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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, 15 September 19
SUPRAMAX / ULTRAMAX: MORE STEMS WERE NOTICED GOING TO VIETNAM FROM INDONESIA - BALTIC BRIEFING
Capesize
Overall it was a negative week for the Capesize market, with many routes losing ground. A limited amount of time charter appeare ...
Wednesday, 11 September 19
THE INDONESIAN COAL PRICE REFERENCE FELL HEAVILY IN SEPTEMBER
COALspot.com: The Ministry of Energy and Mineral Resources of the Republic of Indonesia has revised down the benchmark price of Indonesian thermal ...
Wednesday, 11 September 19
SHIPPING MARKET INSIGHT - INTERMODAL
We are going through one of the rare instances where we see optimism building in the dry bulk industry and, as the momentum is still going, the bel ...
Monday, 09 September 19
INDIAN COMPANIES READY TO INVEST IN DEVELOPMENT OF NEW COAL DEPOSITS IN RUSSIA'S YAKUTIA - TASS
Indian metallurgical companies, which received trial batches of coal from Kolmar mining company, are satisfied with the quality of the products and ...
Monday, 09 September 19
COLOMBIA COAL OUTPUT DOWN YEAR-ON-YEAR IN 2ND QUARTER - REUTERS
Colombia, the world’s fifth-largest exporter of coal, produced 18.9 million tonnes of the fuel in the second quarter, down 4.5% from the same ...
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- Mercuria Energy - Indonesia
- Bulk Trading Sa - Switzerland
- MS Steel International - UAE
- Samtan Co., Ltd - South Korea
- White Energy Company Limited
- Sical Logistics Limited - India
- Deloitte Consulting - India
- Semirara Mining and Power Corporation, Philippines
- Baramulti Group, Indonesia
- Borneo Indobara - Indonesia
- GAC Shipping (India) Pvt Ltd
- Mintek Dendrill Indonesia
- Latin American Coal - Colombia
- PTC India Limited - India
- Anglo American - United Kingdom
- Jorong Barutama Greston.PT - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Savvy Resources Ltd - HongKong
- Binh Thuan Hamico - Vietnam
- Coal and Oil Company - UAE
- Pipit Mutiara Jaya. PT, Indonesia
- Indogreen Group - Indonesia
- Thai Mozambique Logistica
- ICICI Bank Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- European Bulk Services B.V. - Netherlands
- Orica Australia Pty. Ltd.
- VISA Power Limited - India
- Indonesian Coal Mining Association
- Kideco Jaya Agung - Indonesia
- Mercator Lines Limited - India
- Central Electricity Authority - India
- Chettinad Cement Corporation Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Edison Trading Spa - Italy
- CNBM International Corporation - China
- McConnell Dowell - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Australian Commodity Traders Exchange
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Meenaskhi Energy Private Limited - India
- Alfred C Toepfer International GmbH - Germany
- San Jose City I Power Corp, Philippines
- Bukit Baiduri Energy - Indonesia
- Metalloyd Limited - United Kingdom
- Lanco Infratech Ltd - India
- Makarim & Taira - Indonesia
- Chamber of Mines of South Africa
- Independent Power Producers Association of India
- Sinarmas Energy and Mining - Indonesia
- Ministry of Finance - Indonesia
- Central Java Power - Indonesia
- Indian Oil Corporation Limited
- Aboitiz Power Corporation - Philippines
- ASAPP Information Group - India
- AsiaOL BioFuels Corp., Philippines
- OPG Power Generation Pvt Ltd - India
- Trasteel International SA, Italy
- Vedanta Resources Plc - India
- GVK Power & Infra Limited - India
- Jindal Steel & Power Ltd - India
- Sree Jayajothi Cements Limited - India
- Directorate Of Revenue Intelligence - India
- Therma Luzon, Inc, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Tata Chemicals Ltd - India
- Planning Commission, India
- Electricity Generating Authority of Thailand
- PNOC Exploration Corporation - Philippines
- Vizag Seaport Private Limited - India
- SMC Global Power, Philippines
- Economic Council, Georgia
- Gujarat Electricity Regulatory Commission - India
- Madhucon Powers Ltd - India
- Power Finance Corporation Ltd., India
- The State Trading Corporation of India Ltd
- Ministry of Mines - Canada
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Carbofer General Trading SA - India
- Aditya Birla Group - India
- Toyota Tsusho Corporation, Japan
- Energy Link Ltd, New Zealand
- Kepco SPC Power Corporation, Philippines
- Maheswari Brothers Coal Limited - India
- Kartika Selabumi Mining - Indonesia
- Bangladesh Power Developement Board
- Billiton Holdings Pty Ltd - Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kaltim Prima Coal - Indonesia
- Tamil Nadu electricity Board
