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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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- San Jose City I Power Corp, Philippines
- OPG Power Generation Pvt Ltd - India
- Uttam Galva Steels Limited - India
- Kartika Selabumi Mining - Indonesia
- Mintek Dendrill Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Thiess Contractors Indonesia
- Parliament of New Zealand
- Carbofer General Trading SA - India
- Metalloyd Limited - United Kingdom
- Indogreen Group - Indonesia
- Economic Council, Georgia
- Siam City Cement PLC, Thailand
- Semirara Mining and Power Corporation, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Kaltim Prima Coal - Indonesia
- Altura Mining Limited, Indonesia
- Pendopo Energi Batubara - Indonesia
- White Energy Company Limited
- Orica Mining Services - Indonesia
- Independent Power Producers Association of India
- The University of Queensland
- New Zealand Coal & Carbon
- Indo Tambangraya Megah - Indonesia
- Kideco Jaya Agung - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Simpson Spence & Young - Indonesia
- Straits Asia Resources Limited - Singapore
- Barasentosa Lestari - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Maharashtra Electricity Regulatory Commission - India
- Riau Bara Harum - Indonesia
- Energy Link Ltd, New Zealand
- VISA Power Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Dalmia Cement Bharat India
- Aditya Birla Group - India
- Standard Chartered Bank - UAE
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Sojitz Corporation - Japan
- Semirara Mining Corp, Philippines
- International Coal Ventures Pvt Ltd - India
- Deloitte Consulting - India
- Bhoruka Overseas - Indonesia
- Chettinad Cement Corporation Ltd - India
- Medco Energi Mining Internasional
- Latin American Coal - Colombia
- Goldman Sachs - Singapore
- Ind-Barath Power Infra Limited - India
- Savvy Resources Ltd - HongKong
- Sree Jayajothi Cements Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kobexindo Tractors - Indoneisa
- Central Java Power - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Karaikal Port Pvt Ltd - India
- SN Aboitiz Power Inc, Philippines
- Cigading International Bulk Terminal - Indonesia
- Rio Tinto Coal - Australia
- Commonwealth Bank - Australia
- Wood Mackenzie - Singapore
- Therma Luzon, Inc, Philippines
- Malabar Cements Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Africa Commodities Group - South Africa
- Kepco SPC Power Corporation, Philippines
- Heidelberg Cement - Germany
- Tata Chemicals Ltd - India
- South Luzon Thermal Energy Corporation
- Antam Resourcindo - Indonesia
- European Bulk Services B.V. - Netherlands
- ASAPP Information Group - India
- Wilmar Investment Holdings
- Krishnapatnam Port Company Ltd. - India
- GMR Energy Limited - India
- Energy Development Corp, Philippines
- Star Paper Mills Limited - India
- Port Waratah Coal Services - Australia
- CNBM International Corporation - China
- Toyota Tsusho Corporation, Japan
- Asmin Koalindo Tuhup - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Eastern Coal Council - USA
- Globalindo Alam Lestari - Indonesia
- Kumho Petrochemical, South Korea
- Ceylon Electricity Board - Sri Lanka
- Vijayanagar Sugar Pvt Ltd - India
- Oldendorff Carriers - Singapore
- Maheswari Brothers Coal Limited - India
- Gujarat Sidhee Cement - India
- Price Waterhouse Coopers - Russia
- Bukit Makmur.PT - Indonesia
- Mjunction Services Limited - India
- Sindya Power Generating Company Private Ltd
- Meenaskhi Energy Private Limited - India
- IHS Mccloskey Coal Group - USA
- The State Trading Corporation of India Ltd
- Interocean Group of Companies - India
- Petrochimia International Co. Ltd.- Taiwan
- Coastal Gujarat Power Limited - India
- Renaissance Capital - South Africa
- Bukit Asam (Persero) Tbk - Indonesia
- Essar Steel Hazira Ltd - India
- GVK Power & Infra Limited - India
