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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, 16 October 12
DRY BULK FREIGHT RATES COULD IMPROVE ON CHINESE STIMULUS AND WINTER CARGO DEMAND SAYS BIMCO - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
BIMCO has given out its forecast for the next six weeks, in terms of freight rates for dry bulk carriers. According to them, Capesize TC Average rat ...
Monday, 15 October 12
IT'S STRICTLY COME CHARTERING - CLARKSON RESEARCH SERVICES
The charter market is a bit of a dance between ship owner and charterer: one leader, one follower; one step, two steps, turn... The dance is symbiot ...
Sunday, 14 October 12
SUB-BIT INDONESIA COAL AND CFR SOUTH CHINA COAL SWAPS: SOFT
COALspot.com - Sub-Bit Indonesia coal swaps (FOB ) for December 2012 delivery lost 0.329 percent w- w but gained 0.248 percent d-d on Friday, 12 Oct ...
Sunday, 14 October 12
SUPRAMAX FREIGHT STEADY: PANAMAX FREIGHTS FIRM - VISTAAR
COALspot.com - The shipping market saw some hectic activity in the Cape and panamax sector and quite a lot of fixtures reported.
The BDI was up b ...
Friday, 12 October 12
HOW REAL IS THE THREAT OF PIRACY? - BIMCO
The threat of modern piracy remains serious, regardless of its seasonal variations and the fact that it is chiefly confined to the Indian Ocean, Gul ...
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- Bahari Cakrawala Sebuku - Indonesia
- Sarangani Energy Corporation, Philippines
- AsiaOL BioFuels Corp., Philippines
- Tata Chemicals Ltd - India
- Makarim & Taira - Indonesia
- Intertek Mineral Services - Indonesia
- GAC Shipping (India) Pvt Ltd
- ASAPP Information Group - India
- White Energy Company Limited
- Ministry of Mines - Canada
- Global Business Power Corporation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Coalindo Energy - Indonesia
- Ministry of Transport, Egypt
- LBH Netherlands Bv - Netherlands
- Sree Jayajothi Cements Limited - India
- Kaltim Prima Coal - Indonesia
- Indonesian Coal Mining Association
- Vizag Seaport Private Limited - India
- Bangladesh Power Developement Board
- Bhatia International Limited - India
- Billiton Holdings Pty Ltd - Australia
- Interocean Group of Companies - India
- Carbofer General Trading SA - India
- Bhushan Steel Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Directorate Of Revenue Intelligence - India
- Central Java Power - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Maharashtra Electricity Regulatory Commission - India
- Independent Power Producers Association of India
- Sojitz Corporation - Japan
- Jaiprakash Power Ventures ltd
- Neyveli Lignite Corporation Ltd, - India
- Iligan Light & Power Inc, Philippines
- Baramulti Group, Indonesia
- MS Steel International - UAE
- PNOC Exploration Corporation - Philippines
- Jindal Steel & Power Ltd - India
- The State Trading Corporation of India Ltd
- SMC Global Power, Philippines
- Cement Manufacturers Association - India
- Ambuja Cements Ltd - India
- Ministry of Finance - Indonesia
- Kumho Petrochemical, South Korea
- Electricity Authority, New Zealand
- Indika Energy - Indonesia
- VISA Power Limited - India
- Mintek Dendrill Indonesia
- Sinarmas Energy and Mining - Indonesia
- Mercuria Energy - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Petrochimia International Co. Ltd.- Taiwan
- Renaissance Capital - South Africa
- Rashtriya Ispat Nigam Limited - India
- IHS Mccloskey Coal Group - USA
- Latin American Coal - Colombia
- Kartika Selabumi Mining - Indonesia
- SN Aboitiz Power Inc, Philippines
- Energy Development Corp, Philippines
- Star Paper Mills Limited - India
- Parliament of New Zealand
- Siam City Cement - Thailand
- Riau Bara Harum - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Global Coal Blending Company Limited - Australia
- Anglo American - United Kingdom
- Karbindo Abesyapradhi - Indoneisa
- European Bulk Services B.V. - Netherlands
- Power Finance Corporation Ltd., India
- Deloitte Consulting - India
- Meralco Power Generation, Philippines
- Tamil Nadu electricity Board
- Antam Resourcindo - Indonesia
- CIMB Investment Bank - Malaysia
- Edison Trading Spa - Italy
- Kideco Jaya Agung - Indonesia
- Indo Tambangraya Megah - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Videocon Industries ltd - India
- Barasentosa Lestari - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Cigading International Bulk Terminal - Indonesia
- Uttam Galva Steels Limited - India
- Timah Investasi Mineral - Indoneisa
- Singapore Mercantile Exchange
- GN Power Mariveles Coal Plant, Philippines
- ICICI Bank Limited - India
