Power Corporation, Philippines
- Marubeni Corporation - India
- SN Aboitiz Power Inc, Philippines
- Madhucon Powers Ltd - India
- Indogreen Group - Indonesia
- Merrill Lynch Commodities Europe
- The Treasury - Australian Government
- Jaiprakash Power Ventures ltd
- Makarim & Taira - Indonesia
- Bhushan Steel Limited - India
- Leighton Contractors Pty Ltd - Australia
- Edison Trading Spa - Italy
- IEA Clean Coal Centre - UK
- Central Java Power - Indonesia
- Meralco Power Generation, Philippines
- Ambuja Cements Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- South Luzon Thermal Energy Corporation
- Mercuria Energy - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Vizag Seaport Private Limited - India
- Videocon Industries ltd - India
- Economic Council, Georgia
- Trasteel International SA, Italy
- Metalloyd Limited - United Kingdom
- Bharathi Cement Corporation - India
- Agrawal Coal Company - India
- Gujarat Mineral Development Corp Ltd - India
- Minerals Council of Australia
- Thai Mozambique Logistica
- Star Paper Mills Limited - India
- ICICI Bank Limited - India
- Salva Resources Pvt Ltd - India
- Simpson Spence & Young - Indonesia
- SMG Consultants - Indonesia
- Bhatia International Limited - India
- Bukit Makmur.PT - Indonesia
- Formosa Plastics Group - Taiwan
- Riau Bara Harum - Indonesia
- Bangladesh Power Developement Board
- Kumho Petrochemical, South Korea
- Timah Investasi Mineral - Indoneisa
- Binh Thuan Hamico - Vietnam
- GMR Energy Limited - India
- The State Trading Corporation of India Ltd
- Kartika Selabumi Mining - Indonesia
- Sical Logistics Limited - India
- Eastern Energy - Thailand
- Carbofer General Trading SA - India
- Toyota Tsusho Corporation, Japan
- CIMB Investment Bank - Malaysia
- ASAPP Information Group - India
- Pipit Mutiara Jaya. PT, Indonesia
- Electricity Generating Authority of Thailand
- Kapuas Tunggal Persada - Indonesia
- Planning Commission, India
- Grasim Industreis Ltd - India
- VISA Power Limited - India
- Singapore Mercantile Exchange
- Gujarat Electricity Regulatory Commission - India
- Manunggal Multi Energi - Indonesia
- Kobexindo Tractors - Indoneisa
- Electricity Authority, New Zealand
- AsiaOL BioFuels Corp., Philippines
- Antam Resourcindo - Indonesia
- India Bulls Power Limited - India
- Sinarmas Energy and Mining - Indonesia
- White Energy Company Limited
- Coastal Gujarat Power Limited - India
- Latin American Coal - Colombia
- Meenaskhi Energy Private Limited - India
- Siam City Cement - Thailand
- GN Power Mariveles Coal Plant, Philippines
- Orica Mining Services - Indonesia
- Global Green Power PLC Corporation, Philippines
- Essar Steel Hazira Ltd - India
- Coal and Oil Company - UAE
- TNB Fuel Sdn Bhd - Malaysia
- Price Waterhouse Coopers - Russia
- Sojitz Corporation - Japan
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Romanian Commodities Exchange
- Alfred C Toepfer International GmbH - Germany
- Vijayanagar Sugar Pvt Ltd - India
- Vedanta Resources Plc - India
- Billiton Holdings Pty Ltd - Australia
- Intertek Mineral Services - Indonesia
- Indian Energy Exchange, India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Semirara Mining and Power Corporation, Philippines
- Power Finance Corporation Ltd., India
- Malabar Cements Ltd - India
- Indika Energy - Indonesia
- PNOC Exploration Corporation - Philippines
- Bhoruka Overseas - Indonesia
- LBH Netherlands Bv - Netherlands
- Neyveli Lignite Corporation Ltd, - India
- Karaikal Port Pvt Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Africa Commodities Group - South Africa
- Thiess Contractors Indonesia
- Banpu Public Company Limited - Thailand
