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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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- Offshore Bulk Terminal Pte Ltd, Singapore
- Meralco Power Generation, Philippines
- Bhatia International Limited - India
- Kapuas Tunggal Persada - Indonesia
- Siam City Cement PLC, Thailand
- Deloitte Consulting - India
- Neyveli Lignite Corporation Ltd, - India
- Chamber of Mines of South Africa
- Gujarat Sidhee Cement - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Global Coal Blending Company Limited - Australia
- Jaiprakash Power Ventures ltd
- Jorong Barutama Greston.PT - Indonesia
- Central Java Power - Indonesia
- Vedanta Resources Plc - India
- Minerals Council of Australia
- Australian Coal Association
- Economic Council, Georgia
- Sarangani Energy Corporation, Philippines
- Singapore Mercantile Exchange
- Global Green Power PLC Corporation, Philippines
- Attock Cement Pakistan Limited
- Sakthi Sugars Limited - India
- TeaM Sual Corporation - Philippines
- Ind-Barath Power Infra Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Petron Corporation, Philippines
- Ministry of Finance - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Timah Investasi Mineral - Indoneisa
- Larsen & Toubro Limited - India
- Holcim Trading Pte Ltd - Singapore
- Kepco SPC Power Corporation, Philippines
- Semirara Mining and Power Corporation, Philippines
- Africa Commodities Group - South Africa
- Trasteel International SA, Italy
- Kaltim Prima Coal - Indonesia
- Banpu Public Company Limited - Thailand
- Bhoruka Overseas - Indonesia
- Chettinad Cement Corporation Ltd - India
- Rio Tinto Coal - Australia
- Therma Luzon, Inc, Philippines
- Goldman Sachs - Singapore
- Bukit Asam (Persero) Tbk - Indonesia
- Parry Sugars Refinery, India
- GAC Shipping (India) Pvt Ltd
- San Jose City I Power Corp, Philippines
- Latin American Coal - Colombia
- Sindya Power Generating Company Private Ltd
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Independent Power Producers Association of India
- IHS Mccloskey Coal Group - USA
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ceylon Electricity Board - Sri Lanka
- Dalmia Cement Bharat India
- Altura Mining Limited, Indonesia
- Samtan Co., Ltd - South Korea
- Uttam Galva Steels Limited - India
- Makarim & Taira - Indonesia
- Xindia Steels Limited - India
- PetroVietnam Power Coal Import and Supply Company
- SMG Consultants - Indonesia
- Grasim Industreis Ltd - India
- Metalloyd Limited - United Kingdom
- Kalimantan Lumbung Energi - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Ambuja Cements Ltd - India
- Siam City Cement - Thailand
- Orica Australia Pty. Ltd.
- Indika Energy - Indonesia
- Indian Oil Corporation Limited
- Mintek Dendrill Indonesia
- Oldendorff Carriers - Singapore
- Power Finance Corporation Ltd., India
- The University of Queensland
- Bharathi Cement Corporation - India
- Renaissance Capital - South Africa
- White Energy Company Limited
- Sojitz Corporation - Japan
- Coalindo Energy - Indonesia
- Medco Energi Mining Internasional
- Ministry of Mines - Canada
- The Treasury - Australian Government
- Eastern Coal Council - USA
- Orica Mining Services - Indonesia
- Pendopo Energi Batubara - Indonesia
- Anglo American - United Kingdom
- London Commodity Brokers - England
- GVK Power & Infra Limited - India
- Wilmar Investment Holdings
- Malabar Cements Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Indonesian Coal Mining Association
- The State Trading Corporation of India Ltd
- Lanco Infratech Ltd - India
- GMR Energy Limited - India
- Carbofer General Trading SA - India
- Indian Energy Exchange, India
- Edison Trading Spa - Italy
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Riau Bara Harum - Indonesia
- Thai Mozambique Logistica
- Barasentosa Lestari - Indonesia
- Vizag Seaport Private Limited - India
- Straits Asia Resources Limited - Singapore
- OPG Power Generation Pvt Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- CNBM International Corporation - China
