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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, 09 December 12
LOW DEMAND PUSHES CHARTER RATES TOWARDS DOWN - VISTAAR
COALspot.com - The freight market has softened and BDI, The Baltic Dry Index, a measure of shipping costs for dry bulk goods, plunged below 10 ...
Friday, 07 December 12
A NEW PHASE FOR AUSTRALIAN RESOURCES - A FITCH STREET INTERVIEW
This week Matt Jamieson spoke with Andrew Colquhoun in Fitch's Asian sovereign rating team, and Vicky Melbourne, Fitch's commodity analyst based i ...
Friday, 07 December 12
SHIPPING INDUSTRY LOOKING ON YET ANOTHER TOUGH YEAR AS WE APPROACH 2013 - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
With shipping finance "on the ropes" as traditional lenders appear to be cutting their losses and tonnage oversupply still the most import ...
Thursday, 06 December 12
PANAMAX : THE POSITIVE VIBES IN THE ATLANTIC REMAINS - FEARNLEYS AS
Handy
The Atlantic market is still depressed with dearth of cargoes and more ships. The trips from Continent to Feast fixed around USD 12k. Trips f ...
Thursday, 06 December 12
STRONG CHINESE DEMAND FOR DRY BULK COMMODITIES EXPECTED FOR 2013 - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
A new analysis from BIMCO released yesterday suggests that 2013 is expected to be a stronger year in terms of China's "hunger" for commod ...
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- Siam City Cement PLC, Thailand
- Kaltim Prima Coal - Indonesia
- Barasentosa Lestari - Indonesia
- Oldendorff Carriers - Singapore
- Gujarat Sidhee Cement - India
- Ministry of Mines - Canada
- Star Paper Mills Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Central Electricity Authority - India
- IEA Clean Coal Centre - UK
- Meralco Power Generation, Philippines
- Kohat Cement Company Ltd. - Pakistan
- GVK Power & Infra Limited - India
- OPG Power Generation Pvt Ltd - India
- Aboitiz Power Corporation - Philippines
- Deloitte Consulting - India
- Directorate Of Revenue Intelligence - India
- Bukit Makmur.PT - Indonesia
- Globalindo Alam Lestari - Indonesia
- Minerals Council of Australia
- Posco Energy - South Korea
- Trasteel International SA, Italy
- Coal and Oil Company - UAE
- Simpson Spence & Young - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- The University of Queensland
- Iligan Light & Power Inc, Philippines
- Borneo Indobara - Indonesia
- Port Waratah Coal Services - Australia
- The Treasury - Australian Government
- Cigading International Bulk Terminal - Indonesia
- Indo Tambangraya Megah - Indonesia
- Videocon Industries ltd - India
- GAC Shipping (India) Pvt Ltd
- Indika Energy - Indonesia
- Mjunction Services Limited - India
- Riau Bara Harum - Indonesia
- Pendopo Energi Batubara - Indonesia
- Grasim Industreis Ltd - India
- Manunggal Multi Energi - Indonesia
- Energy Link Ltd, New Zealand
- Kapuas Tunggal Persada - Indonesia
- Samtan Co., Ltd - South Korea
- Holcim Trading Pte Ltd - Singapore
- ASAPP Information Group - India
- Indian Energy Exchange, India
- Merrill Lynch Commodities Europe
- Parliament of New Zealand
- Bukit Asam (Persero) Tbk - Indonesia
- Orica Australia Pty. Ltd.
