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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, 19 June 14
PANAMAX: VERY CLOSE TO BREAKING THE ALL TIME LOW RECORD - FEARNLEYS AS
Handy
The Supra-Handy market is experiencing the same market slow down as its bigger sister markets however not to the same extent. We see TA rat ...
Wednesday, 18 June 14
CHINESE STEEL PRODUCTION SETS RECORD DURING FIRST TEN DAYS OF JUNE - COMMODORE RESEARCH & CONSULTANCY
Recently released data shows that average daily crude steel production at China's key steel mills hit a record high of 1.833 million tons durin ...
Wednesday, 18 June 14
MARKET INSIGHT - TIMOS PAPADIMITRIOU
Back in January the expectations for Q3 and Q4 were more than great. Talks and claims for a rising BDI and a healthy market were coming from everyw ...
Tuesday, 17 June 14
DRY BULK FREIGHT RATES TO RISE DURING THE SECOND HALF OF 2014, AS CHINA IS EXPECTED TO START IMPORTING MORE IRON ORE FROM BRAZIL - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
In its latest analysis of the dry bulk market, BIMCO said that it doesn’t expect freight rates to react significantly to increased demand bef ...
Monday, 16 June 14
INDONESIAN COAL SWAPS FOR Q3 DELIVERY FALL 2.34 % MONTH ON MONTH
COALspot.com: Indonesian coal swaps for average Q3’ 2014 lost on day, week and on month according to AsiaClear OTC coal swap's reports re ...
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- Banpu Public Company Limited - Thailand
- Power Finance Corporation Ltd., India
- Rio Tinto Coal - Australia
- Bhatia International Limited - India
- New Zealand Coal & Carbon
- Bukit Asam (Persero) Tbk - Indonesia
- Jindal Steel & Power Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Trasteel International SA, Italy
- Timah Investasi Mineral - Indoneisa
- Vedanta Resources Plc - India
- Independent Power Producers Association of India
- Cement Manufacturers Association - India
- Indo Tambangraya Megah - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kobexindo Tractors - Indoneisa
- Kapuas Tunggal Persada - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Edison Trading Spa - Italy
- Commonwealth Bank - Australia
- Parry Sugars Refinery, India
- Tamil Nadu electricity Board
- IEA Clean Coal Centre - UK
- Indian Energy Exchange, India
- Carbofer General Trading SA - India
- Maheswari Brothers Coal Limited - India
- Intertek Mineral Services - Indonesia
- Ind-Barath Power Infra Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Coastal Gujarat Power Limited - India
- PowerSource Philippines DevCo
- Directorate General of MIneral and Coal - Indonesia
- Siam City Cement - Thailand
- Leighton Contractors Pty Ltd - Australia
- The Treasury - Australian Government
- Coalindo Energy - Indonesia
- Malabar Cements Ltd - India
- Kepco SPC Power Corporation, Philippines
- Salva Resources Pvt Ltd - India
- Essar Steel Hazira Ltd - India
- Manunggal Multi Energi - Indonesia
- Price Waterhouse Coopers - Russia
- Kaltim Prima Coal - Indonesia
- VISA Power Limited - India
- Straits Asia Resources Limited - Singapore
- Jorong Barutama Greston.PT - Indonesia
- Coal and Oil Company - UAE
- Bulk Trading Sa - Switzerland
- Kartika Selabumi Mining - Indonesia
- McConnell Dowell - Australia
- Bharathi Cement Corporation - India
- Sakthi Sugars Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Port Waratah Coal Services - Australia
- Attock Cement Pakistan Limited
- Formosa Plastics Group - Taiwan
- Indian Oil Corporation Limited
- Directorate Of Revenue Intelligence - India
- San Jose City I Power Corp, Philippines
- The State Trading Corporation of India Ltd
- Siam City Cement PLC, Thailand
- Interocean Group of Companies - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Meralco Power Generation, Philippines
- Jaiprakash Power Ventures ltd
- Larsen & Toubro Limited - India
- Energy Link Ltd, New Zealand
- PetroVietnam Power Coal Import and Supply Company
- Orica Mining Services - Indonesia
- Posco Energy - South Korea
- Makarim & Taira - Indonesia
- PTC India Limited - India
- Electricity Generating Authority of Thailand
- Star Paper Mills Limited - India
- Toyota Tsusho Corporation, Japan
- Bangladesh Power Developement Board
- European Bulk Services B.V. - Netherlands
- Kumho Petrochemical, South Korea
- Samtan Co., Ltd - South Korea
- Therma Luzon, Inc, Philippines
- Romanian Commodities Exchange
- Central Java Power - Indonesia
- Borneo Indobara - Indonesia
- Pendopo Energi Batubara - Indonesia
- White Energy Company Limited
- Indonesian Coal Mining Association
- ICICI Bank Limited - India
- Sical Logistics Limited - India