- Central Electricity Authority - India
- Sinarmas Energy and Mining - Indonesia
- LBH Netherlands Bv - Netherlands
- Bank of Tokyo Mitsubishi UFJ Ltd
- Commonwealth Bank - Australia
- Rashtriya Ispat Nigam Limited - India
- European Bulk Services B.V. - Netherlands
- Intertek Mineral Services - Indonesia
- PNOC Exploration Corporation - Philippines
- Kumho Petrochemical, South Korea
- Madhucon Powers Ltd - India
- Manunggal Multi Energi - Indonesia
- Tamil Nadu electricity Board
- Interocean Group of Companies - India
- Miang Besar Coal Terminal - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Marubeni Corporation - India
- Energy Link Ltd, New Zealand
- Gujarat Electricity Regulatory Commission - India
- Alfred C Toepfer International GmbH - Germany
- Sical Logistics Limited - India
- Bulk Trading Sa - Switzerland
- McConnell Dowell - Australia
- SMC Global Power, Philippines
- Ministry of Transport, Egypt
- Karaikal Port Pvt Ltd - India
- Videocon Industries ltd - India
- Australian Commodity Traders Exchange
- SN Aboitiz Power Inc, Philippines
- Cement Manufacturers Association - India
- Maheswari Brothers Coal Limited - India
- Planning Commission, India
- Salva Resources Pvt Ltd - India
- Bayan Resources Tbk. - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Toyota Tsusho Corporation, Japan
- Cigading International Bulk Terminal - Indonesia
- Borneo Indobara - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Energy Development Corp, Philippines
- Thiess Contractors Indonesia
- Krishnapatnam Port Company Ltd. - India
- Indogreen Group - Indonesia
- Mjunction Services Limited - India
- Formosa Plastics Group - Taiwan
- Coal and Oil Company - UAE
- CIMB Investment Bank - Malaysia
- Global Business Power Corporation, Philippines
- Semirara Mining Corp, Philippines
- International Coal Ventures Pvt Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Globalindo Alam Lestari - Indonesia
- Jindal Steel & Power Ltd - India
- IEA Clean Coal Centre - UK
- Kideco Jaya Agung - Indonesia
- Baramulti Group, Indonesia
- Georgia Ports Authority, United States
- Electricity Authority, New Zealand
- Essar Steel Hazira Ltd - India
- Savvy Resources Ltd - HongKong
- Agrawal Coal Company - India
- Aboitiz Power Corporation - Philippines
- Gujarat Mineral Development Corp Ltd - India
- Kobexindo Tractors - Indoneisa
- Indo Tambangraya Megah - Indonesia
- India Bulls Power Limited - India
- Standard Chartered Bank - UAE
- Bhushan Steel Limited - India
- Bukit Makmur.PT - Indonesia
- PowerSource Philippines DevCo
- Bangladesh Power Developement Board
- Tata Chemicals Ltd - India
- MS Steel International - UAE
- Bahari Cakrawala Sebuku - Indonesia
- Meenaskhi Energy Private Limited - India
- South Luzon Thermal Energy Corporation
- Iligan Light & Power Inc, Philippines
- Bukit Baiduri Energy - Indonesia
- ASAPP Information Group - India
- VISA Power Limited - India
- Heidelberg Cement - Germany
- Coastal Gujarat Power Limited - India
- Antam Resourcindo - Indonesia
- Port Waratah Coal Services - Australia
- Directorate General of MIneral and Coal - Indonesia
- Merrill Lynch Commodities Europe
- Eastern Energy - Thailand
- Directorate Of Revenue Intelligence - India
- Posco Energy - South Korea
- Sree Jayajothi Cements Limited - India
- Kartika Selabumi Mining - Indonesia
- Price Waterhouse Coopers - Russia
- ICICI Bank Limited - India
- Electricity Generating Authority of Thailand
- Karbindo Abesyapradhi - Indoneisa
- Wood Mackenzie - Singapore
- Star Paper Mills Limited - India
- Leighton Contractors Pty Ltd - Australia
- Petrochimia International Co. Ltd.- Taiwan
- Binh Thuan Hamico - Vietnam
- PTC India Limited - India
- Mercuria Energy - Indonesia
- Romanian Commodities Exchange
- Parliament of New Zealand
- Aditya Birla Group - India
- New Zealand Coal & Carbon
- Simpson Spence & Young - Indonesia
- Mercator Lines Limited - India
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