- Savvy Resources Ltd - HongKong
- Larsen & Toubro Limited - India
- Krishnapatnam Port Company Ltd. - India
- Makarim & Taira - Indonesia
- Global Coal Blending Company Limited - Australia
- Vedanta Resources Plc - India
- Kobexindo Tractors - Indoneisa
- Mintek Dendrill Indonesia
- London Commodity Brokers - England
- Indogreen Group - Indonesia
- Petron Corporation, Philippines
- Dalmia Cement Bharat India
- Sakthi Sugars Limited - India
- Rashtriya Ispat Nigam Limited - India
- Central Java Power - Indonesia
- Standard Chartered Bank - UAE
- Thai Mozambique Logistica
- Jindal Steel & Power Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Electricity Generating Authority of Thailand
- CNBM International Corporation - China
- Commonwealth Bank - Australia
- Therma Luzon, Inc, Philippines
- Marubeni Corporation - India
- Australian Coal Association
- Meenaskhi Energy Private Limited - India
- SN Aboitiz Power Inc, Philippines
- McConnell Dowell - Australia
- Tata Chemicals Ltd - India
- Uttam Galva Steels Limited - India
- Agrawal Coal Company - India
- Cement Manufacturers Association - India
- Anglo American - United Kingdom
- Siam City Cement - Thailand
- Goldman Sachs - Singapore
- Essar Steel Hazira Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Edison Trading Spa - Italy
- PTC India Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Parry Sugars Refinery, India
- Toyota Tsusho Corporation, Japan
- Asmin Koalindo Tuhup - Indonesia
- India Bulls Power Limited - India
- Straits Asia Resources Limited - Singapore
- The State Trading Corporation of India Ltd
- Vizag Seaport Private Limited - India
- Interocean Group of Companies - India
- Banpu Public Company Limited - Thailand
- Baramulti Group, Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Alfred C Toepfer International GmbH - Germany
- Altura Mining Limited, Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Sojitz Corporation - Japan
- Maheswari Brothers Coal Limited - India
- Power Finance Corporation Ltd., India
- Timah Investasi Mineral - Indoneisa
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- LBH Netherlands Bv - Netherlands
- Formosa Plastics Group - Taiwan
- SMC Global Power, Philippines
- Xindia Steels Limited - India
- Miang Besar Coal Terminal - Indonesia
- Sree Jayajothi Cements Limited - India
- Antam Resourcindo - Indonesia
- Semirara Mining Corp, Philippines
- Semirara Mining and Power Corporation, Philippines
- Binh Thuan Hamico - Vietnam
- Leighton Contractors Pty Ltd - Australia
- Tamil Nadu electricity Board
- Australian Commodity Traders Exchange
- San Jose City I Power Corp, Philippines
- Attock Cement Pakistan Limited
- Metalloyd Limited - United Kingdom
- Chettinad Cement Corporation Ltd - India
- Price Waterhouse Coopers - Russia
- Lanco Infratech Ltd - India
- Bulk Trading Sa - Switzerland
- Singapore Mercantile Exchange
- Salva Resources Pvt Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Global Green Power PLC Corporation, Philippines
- Heidelberg Cement - Germany
- Africa Commodities Group - South Africa
- Petrochimia International Co. Ltd.- Taiwan
- New Zealand Coal & Carbon
- Sindya Power Generating Company Private Ltd
- Coalindo Energy - Indonesia
- ICICI Bank Limited - India
- Ministry of Transport, Egypt
- Bukit Baiduri Energy - Indonesia
- Madhucon Powers Ltd - India
- Independent Power Producers Association of India
- Bhushan Steel Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Indian Oil Corporation Limited
- AsiaOL BioFuels Corp., Philippines
- PNOC Exploration Corporation - Philippines
- Medco Energi Mining Internasional
- Kartika Selabumi Mining - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Thiess Contractors Indonesia
- Bharathi Cement Corporation - India
- Romanian Commodities Exchange
- White Energy Company Limited
- PowerSource Philippines DevCo
- TeaM Sual Corporation - Philippines
- Kumho Petrochemical, South Korea
- Wood Mackenzie - Singapore
- Kepco SPC Power Corporation, Philippines
- Karaikal Port Pvt Ltd - India
- Jaiprakash Power Ventures ltd
- Bhatia International Limited - India
- Georgia Ports Authority, United States
- Wilmar Investment Holdings
- Electricity Authority, New Zealand
- Bhoruka Overseas - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- MS Steel International - UAE
- Chamber of Mines of South Africa
- Mercuria Energy - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Ministry of Finance - Indonesia
- Intertek Mineral Services - Indonesia
- Sical Logistics Limited - India
- Orica Mining Services - Indonesia
- Rio Tinto Coal - Australia
- Indonesian Coal Mining Association
- Global Business Power Corporation, Philippines
- Malabar Cements Ltd - India
- Eastern Energy - Thailand
- Bayan Resources Tbk. - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sarangani Energy Corporation, Philippines
- Ambuja Cements Ltd - India
- Ind-Barath Power Infra Limited - India
- International Coal Ventures Pvt Ltd - India
- GMR Energy Limited - India
- Aditya Birla Group - India
- Kideco Jaya Agung - Indonesia
- Coastal Gujarat Power Limited - India
- European Bulk Services B.V. - Netherlands
- Pipit Mutiara Jaya. PT, Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Energy Development Corp, Philippines
- Carbofer General Trading SA - India
- South Luzon Thermal Energy Corporation
- Directorate General of MIneral and Coal - Indonesia
- SMG Consultants - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Planning Commission, India
- Bangladesh Power Developement Board
- Eastern Coal Council - USA
- Ceylon Electricity Board - Sri Lanka
- Asia Pacific Energy Resources Ventures Inc, Philippines
- VISA Power Limited - India
- CIMB Investment Bank - Malaysia
- Renaissance Capital - South Africa
- Kalimantan Lumbung Energi - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Mercator Lines Limited - India
- Latin American Coal - Colombia
- Bahari Cakrawala Sebuku - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- IHS Mccloskey Coal Group - USA
- Economic Council, Georgia
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