- Savvy Resources Ltd - HongKong
- Ministry of Finance - Indonesia
- Commonwealth Bank - Australia
- Petrochimia International Co. Ltd.- Taiwan
- Mintek Dendrill Indonesia
- Maheswari Brothers Coal Limited - India
- Tata Chemicals Ltd - India
- Global Business Power Corporation, Philippines
- MS Steel International - UAE
- Tamil Nadu electricity Board
- Asmin Koalindo Tuhup - Indonesia
- Bayan Resources Tbk. - Indonesia
- Parry Sugars Refinery, India
- Energy Development Corp, Philippines
- Georgia Ports Authority, United States
- Barasentosa Lestari - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Dalmia Cement Bharat India
- Pendopo Energi Batubara - Indonesia
- Sarangani Energy Corporation, Philippines
- Standard Chartered Bank - UAE
- Wilmar Investment Holdings
- McConnell Dowell - Australia
- Bulk Trading Sa - Switzerland
- Samtan Co., Ltd - South Korea
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Indian Oil Corporation Limited
- Aboitiz Power Corporation - Philippines
- The University of Queensland
- Renaissance Capital - South Africa
- Semirara Mining Corp, Philippines
- Sakthi Sugars Limited - India
- Medco Energi Mining Internasional
- Eastern Coal Council - USA
- Mjunction Services Limited - India
- Cigading International Bulk Terminal - Indonesia
- Bukit Baiduri Energy - Indonesia
- Energy Link Ltd, New Zealand
- Uttam Galva Steels Limited - India
- Krishnapatnam Port Company Ltd. - India
- Posco Energy - South Korea
- Independent Power Producers Association of India
- Oldendorff Carriers - Singapore
- Globalindo Alam Lestari - Indonesia
- Port Waratah Coal Services - Australia
- Goldman Sachs - Singapore
- Iligan Light & Power Inc, Philippines
- Global Coal Blending Company Limited - Australia
- Jindal Steel & Power Ltd - India
- Central Electricity Authority - India
- Straits Asia Resources Limited - Singapore
- European Bulk Services B.V. - Netherlands
- Altura Mining Limited, Indonesia
- PTC India Limited - India
- GVK Power & Infra Limited - India
- Interocean Group of Companies - India
- Indo Tambangraya Megah - Indonesia
- San Jose City I Power Corp, Philippines
- Deloitte Consulting - India
- Indonesian Coal Mining Association
- Chettinad Cement Corporation Ltd - India
- OPG Power Generation Pvt Ltd - India
- Ind-Barath Power Infra Limited - India
- London Commodity Brokers - England
- GAC Shipping (India) Pvt Ltd
- Australian Coal Association
- Mercator Lines Limited - India
- Larsen & Toubro Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Rio Tinto Coal - Australia
- Kohat Cement Company Ltd. - Pakistan
- Wood Mackenzie - Singapore
- Baramulti Group, Indonesia
- TeaM Sual Corporation - Philippines
- Parliament of New Zealand
- International Coal Ventures Pvt Ltd - India
- Therma Luzon, Inc, Philippines
- Heidelberg Cement - Germany
- Sree Jayajothi Cements Limited - India
- PowerSource Philippines DevCo
- Petron Corporation, Philippines
- Borneo Indobara - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Siam City Cement PLC, Thailand
- Aditya Birla Group - India
- Ministry of Transport, Egypt
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Xindia Steels Limited - India
- Coalindo Energy - Indonesia
- Orica Australia Pty. Ltd.
- Chamber of Mines of South Africa
- Directorate Of Revenue Intelligence - India
- Lanco Infratech Ltd - India
- Kideco Jaya Agung - Indonesia
- Gujarat Sidhee Cement - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Maharashtra Electricity Regulatory Commission - India
- PetroVietnam Power Coal Import and Supply Company
- SMC Global Power, Philippines
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