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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, 10 October 13
SEVERAL PANAMAX FIXTURES FOR 1 YEAR TC HAVE BEEN REPORTED AROUND $13.5K/DAY - FEARNRESEARCH
Handy
The market is not much fancy as several holidays in the Far East last week. Tonnage side seems tight in SE Asia but there are many of them in ...
Wednesday, 09 October 13
PANAMAX: FIRM ; FIXING ACTIVITY INCREASED IN BOTH BASINS - INTERMODAL
This was another week of gains for the Dry Bulk market, albeit very modest ones compared to the previous ones. Charterers and owners struggled for t ...
Tuesday, 08 October 13
CHINA: INTENSE COMPETITION AMONG DOMESTIC COAL MINERS AS 2013 IMPORT DEMAND REMAINS STRONG - WOOD MACKENZIE
Prices will not fall under RMB500/t or risk supply availability to the coastal market
Despite China's lower economic growth, Wood Mackenzie says ...
Monday, 07 October 13
RICHARD BAY COAL TERMINAL SHIPPED 49.94 MMT OF COAL YTD
COALspot.com - Richards Bay Coal Terminal (RBCT), the world's single largest coal terminal has shipped 49,946,509 mt of coals YTD, according to por ...
Monday, 07 October 13
SOUTH AFRICA'S RBCT SHIPPED 7.94% MORE COAL IN SEPT' 13
COALspot.com - Richards Bay Coal Terminal (RBCT), the single largest coal export terminal in South Africa as well as in the world has shipped 7.94 p ...
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- Coastal Gujarat Power Limited - India
- Kideco Jaya Agung - Indonesia
- Coalindo Energy - Indonesia
- Wood Mackenzie - Singapore
- Altura Mining Limited, Indonesia
- Parry Sugars Refinery, India
- The University of Queensland
- Formosa Plastics Group - Taiwan
- Straits Asia Resources Limited - Singapore
- Electricity Generating Authority of Thailand
- Iligan Light & Power Inc, Philippines
- Energy Link Ltd, New Zealand
- Energy Development Corp, Philippines
- Meralco Power Generation, Philippines
- Ministry of Mines - Canada
- Chettinad Cement Corporation Ltd - India
- Aboitiz Power Corporation - Philippines
- Australian Commodity Traders Exchange
- Indonesian Coal Mining Association
- Kepco SPC Power Corporation, Philippines
- Rashtriya Ispat Nigam Limited - India
- Mercuria Energy - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Central Java Power - Indonesia
- Global Green Power PLC Corporation, Philippines
- Cigading International Bulk Terminal - Indonesia
- Malabar Cements Ltd - India
- Intertek Mineral Services - Indonesia
- Dalmia Cement Bharat India
- Kaltim Prima Coal - Indonesia
- SN Aboitiz Power Inc, Philippines
- Borneo Indobara - Indonesia
- Siam City Cement PLC, Thailand
- Pipit Mutiara Jaya. PT, Indonesia
- TeaM Sual Corporation - Philippines
- White Energy Company Limited
- OPG Power Generation Pvt Ltd - India
- Bharathi Cement Corporation - India
- Neyveli Lignite Corporation Ltd, - India
- Barasentosa Lestari - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sojitz Corporation - Japan
- Jaiprakash Power Ventures ltd
- Maharashtra Electricity Regulatory Commission - India
- Uttam Galva Steels Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Rio Tinto Coal - Australia
- Bangladesh Power Developement Board
- Latin American Coal - Colombia
- Binh Thuan Hamico - Vietnam
- TNB Fuel Sdn Bhd - Malaysia
- Maheswari Brothers Coal Limited - India
- Global Coal Blending Company Limited - Australia
- GAC Shipping (India) Pvt Ltd
- AsiaOL BioFuels Corp., Philippines
- Orica Australia Pty. Ltd.