- Interocean Group of Companies - India
- Oldendorff Carriers - Singapore
- Cigading International Bulk Terminal - Indonesia
- Meralco Power Generation, Philippines
- Bayan Resources Tbk. - Indonesia
- Barasentosa Lestari - Indonesia
- Antam Resourcindo - Indonesia
- Siam City Cement PLC, Thailand
- Larsen & Toubro Limited - India
- India Bulls Power Limited - India
- Commonwealth Bank - Australia
- Karaikal Port Pvt Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- New Zealand Coal & Carbon
- Eastern Coal Council - USA
- Port Waratah Coal Services - Australia
- Sakthi Sugars Limited - India
- Altura Mining Limited, Indonesia
- Grasim Industreis Ltd - India
- Rio Tinto Coal - Australia
- Price Waterhouse Coopers - Russia
- Merrill Lynch Commodities Europe
- Ind-Barath Power Infra Limited - India
- Mjunction Services Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Siam City Cement - Thailand
- Energy Development Corp, Philippines
- Sindya Power Generating Company Private Ltd
- Kapuas Tunggal Persada - Indonesia
- Global Business Power Corporation, Philippines
- Standard Chartered Bank - UAE
- Riau Bara Harum - Indonesia
- Parliament of New Zealand
- Timah Investasi Mineral - Indoneisa
- Bhushan Steel Limited - India
- Romanian Commodities Exchange
- Simpson Spence & Young - Indonesia
- Jaiprakash Power Ventures ltd
- Iligan Light & Power Inc, Philippines
- Australian Coal Association
- Manunggal Multi Energi - Indonesia
- Attock Cement Pakistan Limited
- Vijayanagar Sugar Pvt Ltd - India
- Miang Besar Coal Terminal - Indonesia
- TeaM Sual Corporation - Philippines
- Straits Asia Resources Limited - Singapore
- Orica Mining Services - Indonesia
- Sojitz Corporation - Japan
- Formosa Plastics Group - Taiwan
- Globalindo Alam Lestari - Indonesia
- Electricity Authority, New Zealand
- Pendopo Energi Batubara - Indonesia
- Kumho Petrochemical, South Korea
- Ministry of Transport, Egypt
- Georgia Ports Authority, United States
- LBH Netherlands Bv - Netherlands
- The University of Queensland
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bhatia International Limited - India
- PowerSource Philippines DevCo
- Indian Energy Exchange, India
- Dalmia Cement Bharat India
- Gujarat Mineral Development Corp Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- CIMB Investment Bank - Malaysia
- IHS Mccloskey Coal Group - USA
- Directorate General of MIneral and Coal - Indonesia
- Eastern Energy - Thailand
- Kobexindo Tractors - Indoneisa
- Intertek Mineral Services - Indonesia
- Wilmar Investment Holdings
- London Commodity Brokers - England
- Krishnapatnam Port Company Ltd. - India
- Xindia Steels Limited - India
- Salva Resources Pvt Ltd - India
- Agrawal Coal Company - India
- Karbindo Abesyapradhi - Indoneisa
- Rashtriya Ispat Nigam Limited - India
- Marubeni Corporation - India
- Ceylon Electricity Board - Sri Lanka
- Renaissance Capital - South Africa
- Indo Tambangraya Megah - Indonesia
- Global Green Power PLC Corporation, Philippines
- Videocon Industries ltd - India
- International Coal Ventures Pvt Ltd - India
- Posco Energy - South Korea
- Essar Steel Hazira Ltd - India
- IEA Clean Coal Centre - UK
- Bharathi Cement Corporation - India
- Heidelberg Cement - Germany
- Semirara Mining Corp, Philippines
- Coalindo Energy - Indonesia
- Global Coal Blending Company Limited - Australia
- Wood Mackenzie - Singapore
- Minerals Council of Australia
- Star Paper Mills Limited - India
- Kalimantan Lumbung Energi - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Uttam Galva Steels Limited - India
- The Treasury - Australian Government
- South Luzon Thermal Energy Corporation
- Sarangani Energy Corporation, Philippines
- SN Aboitiz Power Inc, Philippines
- SMG Consultants - Indonesia
- Bukit Makmur.PT - Indonesia
- Ambuja Cements Ltd - India
- Parry Sugars Refinery, India
- Petron Corporation, Philippines
- Indika Energy - Indonesia
- Medco Energi Mining Internasional
- Bhoruka Overseas - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Petrochimia International Co. Ltd.- Taiwan
- Thiess Contractors Indonesia
- GMR Energy Limited - India
- Holcim Trading Pte Ltd - Singapore
- Singapore Mercantile Exchange
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Coastal Gujarat Power Limited - India
- Goldman Sachs - Singapore
- Banpu Public Company Limited - Thailand
- Leighton Contractors Pty Ltd - Australia
- Malabar Cements Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Africa Commodities Group - South Africa
- Cement Manufacturers Association - India
- Gujarat Sidhee Cement - India
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