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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, 11 August 19
ULTRAMAX: A 58,000DWT VESSEL OPEN KEMAMAN FIXED FOR TWO TO THREE LADEN LEGS, REDELIVERY SINGAPORE-JAPAN, AT $12,250 - BALTIC BRIEFING
Capesize
With typhoon Lekima gathering pace, numerous China ports were closed by the end of the week and will likely be for two to three days. ...
Tuesday, 06 August 19
SHIPPING MARKET INSIGHT - INTERMODAL
On the 12th of May four tankers were attacked near the coast of Fujairah. The tankers hit were waiving international flags such as that of No ...
Monday, 05 August 19
SUPRAMAX: COAL FROM INDONESIA TO CHINA PAID AT MID $8,000S ON A 57,000-TONNER DELIVERY SOUTH CHINA - BALTIC BRIEFING
Capesize
Having hit a high of $32,963 early last week, the Capesize 5TC now stands at $25,749. This is over 20% of its value lost in 10 days. C ...
Thursday, 01 August 19
PANAMAX: THE SENTIMENT IN THE MARKET IS STILL POSITIVE FOR THE LONGER TERM - FEARNLEYS
Capesize
Two weeks ago the 5TC index was at 33,000 USD pd. Since then it has fallen off a bit and has stayed around 27,000 USD pd the last week ...
Thursday, 01 August 19
INDIKA ENERGY REVENUES DECLINE DUE TO LOW COAL PRICES
One of the largest Indonesian integrated energy companies PT Indika Energy Tbk posted revenues of US $ 1,380.4 million, down 4.6% compared to US $ ...
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- Karbindo Abesyapradhi - Indoneisa
- Coalindo Energy - Indonesia
- Malabar Cements Ltd - India
- Kumho Petrochemical, South Korea
- Wood Mackenzie - Singapore
- Asmin Koalindo Tuhup - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Marubeni Corporation - India
- Mintek Dendrill Indonesia
- Central Java Power - Indonesia
- Agrawal Coal Company - India
- PNOC Exploration Corporation - Philippines
- SN Aboitiz Power Inc, Philippines
- Barasentosa Lestari - Indonesia
- South Luzon Thermal Energy Corporation
- SMC Global Power, Philippines
- San Jose City I Power Corp, Philippines
- Electricity Generating Authority of Thailand
- Indogreen Group - Indonesia
- MS Steel International - UAE
- Bahari Cakrawala Sebuku - Indonesia
- Essar Steel Hazira Ltd - India
- Energy Link Ltd, New Zealand
- Anglo American - United Kingdom
- Lanco Infratech Ltd - India
- Star Paper Mills Limited - India
- Latin American Coal - Colombia
- Energy Development Corp, Philippines
- Billiton Holdings Pty Ltd - Australia
- Commonwealth Bank - Australia
- Power Finance Corporation Ltd., India
- Indian Energy Exchange, India
- Edison Trading Spa - Italy
- Metalloyd Limited - United Kingdom
- Kobexindo Tractors - Indoneisa
- New Zealand Coal & Carbon
- Global Green Power PLC Corporation, Philippines
- Globalindo Alam Lestari - Indonesia
- Karaikal Port Pvt Ltd - India
- CIMB Investment Bank - Malaysia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Planning Commission, India
- Siam City Cement PLC, Thailand
- Ministry of Finance - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Siam City Cement - Thailand
- Oldendorff Carriers - Singapore
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Miang Besar Coal Terminal - Indonesia
- SMG Consultants - Indonesia
- Africa Commodities Group - South Africa
- Orica Australia Pty. Ltd.
