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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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Sunday, 06 January 13
FREIGHT MARKET REMAINED FAIRLY STEADY - VISTAAR
WISH YOU ALL HAPPY NEW YEAR
COALspot.com - The freight market remained fairly steady in spite of Christmas / New Year Holidays. The BDI was almos ...
Saturday, 05 January 13
THE SHIPPING MARKET IN 2012 AND LOOKING FORWARD - BIMCO
Global Economy: Things will go up from here
The global economy continues to grow, albeit at a slower pace than previous years. The slower economic ...
Friday, 04 January 13
DRY BULK MARKET LOOKING FOR DIRECTION IN FIRST TRADING DAYS OF THE NEW YEAR - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The dry bulk market is actively looking for its footing at the start of the New Year, as charters have been scarce, as is usually the case during th ...
Thursday, 03 January 13
INDONESIAN SUB-BITUMINOUS COAL SWAPS CLOSED US$ 6.86 HIGHER FOR 2014 DELIVERY
COALspot.com - Swaps prices were changed positively for thermal coal for loading in the first quarter from Indonesia, according to SGX AsiaClear OTC ...
Thursday, 03 January 13
SUPRMAX FREIGHT RATE FROM RED SEA / INDIA IS AROUND MID TEENS - FEARNLEYS
Fearnleys in its weekly report said that, Indian market was very quiet in respect of export of iron ore. For Indo-India trip Supra rate was hovering ...
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- Port Waratah Coal Services - Australia
- Gujarat Mineral Development Corp Ltd - India
- Australian Commodity Traders Exchange
- Power Finance Corporation Ltd., India
- Rio Tinto Coal - Australia
- Carbofer General Trading SA - India
- Meralco Power Generation, Philippines
- Global Coal Blending Company Limited - Australia
- Star Paper Mills Limited - India
- Sakthi Sugars Limited - India
- Parliament of New Zealand
- Kepco SPC Power Corporation, Philippines
- Videocon Industries ltd - India
- Indonesian Coal Mining Association
- Ministry of Transport, Egypt
- Edison Trading Spa - Italy
- Borneo Indobara - Indonesia
- Energy Link Ltd, New Zealand
- Billiton Holdings Pty Ltd - Australia
- Ambuja Cements Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Bharathi Cement Corporation - India
- Kohat Cement Company Ltd. - Pakistan
- Directorate Of Revenue Intelligence - India
- Siam City Cement PLC, Thailand
- Maheswari Brothers Coal Limited - India
- PNOC Exploration Corporation - Philippines
- Kaltim Prima Coal - Indonesia
- Coalindo Energy - Indonesia
- Indian Energy Exchange, India
- Simpson Spence & Young - Indonesia
- Kideco Jaya Agung - Indonesia
- Romanian Commodities Exchange
- Central Java Power - Indonesia
- Sical Logistics Limited - India
- VISA Power Limited - India
- Metalloyd Limited - United Kingdom
- Ministry of Finance - Indonesia
- Independent Power Producers Association of India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Parry Sugars Refinery, India
- Merrill Lynch Commodities Europe
- Bukit Baiduri Energy - Indonesia
- Larsen & Toubro Limited - India
- Intertek Mineral Services - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Trasteel International SA, Italy
- Kartika Selabumi Mining - Indonesia
- SN Aboitiz Power Inc, Philippines
- Mercuria Energy - Indonesia
- Aditya Birla Group - India
- Planning Commission, India
- Orica Australia Pty. Ltd.
