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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, 19 September 14
PRICES FOR DRY BULK CARRIERS HAVEN'T CORRECTED ENOUGH, DESPITE LOWER THAN EXPECTED FREIGHT RATES - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
A lot has been said and written about the looming dry bulk market recovery over the past few months. However, even if this hasn’t been materi ...
Thursday, 18 September 14
INDONESIA'S JULY COAL EXPORT VOLUME DROPPED 5.13% M-O-M
COALspot.com: Indonesia, one of the world's largest coal producer and the global leading multi grade coal exporter shipped around $1.65* ...
Thursday, 18 September 14
PANAMAX : US GULF/CHINA FRONTHAUL ARE NOW PAYING TYPICALLY 14.5K + 450K BB - FEARNRESEARCH
Handy
We still see a firming tendency in the Atlantic and it is still ECSA and USG leading on. USG/Cont now up in about USD 17/18k for a Smax whi ...
Thursday, 18 September 14
ELECTRONIC BILLS OF LADING: A GUIDE TO PAPERLESS TRADING WHICH HAS TAKEN THE SHIPPING INDUSTRY BY STORM
Bimco has recently developed and published a charter party clause that specifically addresses the use of electronic bills of lading. Increasing use ...
Wednesday, 17 September 14
PANAMAX: LIMITED INTEREST IN BOTH BASINS; RISING TONNAGE - INTERMODAL
With the week starting off at a fast pace and with the positive momentum from the previous Friday seemingly sticking around for a bit longer, most ...
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- Toyota Tsusho Corporation, Japan
- Power Finance Corporation Ltd., India
- Sinarmas Energy and Mining - Indonesia
- Indogreen Group - Indonesia
- SMG Consultants - Indonesia
- White Energy Company Limited
- Global Coal Blending Company Limited - Australia
- Cement Manufacturers Association - India
- Ministry of Finance - Indonesia
- Ind-Barath Power Infra Limited - India
- Deloitte Consulting - India
- Thiess Contractors Indonesia
- Mjunction Services Limited - India
- Kepco SPC Power Corporation, Philippines
- Georgia Ports Authority, United States
- Baramulti Group, Indonesia
- Tata Chemicals Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Coastal Gujarat Power Limited - India
- Electricity Generating Authority of Thailand
- Banpu Public Company Limited - Thailand
- Bayan Resources Tbk. - Indonesia
- Parliament of New Zealand
- Star Paper Mills Limited - India
- Lanco Infratech Ltd - India
- Mercuria Energy - Indonesia
- Oldendorff Carriers - Singapore
- Globalindo Alam Lestari - Indonesia
- Heidelberg Cement - Germany
- Ministry of Mines - Canada
- Energy Link Ltd, New Zealand
- Renaissance Capital - South Africa
- AsiaOL BioFuels Corp., Philippines
- GAC Shipping (India) Pvt Ltd
- VISA Power Limited - India
- Standard Chartered Bank - UAE
- Gujarat Mineral Development Corp Ltd - India
- Makarim & Taira - Indonesia
- Indian Energy Exchange, India
- Carbofer General Trading SA - India
- San Jose City I Power Corp, Philippines
- Larsen & Toubro Limited - India
- Sindya Power Generating Company Private Ltd
- Aboitiz Power Corporation - Philippines
- South Luzon Thermal Energy Corporation
- Antam Resourcindo - Indonesia
- Posco Energy - South Korea
- Bhoruka Overseas - Indonesia
- Agrawal Coal Company - India
- Central Java Power - Indonesia
- Bukit Makmur.PT - Indonesia
- Planning Commission, India
- Global Green Power PLC Corporation, Philippines
- Jindal Steel & Power Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Sojitz Corporation - Japan
- TNB Fuel Sdn Bhd - Malaysia
- Eastern Coal Council - USA
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Eastern Energy - Thailand
- Savvy Resources Ltd - HongKong
- Vizag Seaport Private Limited - India
- Timah Investasi Mineral - Indoneisa
- Port Waratah Coal Services - Australia
- Bhushan Steel Limited - India
- Binh Thuan Hamico - Vietnam
- Meralco Power Generation, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Economic Council, Georgia
- Sree Jayajothi Cements Limited - India
- PNOC Exploration Corporation - Philippines
- Siam City Cement - Thailand
- GVK Power & Infra Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Offshore Bulk Terminal Pte Ltd, Singapore
- The State Trading Corporation of India Ltd
- Rio Tinto Coal - Australia
- Maheswari Brothers Coal Limited - India
- McConnell Dowell - Australia
- GMR Energy Limited - India
- Indian Oil Corporation Limited
- Parry Sugars Refinery, India
- OPG Power Generation Pvt Ltd - India
- Vedanta Resources Plc - India
- Iligan Light & Power Inc, Philippines
- Holcim Trading Pte Ltd - Singapore
- Cigading International Bulk Terminal - Indonesia
- Goldman Sachs - Singapore
- The University of Queensland
- Wilmar Investment Holdings
- Miang Besar Coal Terminal - Indonesia
- Romanian Commodities Exchange
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Pendopo Energi Batubara - Indonesia
- Thai Mozambique Logistica
- Tamil Nadu electricity Board
- Metalloyd Limited - United Kingdom
- Directorate Of Revenue Intelligence - India
- Karbindo Abesyapradhi - Indoneisa
- Gujarat Sidhee Cement - India
- Coal and Oil Company - UAE
- Kumho Petrochemical, South Korea
- Petrochimia International Co. Ltd.- Taiwan
- Vijayanagar Sugar Pvt Ltd - India
- SMC Global Power, Philippines
- Attock Cement Pakistan Limited
- Grasim Industreis Ltd - India
- ICICI Bank Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- The Treasury - Australian Government
- Salva Resources Pvt Ltd - India
- Price Waterhouse Coopers - Russia
- Pipit Mutiara Jaya. PT, Indonesia
- Orica Mining Services - Indonesia
- New Zealand Coal & Carbon
- Meenaskhi Energy Private Limited - India
- Africa Commodities Group - South Africa
- TeaM Sual Corporation - Philippines
- Asmin Koalindo Tuhup - Indonesia
- Trasteel International SA, Italy
- Orica Australia Pty. Ltd.
