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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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Friday, 26 September 14
NEWCASTLMAXES ARE THE MOST SOUGHT AFTER VESSELS BY SHIP OWNERS TODAY SAYS VESSELS VALUE
KNOWLEDGE TO ELEVATE
Determining a ship’s fair value can be a very tricky business, especially when you’re the one paying. As such ...
Thursday, 25 September 14
LACK OF COAL BUSINESS PUSHING DOWN PANAMAX EARNINGS IN PACIFIC
Handy
In the Atlantic we see rates steady climbing upwards. More coal cargoes out of USG and USEC are helping the TA market which is up some USD ...
Wednesday, 24 September 14
ADARO AGREED TO REDUCE ITS CONCESSION AREA TO 31,379.8 HECTARES
COALspot.com: PT Adaro Energy Tbk (Adaro Energy) today announced that, PT Adaro Indonesia (AI), its wholly owned subsidiary, entered into a M ...
Wednesday, 24 September 14
CAPESIZE: ACTIVITY IN BOTH BASINS WAS UNIMPRESSIVE
COALspot.com: The end of the week prior seems to have marked the tone for the days that followed, with the Dry Bulk market giving up a significant ...
Tuesday, 23 September 14
MEDCO TO INCREASE ITS COAL PRODUCTION NEXT YEAR
COALspot.com: PT Medco Energi Internasional is looking to increase its coal production next year, supported by the launch of operations at its Duta ...
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- White Energy Company Limited
- Global Business Power Corporation, Philippines
- Coalindo Energy - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Alfred C Toepfer International GmbH - Germany
- The Treasury - Australian Government
- Bank of Tokyo Mitsubishi UFJ Ltd
- International Coal Ventures Pvt Ltd - India
- The State Trading Corporation of India Ltd
- Marubeni Corporation - India
- Sakthi Sugars Limited - India
- Australian Commodity Traders Exchange
- Pipit Mutiara Jaya. PT, Indonesia
- Sojitz Corporation - Japan
- Indian Energy Exchange, India
- Maharashtra Electricity Regulatory Commission - India
- Larsen & Toubro Limited - India
- Bharathi Cement Corporation - India
- Binh Thuan Hamico - Vietnam
- Bulk Trading Sa - Switzerland
- Bangladesh Power Developement Board
- Indogreen Group - Indonesia
- Madhucon Powers Ltd - India
- Toyota Tsusho Corporation, Japan
- Aboitiz Power Corporation - Philippines
- Sindya Power Generating Company Private Ltd
- Interocean Group of Companies - India
- Kaltim Prima Coal - Indonesia
- Ministry of Transport, Egypt
- Uttam Galva Steels Limited - India
- Miang Besar Coal Terminal - Indonesia
- Latin American Coal - Colombia
- Meralco Power Generation, Philippines
- Thai Mozambique Logistica
- Singapore Mercantile Exchange
- Trasteel International SA, Italy
- Merrill Lynch Commodities Europe
- Bhatia International Limited - India
- Borneo Indobara - Indonesia
- Pendopo Energi Batubara - Indonesia
- Romanian Commodities Exchange
- Bahari Cakrawala Sebuku - Indonesia
- Power Finance Corporation Ltd., India
- San Jose City I Power Corp, Philippines
- Krishnapatnam Port Company Ltd. - India
- TNB Fuel Sdn Bhd - Malaysia
- Gujarat Electricity Regulatory Commission - India
- Energy Development Corp, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Energy Link Ltd, New Zealand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Timah Investasi Mineral - Indoneisa
- Metalloyd Limited - United Kingdom
- SN Aboitiz Power Inc, Philippines
- Vizag Seaport Private Limited - India
- Semirara Mining and Power Corporation, Philippines
- Global Green Power PLC Corporation, Philippines
- PNOC Exploration Corporation - Philippines
- Cigading International Bulk Terminal - Indonesia
- ICICI Bank Limited - India
- Deloitte Consulting - India
- Wilmar Investment Holdings
- Jorong Barutama Greston.PT - Indonesia
- Petron Corporation, Philippines
- Antam Resourcindo - Indonesia
- Kepco SPC Power Corporation, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- GAC Shipping (India) Pvt Ltd
- Chettinad Cement Corporation Ltd - India
- Formosa Plastics Group - Taiwan
- Malabar Cements Ltd - India
- Indian Oil Corporation Limited
- Africa Commodities Group - South Africa
- Ministry of Mines - Canada
- Gujarat Sidhee Cement - India
- Kalimantan Lumbung Energi - Indonesia
- PowerSource Philippines DevCo
- OPG Power Generation Pvt Ltd - India
- Price Waterhouse Coopers - Russia
- Central Java Power - Indonesia
- South Luzon Thermal Energy Corporation
- Posco Energy - South Korea
- Aditya Birla Group - India
- Standard Chartered Bank - UAE
- Siam City Cement - Thailand
- CIMB Investment Bank - Malaysia
- Iligan Light & Power Inc, Philippines
