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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, 28 August 14
PANAMAX: OWNERS CAN GET AROUND USD 16000 FOR A FRONTHAUL; PERIOD MARKET - VERY QUIET - FEARNLEYS
Handy
The activity and sentiment is improving in the Atlantic with the general TA rate is up about US$ 800 w-o-w. We see more South American carg ...
Thursday, 28 August 14
BANPU REPORTS HIGHER FIRST-HALF YEAR RESULTS FOR 2014
COALspot.com: Banpu Public Company Limited (BANPU) reports higher first half-year financial results for 2014 having its gross profit increasing 3 p ...
Wednesday, 27 August 14
FREIGHT MARKET: IS THE MARKET IN A RECOVERY MOOD? - GEORGE ILIOPOULOS
Is the market in a recovery mood?
August is typically a time when the shipping industry takes it easy… charter-ers book their requireme ...
Tuesday, 26 August 14
4TH ANNUAL ASIA NICKEL
4th Annual Asia Nickel
19-20 Nov 2014
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Web Site
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Tuesday, 26 August 14
DESPITE LOW DRY BULK RATES, BULKER PRICES ARE STILL HIGH - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
Traditionally, August tends to be a month of slow activity in the sale and purchasing market and this year has been no exception. However, as shipb ...
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- Vijayanagar Sugar Pvt Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Bhoruka Overseas - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Australian Coal Association
- Offshore Bulk Terminal Pte Ltd, Singapore
- Energy Development Corp, Philippines
- Grasim Industreis Ltd - India
- Bangladesh Power Developement Board
- GN Power Mariveles Coal Plant, Philippines
- Bayan Resources Tbk. - Indonesia
- South Luzon Thermal Energy Corporation
- Barasentosa Lestari - Indonesia
- GVK Power & Infra Limited - India
- Global Business Power Corporation, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Mintek Dendrill Indonesia
- Kepco SPC Power Corporation, Philippines
- Maheswari Brothers Coal Limited - India
- Star Paper Mills Limited - India
- New Zealand Coal & Carbon
- Wood Mackenzie - Singapore
- Sakthi Sugars Limited - India
- Alfred C Toepfer International GmbH - Germany
- Siam City Cement - Thailand
- LBH Netherlands Bv - Netherlands
- Mercuria Energy - Indonesia
- The State Trading Corporation of India Ltd
- Mercator Lines Limited - India
- VISA Power Limited - India
- Sojitz Corporation - Japan
- Georgia Ports Authority, United States
- Meralco Power Generation, Philippines
- Sical Logistics Limited - India
- Economic Council, Georgia
- Savvy Resources Ltd - HongKong
- Central Electricity Authority - India
- Orica Mining Services - Indonesia
- Electricity Authority, New Zealand
- IEA Clean Coal Centre - UK
- Asmin Koalindo Tuhup - Indonesia
- MS Steel International - UAE
- Intertek Mineral Services - Indonesia
- Edison Trading Spa - Italy
- Ind-Barath Power Infra Limited - India
- Billiton Holdings Pty Ltd - Australia
- Directorate Of Revenue Intelligence - India
- Iligan Light & Power Inc, Philippines
- Independent Power Producers Association of India
- Uttam Galva Steels Limited - India
- Coalindo Energy - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- IHS Mccloskey Coal Group - USA
- SN Aboitiz Power Inc, Philippines
- Merrill Lynch Commodities Europe
- Ministry of Mines - Canada
- Aboitiz Power Corporation - Philippines
- Mjunction Services Limited - India
- Posco Energy - South Korea
- Interocean Group of Companies - India
- India Bulls Power Limited - India
- Malabar Cements Ltd - India
- Australian Commodity Traders Exchange
- Jindal Steel & Power Ltd - India
- PTC India Limited - India
- Sindya Power Generating Company Private Ltd
- Lanco Infratech Ltd - India
- Bharathi Cement Corporation - India
- Power Finance Corporation Ltd., India
- Latin American Coal - Colombia
- Marubeni Corporation - India
- Karbindo Abesyapradhi - Indoneisa
- Jaiprakash Power Ventures ltd
- Straits Asia Resources Limited - Singapore
- Central Java Power - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Commonwealth Bank - Australia
- Price Waterhouse Coopers - Russia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- TeaM Sual Corporation - Philippines
- GAC Shipping (India) Pvt Ltd
- Kartika Selabumi Mining - Indonesia
- Bhatia International Limited - India
- Goldman Sachs - Singapore
- McConnell Dowell - Australia
- Chamber of Mines of South Africa
- Banpu Public Company Limited - Thailand
- GMR Energy Limited - India