- Ambuja Cements Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Bhoruka Overseas - Indonesia
- Madhucon Powers Ltd - India
- Heidelberg Cement - Germany
- Ministry of Mines - Canada
- Bayan Resources Tbk. - Indonesia
- Latin American Coal - Colombia
- GN Power Mariveles Coal Plant, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Semirara Mining Corp, Philippines
- Renaissance Capital - South Africa
- Videocon Industries ltd - India
- Georgia Ports Authority, United States
- Metalloyd Limited - United Kingdom
- Economic Council, Georgia
- Barasentosa Lestari - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- SMG Consultants - Indonesia
- Minerals Council of Australia
- Kideco Jaya Agung - Indonesia
- Meenaskhi Energy Private Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Mjunction Services Limited - India
- Central Electricity Authority - India
- Medco Energi Mining Internasional
- Simpson Spence & Young - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- South Luzon Thermal Energy Corporation
- Africa Commodities Group - South Africa
- Savvy Resources Ltd - HongKong
- Kohat Cement Company Ltd. - Pakistan
- Thiess Contractors Indonesia
- Ministry of Transport, Egypt
- Asia Pacific Energy Resources Ventures Inc, Philippines
- CNBM International Corporation - China
- Uttam Galva Steels Limited - India
- OPG Power Generation Pvt Ltd - India
- Thai Mozambique Logistica
- Indika Energy - Indonesia
- Lanco Infratech Ltd - India
- LBH Netherlands Bv - Netherlands
- Wood Mackenzie - Singapore
- Neyveli Lignite Corporation Ltd, - India
- CIMB Investment Bank - Malaysia
- Agrawal Coal Company - India
- Merrill Lynch Commodities Europe
- Alfred C Toepfer International GmbH - Germany
- SMC Global Power, Philippines
- ASAPP Information Group - India
- Karaikal Port Pvt Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Vizag Seaport Private Limited - India
- Singapore Mercantile Exchange
- Ceylon Electricity Board - Sri Lanka
- Kalimantan Lumbung Energi - Indonesia
- Bukit Baiduri Energy - Indonesia
- Grasim Industreis Ltd - India
- PNOC Exploration Corporation - Philippines
- Marubeni Corporation - India
- Global Coal Blending Company Limited - Australia
- Riau Bara Harum - Indonesia
- GMR Energy Limited - India
- Planning Commission, India
- Mercator Lines Limited - India
- Aditya Birla Group - India
- Antam Resourcindo - Indonesia
- Anglo American - United Kingdom
- AsiaOL BioFuels Corp., Philippines
- Energy Development Corp, Philippines
- SN Aboitiz Power Inc, Philippines
- Globalindo Alam Lestari - Indonesia
- Dalmia Cement Bharat India
- Gujarat Electricity Regulatory Commission - India
- Sindya Power Generating Company Private Ltd
- Standard Chartered Bank - UAE
- Baramulti Group, Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Gujarat Mineral Development Corp Ltd - India
- Eastern Energy - Thailand
- The University of Queensland
- Petrochimia International Co. Ltd.- Taiwan
- Indogreen Group - Indonesia
- Australian Coal Association
- Tata Chemicals Ltd - India
- Goldman Sachs - Singapore
- Bukit Makmur.PT - Indonesia
- Australian Commodity Traders Exchange
- Wilmar Investment Holdings
- Sojitz Corporation - Japan
- International Coal Ventures Pvt Ltd - India
- IHS Mccloskey Coal Group - USA
- Sarangani Energy Corporation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- GAC Shipping (India) Pvt Ltd
- Iligan Light & Power Inc, Philippines
- Chettinad Cement Corporation Ltd - India
- GVK Power & Infra Limited - India
- Binh Thuan Hamico - Vietnam
- TeaM Sual Corporation - Philippines
- Altura Mining Limited, Indonesia
- MS Steel International - UAE
- Parliament of New Zealand
- Semirara Mining and Power Corporation, Philippines
- Deloitte Consulting - India
- Gujarat Sidhee Cement - India
- Aboitiz Power Corporation - Philippines
- Mercuria Energy - Indonesia
- Sree Jayajothi Cements Limited - India
- Oldendorff Carriers - Singapore
- Electricity Authority, New Zealand
- Chamber of Mines of South Africa
- Billiton Holdings Pty Ltd - Australia
- Xindia Steels Limited - India
- Global Business Power Corporation, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Eastern Coal Council - USA
- London Commodity Brokers - England
- Petron Corporation, Philippines
- Bhushan Steel Limited - India
- Sinarmas Energy and Mining - Indonesia
- Mintek Dendrill Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Orica Australia Pty. Ltd.
- Global Green Power PLC Corporation, Philippines
- India Bulls Power Limited - India
- Rashtriya Ispat Nigam Limited - India
- Ministry of Finance - Indonesia
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