- Independent Power Producers Association of India
- Ministry of Finance - Indonesia
- Ind-Barath Power Infra Limited - India
- Port Waratah Coal Services - Australia
- GMR Energy Limited - India
- Electricity Generating Authority of Thailand
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- The University of Queensland
- Indonesian Coal Mining Association
- Samtan Co., Ltd - South Korea
- Asmin Koalindo Tuhup - Indonesia
- Kartika Selabumi Mining - Indonesia
- Coastal Gujarat Power Limited - India
- Central Electricity Authority - India
- Rio Tinto Coal - Australia
- Maheswari Brothers Coal Limited - India
- Minerals Council of Australia
- Bukit Baiduri Energy - Indonesia
- Agrawal Coal Company - India
- Straits Asia Resources Limited - Singapore
- Salva Resources Pvt Ltd - India
- TeaM Sual Corporation - Philippines
- Ambuja Cements Ltd - India
- IHS Mccloskey Coal Group - USA
- Jindal Steel & Power Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Therma Luzon, Inc, Philippines
- Cement Manufacturers Association - India
- VISA Power Limited - India
- India Bulls Power Limited - India
- Australian Coal Association
- LBH Netherlands Bv - Netherlands
- Makarim & Taira - Indonesia
- PTC India Limited - India
- Eastern Energy - Thailand
- Orica Mining Services - Indonesia
- Electricity Authority, New Zealand
- Sinarmas Energy and Mining - Indonesia
- Oldendorff Carriers - Singapore
- Mercator Lines Limited - India
- Mercuria Energy - Indonesia
- Mintek Dendrill Indonesia
- Siam City Cement PLC, Thailand
- Lanco Infratech Ltd - India
- GVK Power & Infra Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Indo Tambangraya Megah - Indonesia
- Tamil Nadu electricity Board
- SMG Consultants - Indonesia
- Directorate Of Revenue Intelligence - India
- Grasim Industreis Ltd - India
- Semirara Mining Corp, Philippines
- Kobexindo Tractors - Indoneisa
- Gujarat Mineral Development Corp Ltd - India
- Economic Council, Georgia
- Kumho Petrochemical, South Korea
- Thiess Contractors Indonesia
- Kapuas Tunggal Persada - Indonesia
- Attock Cement Pakistan Limited
- Sree Jayajothi Cements Limited - India
- Global Coal Blending Company Limited - Australia
- Eastern Coal Council - USA
- CNBM International Corporation - China
- Jaiprakash Power Ventures ltd
- Anglo American - United Kingdom
- Planning Commission, India
- Bhoruka Overseas - Indonesia
- Simpson Spence & Young - Indonesia
- Indika Energy - Indonesia
- Star Paper Mills Limited - India
- Edison Trading Spa - Italy
- ASAPP Information Group - India
- Directorate General of MIneral and Coal - Indonesia
- Bayan Resources Tbk. - Indonesia
- Riau Bara Harum - Indonesia
- Bukit Makmur.PT - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Renaissance Capital - South Africa
- MS Steel International - UAE
- GN Power Mariveles Coal Plant, Philippines
- SMC Global Power, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Chamber of Mines of South Africa
- Petrochimia International Co. Ltd.- Taiwan
- Medco Energi Mining Internasional
- Commonwealth Bank - Australia
- Essar Steel Hazira Ltd - India
- Intertek Mineral Services - Indonesia
- Tata Chemicals Ltd - India
- Dalmia Cement Bharat India
- IEA Clean Coal Centre - UK
- Meenaskhi Energy Private Limited - India
- Videocon Industries ltd - India
- Baramulti Group, Indonesia
- Rashtriya Ispat Nigam Limited - India
- Xindia Steels Limited - India
- Kideco Jaya Agung - Indonesia
- Vedanta Resources Plc - India
- Ceylon Electricity Board - Sri Lanka
- Goldman Sachs - Singapore
- AsiaOL BioFuels Corp., Philippines
- Karbindo Abesyapradhi - Indoneisa
- Manunggal Multi Energi - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Barasentosa Lestari - Indonesia
- Altura Mining Limited, Indonesia
- Banpu Public Company Limited - Thailand
- Kohat Cement Company Ltd. - Pakistan
- Sarangani Energy Corporation, Philippines
- Parliament of New Zealand
- Parry Sugars Refinery, India
- Georgia Ports Authority, United States
- McConnell Dowell - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Wood Mackenzie - Singapore
- European Bulk Services B.V. - Netherlands
- Savvy Resources Ltd - HongKong
- Mjunction Services Limited - India
- London Commodity Brokers - England
- Globalindo Alam Lestari - Indonesia
- Sical Logistics Limited - India
- Orica Australia Pty. Ltd.
- Coal and Oil Company - UAE
- New Zealand Coal & Carbon
- Heidelberg Cement - Germany
- Carbofer General Trading SA - India
- Karaikal Port Pvt Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Bhushan Steel Limited - India
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