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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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- Samtan Co., Ltd - South Korea
- Gujarat Electricity Regulatory Commission - India
- Independent Power Producers Association of India
- London Commodity Brokers - England
- Bhoruka Overseas - Indonesia
- European Bulk Services B.V. - Netherlands
- Bukit Asam (Persero) Tbk - Indonesia
- TeaM Sual Corporation - Philippines
- Bukit Baiduri Energy - Indonesia
- Latin American Coal - Colombia
- Timah Investasi Mineral - Indoneisa
- Siam City Cement PLC, Thailand
- Offshore Bulk Terminal Pte Ltd, Singapore
- Eastern Energy - Thailand
- Orica Mining Services - Indonesia
- GVK Power & Infra Limited - India
- Barasentosa Lestari - Indonesia
- Bhushan Steel Limited - India
- International Coal Ventures Pvt Ltd - India
- Africa Commodities Group - South Africa
- Manunggal Multi Energi - Indonesia
- Dalmia Cement Bharat India
- Sojitz Corporation - Japan
- Formosa Plastics Group - Taiwan
- Maheswari Brothers Coal Limited - India
- Goldman Sachs - Singapore
- Altura Mining Limited, Indonesia
- McConnell Dowell - Australia
- Petron Corporation, Philippines
- The State Trading Corporation of India Ltd
- Salva Resources Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- Cigading International Bulk Terminal - Indonesia
- The University of Queensland
- Thai Mozambique Logistica
- Grasim Industreis Ltd - India
- Gujarat Sidhee Cement - India
- MS Steel International - UAE
- Commonwealth Bank - Australia
- Uttam Galva Steels Limited - India
- Economic Council, Georgia
- Mjunction Services Limited - India
- Standard Chartered Bank - UAE
- Riau Bara Harum - Indonesia
- Siam City Cement - Thailand
- Directorate General of MIneral and Coal - Indonesia
- Wilmar Investment Holdings
- Parry Sugars Refinery, India
- Indian Oil Corporation Limited
- Kepco SPC Power Corporation, Philippines
- Sical Logistics Limited - India
- Planning Commission, India
- Bukit Makmur.PT - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- SMC Global Power, Philippines
- Posco Energy - South Korea
- Semirara Mining and Power Corporation, Philippines
- Energy Development Corp, Philippines
- Aboitiz Power Corporation - Philippines
- Tata Chemicals Ltd - India
- Jaiprakash Power Ventures ltd
- New Zealand Coal & Carbon
- Billiton Holdings Pty Ltd - Australia
- Indian Energy Exchange, India
- Pendopo Energi Batubara - Indonesia
- Antam Resourcindo - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Sindya Power Generating Company Private Ltd
- CIMB Investment Bank - Malaysia
- Kohat Cement Company Ltd. - Pakistan
- Bhatia International Limited - India
- Power Finance Corporation Ltd., India
- Marubeni Corporation - India
- PetroVietnam Power Coal Import and Supply Company
- Holcim Trading Pte Ltd - Singapore
- Miang Besar Coal Terminal - Indonesia
- Karaikal Port Pvt Ltd - India
- PowerSource Philippines DevCo
- Australian Coal Association
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Global Coal Blending Company Limited - Australia
- Agrawal Coal Company - India
- Heidelberg Cement - Germany
- SMG Consultants - Indonesia
- Borneo Indobara - Indonesia
- Romanian Commodities Exchange
- Coalindo Energy - Indonesia
- Port Waratah Coal Services - Australia
- Kalimantan Lumbung Energi - Indonesia
- Electricity Generating Authority of Thailand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Directorate Of Revenue Intelligence - India
- Ind-Barath Power Infra Limited - India
- Indika Energy - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Electricity Authority, New Zealand
- ASAPP Information Group - India
- San Jose City I Power Corp, Philippines
- Thiess Contractors Indonesia
- Cement Manufacturers Association - India
- Sarangani Energy Corporation, Philippines
- Kideco Jaya Agung - Indonesia
- Kartika Selabumi Mining - Indonesia
- Chamber of Mines of South Africa
- Interocean Group of Companies - India
