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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, 09 January 14
CAPESIZE: WEST AUSTRALIA FREIGHT IS NOW DOWN IN THE $8S AND STILL DROPPING - FEARNLEYS
Handy
In the Atlantic we see rates sliding slowly for the start of 2014. Several players cvrd over the holidays and the rate decline was som ...
Thursday, 09 January 14
THE SHIPPING MARKET IN 2013 AND LOOKING FORWARD GLOBAL ECONOMY: STEADY AS SHE GOES UPWARDS - BIMCO
Over the past year, developed economies have gained traction while developing and emerging economies have suffered from slower growth. Despite key e ...
Wednesday, 08 January 14
DRY BULK MARKET PROSPECTS LOOKING BRIGHTER DESPITE SLOW START TO THE NEW YEAR - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
Despite the fact that the dry bulk market's benchmark, the BDI has been on a fall since the start of 2014, ending yesterday's session down to 1,87 ...
Wednesday, 08 January 14
AUSTRALIAN NEWCASTLE PORT'S WEEKLY COAL EXPORTS FALL
COALspot.com: In the week ended January 6, power plant and semi-soft coking coal shipments from the port of Newcastle in Queensland, totalled 3.27 m ...
Wednesday, 08 January 14
THE DRY BULK MARKET HAS LOST SOME OF ITS STEAM THESE PAST COUPLE OF DAYS: INTERMODAL
Chartering (Wet: Softer- / Dry: Softer- )
The Dry Bulk market has lost some of its steam these past couple of days although hires, espe ...
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- Ministry of Mines - Canada
- Thai Mozambique Logistica
- PowerSource Philippines DevCo
- Independent Power Producers Association of India
- Videocon Industries ltd - India
- Miang Besar Coal Terminal - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Coastal Gujarat Power Limited - India
- Uttam Galva Steels Limited - India
- Central Java Power - Indonesia
- Intertek Mineral Services - Indonesia
- Carbofer General Trading SA - India
- Altura Mining Limited, Indonesia
- Meralco Power Generation, Philippines
- Trasteel International SA, Italy
- Timah Investasi Mineral - Indoneisa
- Tamil Nadu electricity Board
- Thiess Contractors Indonesia
- Riau Bara Harum - Indonesia
- Kobexindo Tractors - Indoneisa
- AsiaOL BioFuels Corp., Philippines
- Edison Trading Spa - Italy
- Indian Energy Exchange, India
- Eastern Energy - Thailand
- Maheswari Brothers Coal Limited - India
- Vizag Seaport Private Limited - India
- Binh Thuan Hamico - Vietnam
- Georgia Ports Authority, United States
- Attock Cement Pakistan Limited
- San Jose City I Power Corp, Philippines
- Oldendorff Carriers - Singapore
- Karbindo Abesyapradhi - Indoneisa
- ICICI Bank Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Sinarmas Energy and Mining - Indonesia
- Goldman Sachs - Singapore
- International Coal Ventures Pvt Ltd - India
- Marubeni Corporation - India
- Bukit Asam (Persero) Tbk - Indonesia
- Cement Manufacturers Association - India
- Petrochimia International Co. Ltd.- Taiwan
- Grasim Industreis Ltd - India
- Sojitz Corporation - Japan
- Deloitte Consulting - India
- Ministry of Transport, Egypt
- Interocean Group of Companies - India
- Anglo American - United Kingdom
- Planning Commission, India
- Standard Chartered Bank - UAE
- Mintek Dendrill Indonesia
- Global Business Power Corporation, Philippines
- Renaissance Capital - South Africa
- SMG Consultants - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Offshore Bulk Terminal Pte Ltd, Singapore
- Leighton Contractors Pty Ltd - Australia
- ASAPP Information Group - India
- Cigading International Bulk Terminal - Indonesia
- Australian Coal Association
- Global Coal Blending Company Limited - Australia
- McConnell Dowell - Australia
- SN Aboitiz Power Inc, Philippines
- Tata Chemicals Ltd - India
- Dalmia Cement Bharat India
- Therma Luzon, Inc, Philippines
- Savvy Resources Ltd - HongKong
- IHS Mccloskey Coal Group - USA
- Indogreen Group - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Kumho Petrochemical, South Korea
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ambuja Cements Ltd - India
- Chamber of Mines of South Africa
- Toyota Tsusho Corporation, Japan
- Directorate General of MIneral and Coal - Indonesia
- Siam City Cement - Thailand
- Mercuria Energy - Indonesia
- IEA Clean Coal Centre - UK
- MS Steel International - UAE
- PTC India Limited - India
- Ind-Barath Power Infra Limited - India
- Coalindo Energy - Indonesia
- Simpson Spence & Young - Indonesia
- Posco Energy - South Korea
- Australian Commodity Traders Exchange
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Metalloyd Limited - United Kingdom
- Directorate Of Revenue Intelligence - India
- Parry Sugars Refinery, India
