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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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Saturday, 27 July 13
INDONESIA TO INDIA SUPRAMAX FREIGHT RATES ARE EXPECTED TO REMAIN STEADY - CAPT.REDDY
COALspot.com : The freight market seemed to soften this week with BDI , Cape and Panamax indices dropped average 5 percent on week.
The BDI was d ...
Thursday, 25 July 13
CAPESIZE : PACIFIC AND ATLANTIC RATES ARE HOLDING STEADY - FEARNLEYS AS
Handy
The Far East market remains quiet even if some Indo coal trip orders were fed in the market at early this week. Prompt ships passing Singapor ...
Thursday, 25 July 13
SUMMER LULL CHIPPING AWAY RECENT GAINS IN DRY BULK FREIGHT RATES - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
In what seems to be establishing as a permanent trend, at least for the time being, the dry bulk market kept on retreating yesterday, even if this r ...
Tuesday, 23 July 13
NEWCASTLE'S COAL EXPORTS CLIMB 17.82% ON WEEK, PORT'S DATA SHOWS
COALspot.com: Newcastle port in Australia has loaded 3,369,865 tons of coal for the week ended 0700 hours 22 July 2013, Newcastle Port Corp. s ...
Monday, 22 July 13
DRY BULK MARKET DIFFICULT TO MAINTAIN POSITIVE DRIVE CLAIMS SHIPBROKER - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market has seen a significant recovery in recent weeks, leading most ship classes to earnings above their operating expenses, thus brin ...
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- Mintek Dendrill Indonesia
- The State Trading Corporation of India Ltd
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- Larsen & Toubro Limited - India
- PTC India Limited - India
- TeaM Sual Corporation - Philippines
- Sinarmas Energy and Mining - Indonesia
- Oldendorff Carriers - Singapore
- Petrochimia International Co. Ltd.- Taiwan
- Semirara Mining Corp, Philippines
- Vizag Seaport Private Limited - India
- Bangladesh Power Developement Board
- Independent Power Producers Association of India
- Riau Bara Harum - Indonesia
- Xindia Steels Limited - India
- Renaissance Capital - South Africa
- Latin American Coal - Colombia
- Agrawal Coal Company - India
- Eastern Energy - Thailand
- Vedanta Resources Plc - India
- Global Business Power Corporation, Philippines
- Sical Logistics Limited - India
- Directorate Of Revenue Intelligence - India
- Maharashtra Electricity Regulatory Commission - India
- Sindya Power Generating Company Private Ltd
- Parry Sugars Refinery, India
- Kaltim Prima Coal - Indonesia
- Ministry of Transport, Egypt
- Romanian Commodities Exchange
- Rio Tinto Coal - Australia
- Ministry of Mines - Canada
- Global Green Power PLC Corporation, Philippines
- VISA Power Limited - India
- Sarangani Energy Corporation, Philippines
- Australian Coal Association
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- Simpson Spence & Young - Indonesia
- Africa Commodities Group - South Africa
- Jindal Steel & Power Ltd - India
- GVK Power & Infra Limited - India
- PNOC Exploration Corporation - Philippines
- Star Paper Mills Limited - India
- New Zealand Coal & Carbon
- Bhushan Steel Limited - India
- Kumho Petrochemical, South Korea
- Bukit Asam (Persero) Tbk - Indonesia
- Metalloyd Limited - United Kingdom
- Rashtriya Ispat Nigam Limited - India
- Electricity Authority, New Zealand
- Kobexindo Tractors - Indoneisa
- Banpu Public Company Limited - Thailand
- Therma Luzon, Inc, Philippines
- Attock Cement Pakistan Limited
- Cement Manufacturers Association - India
- Price Waterhouse Coopers - Russia
- ASAPP Information Group - India
- Indian Energy Exchange, India
- Coal and Oil Company - UAE
- Baramulti Group, Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Sojitz Corporation - Japan
- Edison Trading Spa - Italy
- Antam Resourcindo - Indonesia
- Bukit Baiduri Energy - Indonesia
- Toyota Tsusho Corporation, Japan
- Altura Mining Limited, Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Minerals Council of Australia
- Sakthi Sugars Limited - India
- Semirara Mining and Power Corporation, Philippines
- Ministry of Finance - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- CNBM International Corporation - China
- Singapore Mercantile Exchange
- Petron Corporation, Philippines
- Leighton Contractors Pty Ltd - Australia
- Mjunction Services Limited - India
- Meenaskhi Energy Private Limited - India
- Ind-Barath Power Infra Limited - India
- London Commodity Brokers - England
- Commonwealth Bank - Australia
- IHS Mccloskey Coal Group - USA
- Samtan Co., Ltd - South Korea
- Offshore Bulk Terminal Pte Ltd, Singapore
- CIMB Investment Bank - Malaysia
- Iligan Light & Power Inc, Philippines
- White Energy Company Limited
- Sree Jayajothi Cements Limited - India
- Intertek Mineral Services - Indonesia
- Wilmar Investment Holdings
- Bukit Makmur.PT - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Parliament of New Zealand
- Holcim Trading Pte Ltd - Singapore
- Pipit Mutiara Jaya. PT, Indonesia
- Australian Commodity Traders Exchange
- Timah Investasi Mineral - Indoneisa
- Bayan Resources Tbk. - Indonesia
- Globalindo Alam Lestari - Indonesia
- Borneo Indobara - Indonesia
- Meralco Power Generation, Philippines
- PowerSource Philippines DevCo
- Energy Development Corp, Philippines
- Thai Mozambique Logistica
- Anglo American - United Kingdom
- Central Java Power - Indonesia
- LBH Netherlands Bv - Netherlands
- Krishnapatnam Port Company Ltd. - India
- Cigading International Bulk Terminal - Indonesia
- Karaikal Port Pvt Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Tata Chemicals Ltd - India
- Central Electricity Authority - India
- Bahari Cakrawala Sebuku - Indonesia
- Straits Asia Resources Limited - Singapore
- Kideco Jaya Agung - Indonesia
- Uttam Galva Steels Limited - India
- Indogreen Group - Indonesia
- Orica Australia Pty. Ltd.