- MS Steel International - UAE
- Merrill Lynch Commodities Europe
- Essar Steel Hazira Ltd - India
- Wood Mackenzie - Singapore
- Billiton Holdings Pty Ltd - Australia
- Alfred C Toepfer International GmbH - Germany
- Jaiprakash Power Ventures ltd
- Madhucon Powers Ltd - India
- ASAPP Information Group - India
- Edison Trading Spa - Italy
- Sakthi Sugars Limited - India
- Minerals Council of Australia
- European Bulk Services B.V. - Netherlands
- Ambuja Cements Ltd - India
- Medco Energi Mining Internasional
- Bukit Asam (Persero) Tbk - Indonesia
- Latin American Coal - Colombia
- Indonesian Coal Mining Association
- PTC India Limited - India
- Kideco Jaya Agung - Indonesia
- Samtan Co., Ltd - South Korea
- Kaltim Prima Coal - Indonesia
- IEA Clean Coal Centre - UK
- Global Business Power Corporation, Philippines
- Simpson Spence & Young - Indonesia
- Coalindo Energy - Indonesia
- Kobexindo Tractors - Indoneisa
- LBH Netherlands Bv - Netherlands
- Commonwealth Bank - Australia
- Barasentosa Lestari - Indonesia
- Manunggal Multi Energi - Indonesia
- Electricity Authority, New Zealand
- Maharashtra Electricity Regulatory Commission - India
- Chettinad Cement Corporation Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Formosa Plastics Group - Taiwan
- Indo Tambangraya Megah - Indonesia
- Sical Logistics Limited - India
- Karaikal Port Pvt Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Australian Commodity Traders Exchange
- SN Aboitiz Power Inc, Philippines
- PowerSource Philippines DevCo
- Intertek Mineral Services - Indonesia
- IHS Mccloskey Coal Group - USA
- Leighton Contractors Pty Ltd - Australia
- London Commodity Brokers - England
- Bank of Tokyo Mitsubishi UFJ Ltd
- Semirara Mining and Power Corporation, Philippines
- Bangladesh Power Developement Board
- Interocean Group of Companies - India
- International Coal Ventures Pvt Ltd - India
- Therma Luzon, Inc, Philippines
- Krishnapatnam Port Company Ltd. - India
- Aditya Birla Group - India
- Directorate General of MIneral and Coal - Indonesia
- Bulk Trading Sa - Switzerland
- Indika Energy - Indonesia
- Petron Corporation, Philippines
- Australian Coal Association
- Ministry of Transport, Egypt
- Sarangani Energy Corporation, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Mintek Dendrill Indonesia
- Independent Power Producers Association of India
- Malabar Cements Ltd - India
- Bharathi Cement Corporation - India
- CIMB Investment Bank - Malaysia
- Borneo Indobara - Indonesia
- Videocon Industries ltd - India
- Marubeni Corporation - India
- Singapore Mercantile Exchange
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Chamber of Mines of South Africa
- Neyveli Lignite Corporation Ltd, - India
- Xindia Steels Limited - India
- Rashtriya Ispat Nigam Limited - India
- Bukit Baiduri Energy - Indonesia
- Central Electricity Authority - India
- Altura Mining Limited, Indonesia
- Straits Asia Resources Limited - Singapore
- Energy Development Corp, Philippines
- Siam City Cement PLC, Thailand
- GN Power Mariveles Coal Plant, Philippines
- Dalmia Cement Bharat India
- CNBM International Corporation - China
- Bhatia International Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Riau Bara Harum - Indonesia
- Semirara Mining Corp, Philippines
- India Bulls Power Limited - India
- Mercator Lines Limited - India
- Uttam Galva Steels Limited - India
- Kartika Selabumi Mining - Indonesia
- Anglo American - United Kingdom
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