- PetroVietnam Power Coal Import and Supply Company
- Essar Steel Hazira Ltd - India
- Sarangani Energy Corporation, Philippines
- Therma Luzon, Inc, Philippines
- PTC India Limited - India
- Makarim & Taira - Indonesia
- Baramulti Group, Indonesia
- SMG Consultants - Indonesia
- Semirara Mining Corp, Philippines
- PowerSource Philippines DevCo
- Wood Mackenzie - Singapore
- Anglo American - United Kingdom
- Aboitiz Power Corporation - Philippines
- Georgia Ports Authority, United States
- Directorate General of MIneral and Coal - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Global Business Power Corporation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Mercator Lines Limited - India
- Agrawal Coal Company - India
- White Energy Company Limited
- Heidelberg Cement - Germany
- IEA Clean Coal Centre - UK
- Indo Tambangraya Megah - Indonesia
- International Coal Ventures Pvt Ltd - India
- Leighton Contractors Pty Ltd - Australia
- GVK Power & Infra Limited - India
- Oldendorff Carriers - Singapore
- TeaM Sual Corporation - Philippines
- Bulk Trading Sa - Switzerland
- Gujarat Sidhee Cement - India
- Indogreen Group - Indonesia
- Deloitte Consulting - India
- TNB Fuel Sdn Bhd - Malaysia
- Miang Besar Coal Terminal - Indonesia
- Ind-Barath Power Infra Limited - India
- Barasentosa Lestari - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Kapuas Tunggal Persada - Indonesia
- CIMB Investment Bank - Malaysia
- Mjunction Services Limited - India
- Kumho Petrochemical, South Korea
- Globalindo Alam Lestari - Indonesia
- Altura Mining Limited, Indonesia
- Petron Corporation, Philippines
- Chamber of Mines of South Africa
- Attock Cement Pakistan Limited
- Kalimantan Lumbung Energi - Indonesia
- Medco Energi Mining Internasional
- CNBM International Corporation - China
- Karaikal Port Pvt Ltd - India
- OPG Power Generation Pvt Ltd - India
- Meenaskhi Energy Private Limited - India
- Samtan Co., Ltd - South Korea
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- AsiaOL BioFuels Corp., Philippines
- The Treasury - Australian Government
- GAC Shipping (India) Pvt Ltd
- Jaiprakash Power Ventures ltd
- Wilmar Investment Holdings
- Madhucon Powers Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- San Jose City I Power Corp, Philippines
- Eastern Energy - Thailand
- Goldman Sachs - Singapore
- Toyota Tsusho Corporation, Japan
- Electricity Authority, New Zealand
- Chettinad Cement Corporation Ltd - India
- Manunggal Multi Energi - Indonesia
- Uttam Galva Steels Limited - India
- European Bulk Services B.V. - Netherlands
- Alfred C Toepfer International GmbH - Germany
- Standard Chartered Bank - UAE
- McConnell Dowell - Australia
- South Luzon Thermal Energy Corporation
- SMC Global Power, Philippines
- Energy Development Corp, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Holcim Trading Pte Ltd - Singapore
- MS Steel International - UAE
- LBH Netherlands Bv - Netherlands
- Global Green Power PLC Corporation, Philippines
- GMR Energy Limited - India
- Vizag Seaport Private Limited - India
- Coal and Oil Company - UAE
- India Bulls Power Limited - India
- Sindya Power Generating Company Private Ltd
- Antam Resourcindo - Indonesia
- ASAPP Information Group - India
- Bhoruka Overseas - Indonesia
- Salva Resources Pvt Ltd - India
- Price Waterhouse Coopers - Russia
- Tamil Nadu electricity Board
- Jindal Steel & Power Ltd - India
- Posco Energy - South Korea
- Bangladesh Power Developement Board
- Tata Chemicals Ltd - India
- Straits Asia Resources Limited - Singapore
- Commonwealth Bank - Australia
- Economic Council, Georgia
- Minerals Council of Australia
- Gujarat Electricity Regulatory Commission - India
- Mintek Dendrill Indonesia
- Binh Thuan Hamico - Vietnam
- IHS Mccloskey Coal Group - USA
- Thai Mozambique Logistica
- Vedanta Resources Plc - India
- Bukit Makmur.PT - Indonesia
- Marubeni Corporation - India
- Rashtriya Ispat Nigam Limited - India
- Xindia Steels Limited - India
- Kobexindo Tractors - Indoneisa
- Renaissance Capital - South Africa
- Krishnapatnam Port Company Ltd. - India
- Sree Jayajothi Cements Limited - India
- ICICI Bank Limited - India
- New Zealand Coal & Carbon
- Cigading International Bulk Terminal - Indonesia
- Cement Manufacturers Association - India
- Central Electricity Authority - India
- Bhatia International Limited - India
- Ceylon Electricity Board - Sri Lanka
- Bahari Cakrawala Sebuku - Indonesia
- Africa Commodities Group - South Africa
- Sinarmas Energy and Mining - Indonesia
- Eastern Coal Council - USA
- London Commodity Brokers - England
- Lanco Infratech Ltd - India
- Singapore Mercantile Exchange
- Indika Energy - Indonesia
- Interocean Group of Companies - India
- Maharashtra Electricity Regulatory Commission - India
- Ministry of Mines - Canada
- Timah Investasi Mineral - Indoneisa
- Australian Coal Association
- Indian Oil Corporation Limited
- Pendopo Energi Batubara - Indonesia
- Bhushan Steel Limited - India
- Riau Bara Harum - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Sojitz Corporation - Japan
- Siam City Cement - Thailand
- Latin American Coal - Colombia
- Petrochimia International Co. Ltd.- Taiwan
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Grasim Industreis Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Formosa Plastics Group - Taiwan
- Malabar Cements Ltd - India
- Bayan Resources Tbk. - Indonesia
- Electricity Generating Authority of Thailand
- Savvy Resources Ltd - HongKong
- Orica Mining Services - Indonesia
- Banpu Public Company Limited - Thailand
- Iligan Light & Power Inc, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Thiess Contractors Indonesia
- Dalmia Cement Bharat India
- Pipit Mutiara Jaya. PT, Indonesia
- The University of Queensland
- The State Trading Corporation of India Ltd
- Coastal Gujarat Power Limited - India
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