- Madhucon Powers Ltd - India
- Gujarat Sidhee Cement - India
- OPG Power Generation Pvt Ltd - India
- Interocean Group of Companies - India
- Wood Mackenzie - Singapore
- Essar Steel Hazira Ltd - India
- Global Coal Blending Company Limited - Australia
- South Luzon Thermal Energy Corporation
- Indian Oil Corporation Limited
- SMG Consultants - Indonesia
- Kapuas Tunggal Persada - Indonesia
- The Treasury - Australian Government
- Tamil Nadu electricity Board
- Manunggal Multi Energi - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Lanco Infratech Ltd - India
- Aditya Birla Group - India
- The University of Queensland
- Savvy Resources Ltd - HongKong
- Kepco SPC Power Corporation, Philippines
- SMC Global Power, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Alfred C Toepfer International GmbH - Germany
- Aboitiz Power Corporation - Philippines
- Goldman Sachs - Singapore
- Barasentosa Lestari - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ceylon Electricity Board - Sri Lanka
- Trasteel International SA, Italy
- Formosa Plastics Group - Taiwan
- Dalmia Cement Bharat India
- Jorong Barutama Greston.PT - Indonesia
- Planning Commission, India
- Siam City Cement PLC, Thailand
- ICICI Bank Limited - India
- Grasim Industreis Ltd - India
- Chamber of Mines of South Africa
- Power Finance Corporation Ltd., India
- GAC Shipping (India) Pvt Ltd
- Carbofer General Trading SA - India
- India Bulls Power Limited - India
- Georgia Ports Authority, United States
- Eastern Coal Council - USA
- GMR Energy Limited - India
- Merrill Lynch Commodities Europe
- San Jose City I Power Corp, Philippines
- Bhoruka Overseas - Indonesia
- Kartika Selabumi Mining - Indonesia
- IEA Clean Coal Centre - UK
- Coastal Gujarat Power Limited - India
- Port Waratah Coal Services - Australia
- Siam City Cement - Thailand
- Energy Link Ltd, New Zealand
- Electricity Generating Authority of Thailand
- Indo Tambangraya Megah - Indonesia
- Heidelberg Cement - Germany
- Standard Chartered Bank - UAE
- Pendopo Energi Batubara - Indonesia
- Salva Resources Pvt Ltd - India
- Bharathi Cement Corporation - India
- McConnell Dowell - Australia
- Economic Council, Georgia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bhatia International Limited - India
- European Bulk Services B.V. - Netherlands
- Miang Besar Coal Terminal - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Maheswari Brothers Coal Limited - India
- Posco Energy - South Korea
- GN Power Mariveles Coal Plant, Philippines
- MS Steel International - UAE
- AsiaOL BioFuels Corp., Philippines
- Videocon Industries ltd - India
- Makarim & Taira - Indonesia
- Thiess Contractors Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Malabar Cements Ltd - India
- Indonesian Coal Mining Association
- Coalindo Energy - Indonesia
- Deloitte Consulting - India
- Mercuria Energy - Indonesia
- Marubeni Corporation - India
- Gujarat Electricity Regulatory Commission - India
- SN Aboitiz Power Inc, Philippines
- Bulk Trading Sa - Switzerland
- Ambuja Cements Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Indika Energy - Indonesia
- Binh Thuan Hamico - Vietnam
- Bank of Tokyo Mitsubishi UFJ Ltd
- Mercator Lines Limited - India
- Orica Mining Services - Indonesia
- Medco Energi Mining Internasional
- Dr Ramakrishna Prasad Power Pvt Ltd - India
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