- GVK Power & Infra Limited - India
- TeaM Sual Corporation - Philippines
- South Luzon Thermal Energy Corporation
- Bukit Baiduri Energy - Indonesia
- Ind-Barath Power Infra Limited - India
- Central Electricity Authority - India
- Kobexindo Tractors - Indoneisa
- Economic Council, Georgia
- India Bulls Power Limited - India
- Manunggal Multi Energi - Indonesia
- Heidelberg Cement - Germany
- Banpu Public Company Limited - Thailand
- International Coal Ventures Pvt Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Bulk Trading Sa - Switzerland
- Krishnapatnam Port Company Ltd. - India
- Vijayanagar Sugar Pvt Ltd - India
- Meenaskhi Energy Private Limited - India
- Australian Coal Association
- Indogreen Group - Indonesia
- Bharathi Cement Corporation - India
- Globalindo Alam Lestari - Indonesia
- Madhucon Powers Ltd - India
- New Zealand Coal & Carbon
- Goldman Sachs - Singapore
- Chettinad Cement Corporation Ltd - India
- Essar Steel Hazira Ltd - India
- Borneo Indobara - Indonesia
- Eastern Coal Council - USA
- Larsen & Toubro Limited - India
- Sakthi Sugars Limited - India
- Electricity Generating Authority of Thailand
- Medco Energi Mining Internasional
- The University of Queensland
- Thiess Contractors Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Lanco Infratech Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Metalloyd Limited - United Kingdom
- Parry Sugars Refinery, India
- Eastern Energy - Thailand
- Bayan Resources Tbk. - Indonesia
- Leighton Contractors Pty Ltd - Australia
- CNBM International Corporation - China
- The Treasury - Australian Government
- Salva Resources Pvt Ltd - India
- Planning Commission, India
- Wilmar Investment Holdings
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Dalmia Cement Bharat India
- Therma Luzon, Inc, Philippines
- Coastal Gujarat Power Limited - India
- Oldendorff Carriers - Singapore
- Price Waterhouse Coopers - Russia
- Formosa Plastics Group - Taiwan
- Jorong Barutama Greston.PT - Indonesia
- Wood Mackenzie - Singapore
- Gujarat Electricity Regulatory Commission - India
- Toyota Tsusho Corporation, Japan
- Aboitiz Power Corporation - Philippines
- Malabar Cements Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Sindya Power Generating Company Private Ltd
- Trasteel International SA, Italy
- Gujarat Mineral Development Corp Ltd - India
- Posco Energy - South Korea
- Savvy Resources Ltd - HongKong
- Semirara Mining Corp, Philippines
- PTC India Limited - India
- Global Green Power PLC Corporation, Philippines
- Attock Cement Pakistan Limited
- OPG Power Generation Pvt Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Commonwealth Bank - Australia
- Indian Oil Corporation Limited
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Sical Logistics Limited - India
- Thai Mozambique Logistica
- Altura Mining Limited, Indonesia
- San Jose City I Power Corp, Philippines
- Binh Thuan Hamico - Vietnam
- Mjunction Services Limited - India
- Agrawal Coal Company - India
- Orica Australia Pty. Ltd.
- Chamber of Mines of South Africa
- Georgia Ports Authority, United States
- Straits Asia Resources Limited - Singapore
- Mercator Lines Limited - India
- Romanian Commodities Exchange
- IEA Clean Coal Centre - UK
- Minerals Council of Australia
- Maheswari Brothers Coal Limited - India
- Coal and Oil Company - UAE
- Port Waratah Coal Services - Australia
- Orica Mining Services - Indonesia
- Karaikal Port Pvt Ltd - India
- PowerSource Philippines DevCo
- Australian Commodity Traders Exchange
- Samtan Co., Ltd - South Korea
- Simpson Spence & Young - Indonesia
- Kepco SPC Power Corporation, Philippines
- Marubeni Corporation - India
- Grasim Industreis Ltd - India
- Pendopo Energi Batubara - Indonesia
- McConnell Dowell - Australia
- Bhoruka Overseas - Indonesia
- Siam City Cement PLC, Thailand
- Rio Tinto Coal - Australia
- Africa Commodities Group - South Africa
- Energy Link Ltd, New Zealand
- Gujarat Sidhee Cement - India
- Aditya Birla Group - India
- London Commodity Brokers - England
- Bukit Makmur.PT - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Petron Corporation, Philippines
- Miang Besar Coal Terminal - Indonesia
- Xindia Steels Limited - India
- Vedanta Resources Plc - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- SMG Consultants - Indonesia
- Merrill Lynch Commodities Europe
- Indian Energy Exchange, India
- Alfred C Toepfer International GmbH - Germany
- Asmin Koalindo Tuhup - Indonesia
- Standard Chartered Bank - UAE
- Holcim Trading Pte Ltd - Singapore
- GMR Energy Limited - India
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