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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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Tuesday, 19 March 13
SHIP PRICES COULD BE CLOSING IN TO REACH THEIR BOTTOM - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
One of the latest developments in shipping asset prices has been the reluctance from shipyards to further reduce their price expectations to higher ...
Sunday, 17 March 13
A WEAK WEEK FOR SUB-BIT INDONESIA COAL SWAPS
COALspot.com - Sub-Bit Indonesia coal swaps (FOB ) for average Q2’ 2013 delivery has lost 2.11 percent and CFR South China coal shipment ...
Sunday, 17 March 13
COAL FREIGHT RATES STEADY ON HIGHER DEMAND - CAPT. REDDY
COALspot.com - This freight market continued to remain firm in all segments.
The BDI was up by 5.81 pct closing at 892 points. Cape index was up ...
Friday, 15 March 13
CHEAP SHIP VALUATIONS DON'T NECESSARILY MEAN ATTRACTIVE SAYS VESSELS VALUE - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
With ship prices plunging by double-digits in the past few years, many ship owners are pondering their next moves in a market often described as att ...
Thursday, 14 March 13
SUPRAMAX : INDO - INDIA TRIP RATE IS AROUND $10,000; SOUTH CHINA $9500 - FEARNRESEARCH
Handy
Indian market is still quiet in respect of export of iron ore. WC India market has improved with a few stems out of the MEG, WC India opening ...
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- Kohat Cement Company Ltd. - Pakistan
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- Neyveli Lignite Corporation Ltd, - India
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- Latin American Coal - Colombia
- TeaM Sual Corporation - Philippines
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- Cement Manufacturers Association - India
- Iligan Light & Power Inc, Philippines
- London Commodity Brokers - England
- Standard Chartered Bank - UAE
- Savvy Resources Ltd - HongKong
- GVK Power & Infra Limited - India
- Indo Tambangraya Megah - Indonesia
- Rio Tinto Coal - Australia
- CIMB Investment Bank - Malaysia
- Thiess Contractors Indonesia
- The Treasury - Australian Government
- Gujarat Mineral Development Corp Ltd - India
- New Zealand Coal & Carbon
- SMG Consultants - Indonesia
- Orica Mining Services - Indonesia
- Metalloyd Limited - United Kingdom
- Coal and Oil Company - UAE
- Videocon Industries ltd - India
- Sinarmas Energy and Mining - Indonesia
- Indonesian Coal Mining Association
- Indian Energy Exchange, India
- Commonwealth Bank - Australia
- Bhatia International Limited - India
- Formosa Plastics Group - Taiwan
- Maheswari Brothers Coal Limited - India
- Eastern Energy - Thailand
- India Bulls Power Limited - India
- Mercator Lines Limited - India
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- SMC Global Power, Philippines
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- Mintek Dendrill Indonesia
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- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Directorate Of Revenue Intelligence - India
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- Africa Commodities Group - South Africa
- Thai Mozambique Logistica
- Leighton Contractors Pty Ltd - Australia
- IHS Mccloskey Coal Group - USA
- IEA Clean Coal Centre - UK
- Sarangani Energy Corporation, Philippines
- Meralco Power Generation, Philippines
- PTC India Limited - India
- GAC Shipping (India) Pvt Ltd
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- The State Trading Corporation of India Ltd
- Miang Besar Coal Terminal - Indonesia
- South Luzon Thermal Energy Corporation
- Holcim Trading Pte Ltd - Singapore
- Heidelberg Cement - Germany
- Australian Commodity Traders Exchange
- Larsen & Toubro Limited - India
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- Binh Thuan Hamico - Vietnam
- Global Business Power Corporation, Philippines
- Singapore Mercantile Exchange
- Global Coal Blending Company Limited - Australia
- Indian Oil Corporation Limited
- Star Paper Mills Limited - India
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- White Energy Company Limited
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- Indika Energy - Indonesia
- ASAPP Information Group - India
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- Vedanta Resources Plc - India
- Bukit Asam (Persero) Tbk - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Cigading International Bulk Terminal - Indonesia
- Georgia Ports Authority, United States
- Attock Cement Pakistan Limited
- McConnell Dowell - Australia
- Straits Asia Resources Limited - Singapore
- Sindya Power Generating Company Private Ltd
- ICICI Bank Limited - India
- Anglo American - United Kingdom
- Kideco Jaya Agung - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Edison Trading Spa - Italy
- Petron Corporation, Philippines
- Baramulti Group, Indonesia
- Kobexindo Tractors - Indoneisa
- Karbindo Abesyapradhi - Indoneisa
- Romanian Commodities Exchange
- SN Aboitiz Power Inc, Philippines
- Bulk Trading Sa - Switzerland
- Medco Energi Mining Internasional
- Orica Australia Pty. Ltd.