- Minerals Council of Australia
- Iligan Light & Power Inc, Philippines
- European Bulk Services B.V. - Netherlands
- Petron Corporation, Philippines
- Sree Jayajothi Cements Limited - India
- Merrill Lynch Commodities Europe
- Jindal Steel & Power Ltd - India
- Kaltim Prima Coal - Indonesia
- Singapore Mercantile Exchange
- Bhushan Steel Limited - India
- ASAPP Information Group - India
- Ind-Barath Power Infra Limited - India
- Georgia Ports Authority, United States
- Indonesian Coal Mining Association
- Meenaskhi Energy Private Limited - India
- Ministry of Mines - Canada
- Banpu Public Company Limited - Thailand
- PetroVietnam Power Coal Import and Supply Company
- GMR Energy Limited - India
- Leighton Contractors Pty Ltd - Australia
- Mercuria Energy - Indonesia
- Standard Chartered Bank - UAE
- Coastal Gujarat Power Limited - India
- Meralco Power Generation, Philippines
- Makarim & Taira - Indonesia
- Dalmia Cement Bharat India
- Chamber of Mines of South Africa
- Bulk Trading Sa - Switzerland
- The State Trading Corporation of India Ltd
- PowerSource Philippines DevCo
- Rashtriya Ispat Nigam Limited - India
- Directorate Of Revenue Intelligence - India
- Romanian Commodities Exchange
- Pipit Mutiara Jaya. PT, Indonesia
- AsiaOL BioFuels Corp., Philippines
- Larsen & Toubro Limited - India
- Toyota Tsusho Corporation, Japan
- Australian Commodity Traders Exchange
- Bhoruka Overseas - Indonesia
- White Energy Company Limited
- Thai Mozambique Logistica
- Indo Tambangraya Megah - Indonesia
- Antam Resourcindo - Indonesia
- Altura Mining Limited, Indonesia
- Sarangani Energy Corporation, Philippines
- Heidelberg Cement - Germany
- Gujarat Sidhee Cement - India
- Simpson Spence & Young - Indonesia
- Mercator Lines Limited - India
- Ministry of Transport, Egypt
- Binh Thuan Hamico - Vietnam
- VISA Power Limited - India
- Parliament of New Zealand
- Posco Energy - South Korea
- Jorong Barutama Greston.PT - Indonesia
- Renaissance Capital - South Africa
- Alfred C Toepfer International GmbH - Germany
- Uttam Galva Steels Limited - India
- Sakthi Sugars Limited - India
- Vizag Seaport Private Limited - India
- LBH Netherlands Bv - Netherlands
- International Coal Ventures Pvt Ltd - India
- Indian Oil Corporation Limited
- Bayan Resources Tbk. - Indonesia
- Semirara Mining Corp, Philippines
- Wilmar Investment Holdings
- Vijayanagar Sugar Pvt Ltd - India
- Timah Investasi Mineral - Indoneisa
- Salva Resources Pvt Ltd - India
- Samtan Co., Ltd - South Korea
- Kideco Jaya Agung - Indonesia
- OPG Power Generation Pvt Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Sindya Power Generating Company Private Ltd
- Therma Luzon, Inc, Philippines
- Straits Asia Resources Limited - Singapore
- Formosa Plastics Group - Taiwan
- Kapuas Tunggal Persada - Indonesia
- Central Electricity Authority - India
- GN Power Mariveles Coal Plant, Philippines
- Australian Coal Association
- IEA Clean Coal Centre - UK
- Ambuja Cements Ltd - India
- Sical Logistics Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Rio Tinto Coal - Australia
- ICICI Bank Limited - India
- Bukit Makmur.PT - Indonesia
- Vedanta Resources Plc - India
- Carbofer General Trading SA - India
- Kartika Selabumi Mining - Indonesia
- Aditya Birla Group - India
- Bangladesh Power Developement Board
- Chettinad Cement Corporation Ltd - India
- Krishnapatnam Port Company Ltd. - India
- GAC Shipping (India) Pvt Ltd
- Maharashtra Electricity Regulatory Commission - India
- Jaiprakash Power Ventures ltd
- Pendopo Energi Batubara - Indonesia
- Orica Mining Services - Indonesia
- Interocean Group of Companies - India
- Goldman Sachs - Singapore
- Mjunction Services Limited - India
- India Bulls Power Limited - India
- Kepco SPC Power Corporation, Philippines
- Borneo Indobara - Indonesia
- McConnell Dowell - Australia
- CNBM International Corporation - China
- Electricity Authority, New Zealand
- Semirara Mining and Power Corporation, Philippines
- Price Waterhouse Coopers - Russia
- Xindia Steels Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Tamil Nadu electricity Board
- Sojitz Corporation - Japan
- Riau Bara Harum - Indonesia
- Coal and Oil Company - UAE
- Parry Sugars Refinery, India
- Madhucon Powers Ltd - India
- PTC India Limited - India
- IHS Mccloskey Coal Group - USA
- Gujarat Electricity Regulatory Commission - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Grasim Industreis Ltd - India
- Maheswari Brothers Coal Limited - India
- Deloitte Consulting - India
- Petrochimia International Co. Ltd.- Taiwan
- Bhatia International Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bukit Asam (Persero) Tbk - Indonesia
- Global Coal Blending Company Limited - Australia
- Savvy Resources Ltd - HongKong
- Baramulti Group, Indonesia
- Videocon Industries ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Global Business Power Corporation, Philippines
- Trasteel International SA, Italy
- Economic Council, Georgia
- TeaM Sual Corporation - Philippines
- Directorate General of MIneral and Coal - Indonesia
- Attock Cement Pakistan Limited
- Thiess Contractors Indonesia
- Manunggal Multi Energi - Indonesia
- Medco Energi Mining Internasional
- Indika Energy - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Neyveli Lignite Corporation Ltd, - India
- GVK Power & Infra Limited - India
- Eastern Coal Council - USA
- Bharathi Cement Corporation - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- The University of Queensland
- The Treasury - Australian Government
- London Commodity Brokers - England
- Sinarmas Energy and Mining - Indonesia
- Bukit Baiduri Energy - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Port Waratah Coal Services - Australia
- Tata Chemicals Ltd - India
- Independent Power Producers Association of India
- Eastern Energy - Thailand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Intertek Mineral Services - Indonesia
- Aboitiz Power Corporation - Philippines
- Cement Manufacturers Association - India
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