- Trasteel International SA, Italy
- Metalloyd Limited - United Kingdom
- Posco Energy - South Korea
- Orica Mining Services - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Bukit Makmur.PT - Indonesia
- Aditya Birla Group - India
- Sarangani Energy Corporation, Philippines
- European Bulk Services B.V. - Netherlands
- San Jose City I Power Corp, Philippines
- Bayan Resources Tbk. - Indonesia
- Wilmar Investment Holdings
- Karaikal Port Pvt Ltd - India
- Power Finance Corporation Ltd., India
- Videocon Industries ltd - India
- SMG Consultants - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Petron Corporation, Philippines
- Mercator Lines Limited - India
- CIMB Investment Bank - Malaysia
- CNBM International Corporation - China
- Ind-Barath Power Infra Limited - India
- Independent Power Producers Association of India
- Carbofer General Trading SA - India
- Tata Chemicals Ltd - India
- PowerSource Philippines DevCo
- Bukit Asam (Persero) Tbk - Indonesia
- Kartika Selabumi Mining - Indonesia
- Sree Jayajothi Cements Limited - India
- Heidelberg Cement - Germany
- Jorong Barutama Greston.PT - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Bukit Baiduri Energy - Indonesia
- Ministry of Finance - Indonesia
- Savvy Resources Ltd - HongKong
- Chamber of Mines of South Africa
- Georgia Ports Authority, United States
- Bhushan Steel Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Jindal Steel & Power Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Agrawal Coal Company - India
- Africa Commodities Group - South Africa
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kumho Petrochemical, South Korea
- Vijayanagar Sugar Pvt Ltd - India
- Ministry of Transport, Egypt
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Cement Manufacturers Association - India
- Oldendorff Carriers - Singapore
- ASAPP Information Group - India
- Deloitte Consulting - India
- Madhucon Powers Ltd - India
- Baramulti Group, Indonesia
- GMR Energy Limited - India
- Salva Resources Pvt Ltd - India
- Merrill Lynch Commodities Europe
- Kohat Cement Company Ltd. - Pakistan
- The Treasury - Australian Government
- Samtan Co., Ltd - South Korea
- GVK Power & Infra Limited - India
- Global Business Power Corporation, Philippines
- Central Electricity Authority - India
- Tamil Nadu electricity Board
- Ceylon Electricity Board - Sri Lanka
- Krishnapatnam Port Company Ltd. - India
- Meenaskhi Energy Private Limited - India
- Vedanta Resources Plc - India
- Mjunction Services Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Gujarat Electricity Regulatory Commission - India
- Antam Resourcindo - Indonesia
- International Coal Ventures Pvt Ltd - India
- Indo Tambangraya Megah - Indonesia
- Riau Bara Harum - Indonesia
- Goldman Sachs - Singapore
- Parliament of New Zealand
- Sakthi Sugars Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Indian Oil Corporation Limited
- The State Trading Corporation of India Ltd
- Australian Coal Association
- New Zealand Coal & Carbon
- Karbindo Abesyapradhi - Indoneisa
- Bhatia International Limited - India
- Mintek Dendrill Indonesia
- Indogreen Group - Indonesia
- Romanian Commodities Exchange
- Toyota Tsusho Corporation, Japan
- Therma Luzon, Inc, Philippines
- Directorate Of Revenue Intelligence - India
- Planning Commission, India
- Semirara Mining and Power Corporation, Philippines
- Price Waterhouse Coopers - Russia
- Eastern Energy - Thailand
- Thiess Contractors Indonesia
- VISA Power Limited - India
- Indika Energy - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Simpson Spence & Young - Indonesia
- Pendopo Energi Batubara - Indonesia
- Banpu Public Company Limited - Thailand
- Globalindo Alam Lestari - Indonesia
- Minerals Council of Australia
- Coal and Oil Company - UAE
- Anglo American - United Kingdom
- Sindya Power Generating Company Private Ltd
- Medco Energi Mining Internasional
- Thai Mozambique Logistica
- McConnell Dowell - Australia
- Alfred C Toepfer International GmbH - Germany
- Petrochimia International Co. Ltd.- Taiwan
- India Bulls Power Limited - India
- Siam City Cement - Thailand
- ICICI Bank Limited - India
- Electricity Authority, New Zealand
- Marubeni Corporation - India
- Sical Logistics Limited - India
- South Luzon Thermal Energy Corporation
- Economic Council, Georgia
- Ambuja Cements Ltd - India
- MS Steel International - UAE
- Edison Trading Spa - Italy
- Bhoruka Overseas - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Standard Chartered Bank - UAE
- Interocean Group of Companies - India
- IEA Clean Coal Centre - UK
- Timah Investasi Mineral - Indoneisa
- PTC India Limited - India
- Bulk Trading Sa - Switzerland
- Semirara Mining Corp, Philippines
- Renaissance Capital - South Africa
- IHS Mccloskey Coal Group - USA
- Essar Steel Hazira Ltd - India
- Attock Cement Pakistan Limited
- Port Waratah Coal Services - Australia
- Kapuas Tunggal Persada - Indonesia
- Kobexindo Tractors - Indoneisa
- Star Paper Mills Limited - India
- Lanco Infratech Ltd - India
- Singapore Mercantile Exchange
- Vizag Seaport Private Limited - India
- Grasim Industreis Ltd - India
- Gujarat Sidhee Cement - India
- Indian Energy Exchange, India
- Makarim & Taira - Indonesia
- Eastern Coal Council - USA
- PNOC Exploration Corporation - Philippines
- Commonwealth Bank - Australia
- PetroVietnam Power Coal Import and Supply Company
- Gujarat Mineral Development Corp Ltd - India
- Larsen & Toubro Limited - India
- Xindia Steels Limited - India
- LBH Netherlands Bv - Netherlands
- Holcim Trading Pte Ltd - Singapore
- Leighton Contractors Pty Ltd - Australia
- Manunggal Multi Energi - Indonesia
- SMC Global Power, Philippines
- London Commodity Brokers - England
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