- Central Electricity Authority - India
- GMR Energy Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Vizag Seaport Private Limited - India
- Carbofer General Trading SA - India
- India Bulls Power Limited - India
- Ceylon Electricity Board - Sri Lanka
- Gujarat Mineral Development Corp Ltd - India
- Mercuria Energy - Indonesia
- OPG Power Generation Pvt Ltd - India
- Singapore Mercantile Exchange
- Medco Energi Mining Internasional
- Xindia Steels Limited - India
- Bangladesh Power Developement Board
- Rashtriya Ispat Nigam Limited - India
- SN Aboitiz Power Inc, Philippines
- Anglo American - United Kingdom
- Indogreen Group - Indonesia
- CNBM International Corporation - China
- Edison Trading Spa - Italy
- Sree Jayajothi Cements Limited - India
- Bayan Resources Tbk. - Indonesia
- IEA Clean Coal Centre - UK
- Banpu Public Company Limited - Thailand
- Lanco Infratech Ltd - India
- Price Waterhouse Coopers - Russia
- Coastal Gujarat Power Limited - India
- Semirara Mining Corp, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Baramulti Group, Indonesia
- Iligan Light & Power Inc, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Trasteel International SA, Italy
- Mercator Lines Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Simpson Spence & Young - Indonesia
- Orica Australia Pty. Ltd.
- Krishnapatnam Port Company Ltd. - India
- GAC Shipping (India) Pvt Ltd
- Binh Thuan Hamico - Vietnam
- Savvy Resources Ltd - HongKong
- Georgia Ports Authority, United States
- Makarim & Taira - Indonesia
- ICICI Bank Limited - India
- Aditya Birla Group - India
- Sakthi Sugars Limited - India
- Ambuja Cements Ltd - India
- Oldendorff Carriers - Singapore
- Videocon Industries ltd - India
- Metalloyd Limited - United Kingdom
- LBH Netherlands Bv - Netherlands
- Parliament of New Zealand
- South Luzon Thermal Energy Corporation
- Maharashtra Electricity Regulatory Commission - India
- Alfred C Toepfer International GmbH - Germany
- Global Business Power Corporation, Philippines
- Minerals Council of Australia
- Ministry of Finance - Indonesia
- Central Java Power - Indonesia
- Jindal Steel & Power Ltd - India
- Meralco Power Generation, Philippines
- Indonesian Coal Mining Association
- Toyota Tsusho Corporation, Japan
- Intertek Mineral Services - Indonesia
- Kobexindo Tractors - Indoneisa
- Straits Asia Resources Limited - Singapore
- AsiaOL BioFuels Corp., Philippines
- Chettinad Cement Corporation Ltd - India
- Energy Link Ltd, New Zealand
- Renaissance Capital - South Africa
- Merrill Lynch Commodities Europe
- PTC India Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Globalindo Alam Lestari - Indonesia
- Rio Tinto Coal - Australia
- PNOC Exploration Corporation - Philippines
- Leighton Contractors Pty Ltd - Australia
- Essar Steel Hazira Ltd - India
- Kaltim Prima Coal - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Australian Commodity Traders Exchange
- The Treasury - Australian Government
- Vedanta Resources Plc - India
- Meenaskhi Energy Private Limited - India
- Global Green Power PLC Corporation, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Attock Cement Pakistan Limited
- Ministry of Transport, Egypt
- Therma Luzon, Inc, Philippines
- Indo Tambangraya Megah - Indonesia
- Star Paper Mills Limited - India
- Larsen & Toubro Limited - India
- Madhucon Powers Ltd - India
- Coal and Oil Company - UAE
- Bharathi Cement Corporation - India
- Eastern Coal Council - USA
- Neyveli Lignite Corporation Ltd, - India
- Karbindo Abesyapradhi - Indoneisa
- VISA Power Limited - India
- IHS Mccloskey Coal Group - USA
- Wood Mackenzie - Singapore
- Malabar Cements Ltd - India
- Tamil Nadu electricity Board
- Mintek Dendrill Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Kumho Petrochemical, South Korea
- Kapuas Tunggal Persada - Indonesia
- Deloitte Consulting - India
- Ministry of Mines - Canada
- White Energy Company Limited
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