- Merrill Lynch Commodities Europe
- Antam Resourcindo - Indonesia
- Straits Asia Resources Limited - Singapore
- Vedanta Resources Plc - India
- Commonwealth Bank - Australia
- Larsen & Toubro Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Power Finance Corporation Ltd., India
- Asmin Koalindo Tuhup - Indonesia
- Banpu Public Company Limited - Thailand
- Manunggal Multi Energi - Indonesia
- Makarim & Taira - Indonesia
- Africa Commodities Group - South Africa
- Indian Oil Corporation Limited
- Essar Steel Hazira Ltd - India
- Wilmar Investment Holdings
- Pendopo Energi Batubara - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Meenaskhi Energy Private Limited - India
- Ceylon Electricity Board - Sri Lanka
- Kartika Selabumi Mining - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Aboitiz Power Corporation - Philippines
- Semirara Mining and Power Corporation, Philippines
- Eastern Coal Council - USA
- Central Electricity Authority - India
- Bahari Cakrawala Sebuku - Indonesia
- Bayan Resources Tbk. - Indonesia
- Samtan Co., Ltd - South Korea
- Jaiprakash Power Ventures ltd
- Wood Mackenzie - Singapore
- Sree Jayajothi Cements Limited - India
- Medco Energi Mining Internasional
- Kaltim Prima Coal - Indonesia
- SMC Global Power, Philippines
- Petron Corporation, Philippines
- Sakthi Sugars Limited - India
- Minerals Council of Australia
- Price Waterhouse Coopers - Russia
- Sindya Power Generating Company Private Ltd
- Madhucon Powers Ltd - India
- PNOC Exploration Corporation - Philippines
- Star Paper Mills Limited - India
- London Commodity Brokers - England
- Bank of Tokyo Mitsubishi UFJ Ltd
- OPG Power Generation Pvt Ltd - India
- The Treasury - Australian Government
- Iligan Light & Power Inc, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Electricity Generating Authority of Thailand
- White Energy Company Limited
- Billiton Holdings Pty Ltd - Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Mjunction Services Limited - India
- Bukit Makmur.PT - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Rio Tinto Coal - Australia
- Salva Resources Pvt Ltd - India
- Singapore Mercantile Exchange
- GAC Shipping (India) Pvt Ltd
- CIMB Investment Bank - Malaysia
- Economic Council, Georgia
- Kideco Jaya Agung - Indonesia
- Indonesian Coal Mining Association
- Agrawal Coal Company - India
- Indo Tambangraya Megah - Indonesia
- GVK Power & Infra Limited - India
- Siam City Cement PLC, Thailand
- Karaikal Port Pvt Ltd - India
- Lanco Infratech Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Barasentosa Lestari - Indonesia
- The State Trading Corporation of India Ltd
- Energy Link Ltd, New Zealand
- Holcim Trading Pte Ltd - Singapore
- Xindia Steels Limited - India
- Coal and Oil Company - UAE
- Mercator Lines Limited - India
- South Luzon Thermal Energy Corporation
- Bhushan Steel Limited - India
- Orica Australia Pty. Ltd.
- Kepco SPC Power Corporation, Philippines
- VISA Power Limited - India
- New Zealand Coal & Carbon
- CNBM International Corporation - China
- Global Green Power PLC Corporation, Philippines
- Energy Development Corp, Philippines
- Heidelberg Cement - Germany
- Formosa Plastics Group - Taiwan
- Parliament of New Zealand
- Romanian Commodities Exchange
- Electricity Authority, New Zealand
- GMR Energy Limited - India
- Rashtriya Ispat Nigam Limited - India
- Sical Logistics Limited - India
- Aditya Birla Group - India
- Krishnapatnam Port Company Ltd. - India
- Port Waratah Coal Services - Australia
- Bukit Baiduri Energy - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Latin American Coal - Colombia
- Chettinad Cement Corporation Ltd - India
- Semirara Mining Corp, Philippines
- Indika Energy - Indonesia
- LBH Netherlands Bv - Netherlands
- India Bulls Power Limited - India
- The University of Queensland
- Jindal Steel & Power Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Ministry of Finance - Indonesia
- Bhoruka Overseas - Indonesia
- Bulk Trading Sa - Switzerland
- Globalindo Alam Lestari - Indonesia
- Bangladesh Power Developement Board
- Baramulti Group, Indonesia
- European Bulk Services B.V. - Netherlands
- Kohat Cement Company Ltd. - Pakistan
- PetroVietnam Power Coal Import and Supply Company
- Sarangani Energy Corporation, Philippines
- TeaM Sual Corporation - Philippines
- Borneo Indobara - Indonesia
- Gujarat Sidhee Cement - India
- Vijayanagar Sugar Pvt Ltd - India
- Bhatia International Limited - India
- Orica Mining Services - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bharathi Cement Corporation - India
- Malabar Cements Ltd - India
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