- Manunggal Multi Energi - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Parry Sugars Refinery, India
- Trasteel International SA, Italy
- Simpson Spence & Young - Indonesia
- Binh Thuan Hamico - Vietnam
- Rio Tinto Coal - Australia
- Global Coal Blending Company Limited - Australia
- White Energy Company Limited
- Electricity Generating Authority of Thailand
- Karaikal Port Pvt Ltd - India
- Dalmia Cement Bharat India
- Madhucon Powers Ltd - India
- Minerals Council of Australia
- Therma Luzon, Inc, Philippines
- Sree Jayajothi Cements Limited - India
- CNBM International Corporation - China
- Metalloyd Limited - United Kingdom
- Vedanta Resources Plc - India
- Semirara Mining Corp, Philippines
- ASAPP Information Group - India
- Kohat Cement Company Ltd. - Pakistan
- European Bulk Services B.V. - Netherlands
- Carbofer General Trading SA - India
- Antam Resourcindo - Indonesia
- Aditya Birla Group - India
- The University of Queensland
- Global Green Power PLC Corporation, Philippines
- Baramulti Group, Indonesia
- Salva Resources Pvt Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Wilmar Investment Holdings
- Agrawal Coal Company - India
- Petron Corporation, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Oldendorff Carriers - Singapore
- Ceylon Electricity Board - Sri Lanka
- Krishnapatnam Port Company Ltd. - India
- Globalindo Alam Lestari - Indonesia
- Indonesian Coal Mining Association
- SMC Global Power, Philippines
- PNOC Exploration Corporation - Philippines
- Riau Bara Harum - Indonesia
- Vizag Seaport Private Limited - India
- Tata Chemicals Ltd - India
- Singapore Mercantile Exchange
- Cement Manufacturers Association - India
- Samtan Co., Ltd - South Korea
- Larsen & Toubro Limited - India
- Africa Commodities Group - South Africa
- Indika Energy - Indonesia
- Thiess Contractors Indonesia
- Thai Mozambique Logistica
- Semirara Mining and Power Corporation, Philippines
- Eastern Energy - Thailand
- Maharashtra Electricity Regulatory Commission - India
- The Treasury - Australian Government
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Cigading International Bulk Terminal - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Anglo American - United Kingdom
- SMG Consultants - Indonesia
- Eastern Coal Council - USA
- San Jose City I Power Corp, Philippines
- International Coal Ventures Pvt Ltd - India
- Xindia Steels Limited - India
- Indo Tambangraya Megah - Indonesia
- Kideco Jaya Agung - Indonesia
- Standard Chartered Bank - UAE
- Gujarat Electricity Regulatory Commission - India
- Coastal Gujarat Power Limited - India
- Videocon Industries ltd - India
- Bukit Baiduri Energy - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Sarangani Energy Corporation, Philippines
- Sinarmas Energy and Mining - Indonesia
- ICICI Bank Limited - India
- Gujarat Sidhee Cement - India
- Indian Oil Corporation Limited
- Timah Investasi Mineral - Indoneisa
- Romanian Commodities Exchange
- PowerSource Philippines DevCo
- Tamil Nadu electricity Board
- Bukit Makmur.PT - Indonesia
- Deloitte Consulting - India
- Formosa Plastics Group - Taiwan
- Chettinad Cement Corporation Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Coal and Oil Company - UAE
- London Commodity Brokers - England
- Kaltim Prima Coal - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Pendopo Energi Batubara - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Borneo Indobara - Indonesia
- Indian Energy Exchange, India
- Port Waratah Coal Services - Australia
- Leighton Contractors Pty Ltd - Australia
- Kumho Petrochemical, South Korea
- Renaissance Capital - South Africa
- Bhushan Steel Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Ministry of Transport, Egypt
- Toyota Tsusho Corporation, Japan
- Medco Energi Mining Internasional
- Planning Commission, India
- Energy Link Ltd, New Zealand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Altura Mining Limited, Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Makarim & Taira - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Indogreen Group - Indonesia
- Parliament of New Zealand
- Heidelberg Cement - Germany
- OPG Power Generation Pvt Ltd - India
- Kobexindo Tractors - Indoneisa
- Bulk Trading Sa - Switzerland
- Ambuja Cements Ltd - India
- Ministry of Finance - Indonesia
- Orica Australia Pty. Ltd.
- Gujarat Mineral Development Corp Ltd - India
- Meenaskhi Energy Private Limited - India
- Kapuas Tunggal Persada - Indonesia
- CIMB Investment Bank - Malaysia
- Essar Steel Hazira Ltd - India
- Siam City Cement PLC, Thailand
- Attock Cement Pakistan Limited
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