- Miang Besar Coal Terminal - Indonesia
- Iligan Light & Power Inc, Philippines
- Anglo American - United Kingdom
- Ambuja Cements Ltd - India
- Xindia Steels Limited - India
- Leighton Contractors Pty Ltd - Australia
- Pipit Mutiara Jaya. PT, Indonesia
- Australian Commodity Traders Exchange
- Gujarat Electricity Regulatory Commission - India
- Romanian Commodities Exchange
- Indian Energy Exchange, India
- Manunggal Multi Energi - Indonesia
- Electricity Authority, New Zealand
- The Treasury - Australian Government
- Bhatia International Limited - India
- Bhushan Steel Limited - India
- Sical Logistics Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Baramulti Group, Indonesia
- Central Electricity Authority - India
- Indonesian Coal Mining Association
- Jaiprakash Power Ventures ltd
- Binh Thuan Hamico - Vietnam
- Directorate Of Revenue Intelligence - India
- Petron Corporation, Philippines
- Videocon Industries ltd - India
- CIMB Investment Bank - Malaysia
- ICICI Bank Limited - India
- Holcim Trading Pte Ltd - Singapore
- Thai Mozambique Logistica
- TNB Fuel Sdn Bhd - Malaysia
- Planning Commission, India
- Bahari Cakrawala Sebuku - Indonesia
- Samtan Co., Ltd - South Korea
- Singapore Mercantile Exchange
- TeaM Sual Corporation - Philippines
- Electricity Generating Authority of Thailand
- Minerals Council of Australia
- Bukit Baiduri Energy - Indonesia
- Intertek Mineral Services - Indonesia
- McConnell Dowell - Australia
- Tamil Nadu electricity Board
- Georgia Ports Authority, United States
- Mercuria Energy - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Global Coal Blending Company Limited - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Meralco Power Generation, Philippines
- Jindal Steel & Power Ltd - India
- Bangladesh Power Developement Board
- PNOC Exploration Corporation - Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Indian Oil Corporation Limited
- PowerSource Philippines DevCo
- Grasim Industreis Ltd - India
- Bharathi Cement Corporation - India
- AsiaOL BioFuels Corp., Philippines
- Edison Trading Spa - Italy
- Sakthi Sugars Limited - India
- IEA Clean Coal Centre - UK
- Parry Sugars Refinery, India
- Ministry of Mines - Canada
- Billiton Holdings Pty Ltd - Australia
- Siam City Cement - Thailand
- Banpu Public Company Limited - Thailand
- LBH Netherlands Bv - Netherlands
- Lanco Infratech Ltd - India
- Vizag Seaport Private Limited - India
- Trasteel International SA, Italy
- MS Steel International - UAE
- Global Green Power PLC Corporation, Philippines
- Agrawal Coal Company - India
- Indika Energy - Indonesia
- Larsen & Toubro Limited - India
- Mercator Lines Limited - India
- India Bulls Power Limited - India
- SMG Consultants - Indonesia
- London Commodity Brokers - England
- GAC Shipping (India) Pvt Ltd
- Cement Manufacturers Association - India
- Makarim & Taira - Indonesia
- Attock Cement Pakistan Limited
- Borneo Indobara - Indonesia
- Orica Australia Pty. Ltd.
- Merrill Lynch Commodities Europe
- Ministry of Finance - Indonesia
- Power Finance Corporation Ltd., India
- Formosa Plastics Group - Taiwan
- Vedanta Resources Plc - India
- Madhucon Powers Ltd - India
- Timah Investasi Mineral - Indoneisa
- Karbindo Abesyapradhi - Indoneisa
- Chamber of Mines of South Africa
- Coal and Oil Company - UAE
- Coalindo Energy - Indonesia
- Global Business Power Corporation, Philippines
- Marubeni Corporation - India
- Salva Resources Pvt Ltd - India
- Aboitiz Power Corporation - Philippines
- Ministry of Transport, Egypt
- Eastern Energy - Thailand
- PTC India Limited - India
- SMC Global Power, Philippines
- Posco Energy - South Korea
- Australian Coal Association
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Sarangani Energy Corporation, Philippines
- Bulk Trading Sa - Switzerland
- Bayan Resources Tbk. - Indonesia
- Rashtriya Ispat Nigam Limited - India
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