- The University of Queensland
- Vijayanagar Sugar Pvt Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Billiton Holdings Pty Ltd - Australia
- Tamil Nadu electricity Board
- Antam Resourcindo - Indonesia
- Meenaskhi Energy Private Limited - India
- Electricity Authority, New Zealand
- Kaltim Prima Coal - Indonesia
- Lanco Infratech Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Alfred C Toepfer International GmbH - Germany
- Eastern Coal Council - USA
- Pipit Mutiara Jaya. PT, Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Jaiprakash Power Ventures ltd
- Pendopo Energi Batubara - Indonesia
- GMR Energy Limited - India
- Posco Energy - South Korea
- Wood Mackenzie - Singapore
- Power Finance Corporation Ltd., India
- Parliament of New Zealand
- Rashtriya Ispat Nigam Limited - India
- Uttam Galva Steels Limited - India
- Global Green Power PLC Corporation, Philippines
- OPG Power Generation Pvt Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Toyota Tsusho Corporation, Japan
- Chettinad Cement Corporation Ltd - India
- Karaikal Port Pvt Ltd - India
- Siam City Cement PLC, Thailand
- Chamber of Mines of South Africa
- TNB Fuel Sdn Bhd - Malaysia
- Bukit Makmur.PT - Indonesia
- Samtan Co., Ltd - South Korea
- VISA Power Limited - India
- Simpson Spence & Young - Indonesia
- Planning Commission, India
- Merrill Lynch Commodities Europe
- Mercuria Energy - Indonesia
- European Bulk Services B.V. - Netherlands
- Riau Bara Harum - Indonesia
- Australian Coal Association
- Offshore Bulk Terminal Pte Ltd, Singapore
- Ambuja Cements Ltd - India
- CNBM International Corporation - China
- Vizag Seaport Private Limited - India
- Bhoruka Overseas - Indonesia
- Sree Jayajothi Cements Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Sical Logistics Limited - India
- PNOC Exploration Corporation - Philippines
- Borneo Indobara - Indonesia
- Sojitz Corporation - Japan
- Mjunction Services Limited - India
- Bukit Baiduri Energy - Indonesia
- Renaissance Capital - South Africa
- Bharathi Cement Corporation - India
- Manunggal Multi Energi - Indonesia
- Goldman Sachs - Singapore
- Semirara Mining Corp, Philippines
- Ministry of Mines - Canada
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bayan Resources Tbk. - Indonesia
- Deloitte Consulting - India
- Altura Mining Limited, Indonesia
- Aditya Birla Group - India
- Oldendorff Carriers - Singapore
- Makarim & Taira - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
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- Krishnapatnam Port Company Ltd. - India
- Timah Investasi Mineral - Indoneisa
- Kumho Petrochemical, South Korea
- Kapuas Tunggal Persada - Indonesia
- Trasteel International SA, Italy
- Wilmar Investment Holdings
- Gujarat Sidhee Cement - India
- PowerSource Philippines DevCo
- Directorate General of MIneral and Coal - Indonesia
- Jindal Steel & Power Ltd - India
- Energy Development Corp, Philippines
- Sakthi Sugars Limited - India
- Aboitiz Power Corporation - Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Independent Power Producers Association of India
- MS Steel International - UAE
- Ministry of Finance - Indonesia
- Dalmia Cement Bharat India
- Interocean Group of Companies - India
- Bhushan Steel Limited - India
- Salva Resources Pvt Ltd - India
- Coalindo Energy - Indonesia
- Electricity Generating Authority of Thailand
- Agrawal Coal Company - India
- Economic Council, Georgia
- GN Power Mariveles Coal Plant, Philippines
- Kepco SPC Power Corporation, Philippines
- Ministry of Transport, Egypt
- Indogreen Group - Indonesia
- Central Electricity Authority - India
- Siam City Cement - Thailand
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- Xindia Steels Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Energy Link Ltd, New Zealand
- Barasentosa Lestari - Indonesia
- Therma Luzon, Inc, Philippines
- Price Waterhouse Coopers - Russia
- Tata Chemicals Ltd - India
- International Coal Ventures Pvt Ltd - India
- Carbofer General Trading SA - India
- Essar Steel Hazira Ltd - India
- Bangladesh Power Developement Board
- Marubeni Corporation - India
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