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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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Saturday, 20 October 18
PANAMAX: THE PACIFIC SAW A LARGE VOLUME OF FIXING, WITH INDONESIA AGAIN THE DRIVING FORCE - THE BALTIC BRIEFING
Capesize
A positive end to last week after a shaky start, with a Coaltrans taking participants out of the market early on and with rates slippi ...
Thursday, 18 October 18
SUPRAMAX: INDO/WC INDIA SUPRAS ARE FIXING AROUND MID $14000S P/D BASIS SPORE DELIVERY
Capesize
The volatile Cape market continues this week, especially in the Pacific says Fearnleys in its latest weekly report.
...
Thursday, 18 October 18
COAL SHORTAGE HITS POWER SECTOR AGAIN; HOW INDIA CAN GET ITS PRODUCTION RIGHT - ANIL SWARUP
By convincing states of the value proposition of increased production, the record production of Fy15 & Fy16 can be emulated.
The ...
Thursday, 18 October 18
CHINA POWER REFORM NEUTRAL ON GRIDS, PRESSURES IPP MARGINS - FITCH RATINGS
China's power sector reform has a broadly neutral impact on transmission grids although it will pressure the power producers' margins, says ...
Wednesday, 17 October 18
ESCROW SERVICE FOR BALTIC MEMBERS NOW LIVE
The Baltic Exchange’s Escrow Service for its members to hold deposits for ship sale transactions goes live today (15 October). The service is ...
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- Kaltim Prima Coal - Indonesia
- Jaiprakash Power Ventures ltd
- Georgia Ports Authority, United States
- Sarangani Energy Corporation, Philippines
- Heidelberg Cement - Germany
- The University of Queensland
- Intertek Mineral Services - Indonesia
- London Commodity Brokers - England
- Holcim Trading Pte Ltd - Singapore
- Port Waratah Coal Services - Australia
- Rashtriya Ispat Nigam Limited - India
- San Jose City I Power Corp, Philippines
- Siam City Cement - Thailand
- The State Trading Corporation of India Ltd
- Rio Tinto Coal - Australia
- Bayan Resources Tbk. - Indonesia
- Ceylon Electricity Board - Sri Lanka
- The Treasury - Australian Government
- SMC Global Power, Philippines
- Tamil Nadu electricity Board
- Sojitz Corporation - Japan
- ICICI Bank Limited - India
- Energy Link Ltd, New Zealand
- MS Steel International - UAE
- Aditya Birla Group - India
- Indo Tambangraya Megah - Indonesia
- Mercuria Energy - Indonesia
- Ind-Barath Power Infra Limited - India
- Mercator Lines Limited - India
- Sindya Power Generating Company Private Ltd
- TNB Fuel Sdn Bhd - Malaysia
- Asmin Koalindo Tuhup - Indonesia
- Kartika Selabumi Mining - Indonesia
- GAC Shipping (India) Pvt Ltd
- Larsen & Toubro Limited - India
- Karaikal Port Pvt Ltd - India
- Carbofer General Trading SA - India
- PNOC Exploration Corporation - Philippines
- Barasentosa Lestari - Indonesia
- Medco Energi Mining Internasional
- Vedanta Resources Plc - India
- Uttam Galva Steels Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Merrill Lynch Commodities Europe
- Kideco Jaya Agung - Indonesia
- Renaissance Capital - South Africa
- Indian Oil Corporation Limited
- Bahari Cakrawala Sebuku - Indonesia
- Timah Investasi Mineral - Indoneisa
- Pipit Mutiara Jaya. PT, Indonesia
- Bukit Baiduri Energy - Indonesia
- Ambuja Cements Ltd - India
- Attock Cement Pakistan Limited
- Global Coal Blending Company Limited - Australia
- CNBM International Corporation - China
- Indogreen Group - Indonesia
- Binh Thuan Hamico - Vietnam
- SN Aboitiz Power Inc, Philippines
- Ministry of Finance - Indonesia
- Bharathi Cement Corporation - India
- Malabar Cements Ltd - India
- Ministry of Transport, Egypt
- Sree Jayajothi Cements Limited - India
- Sinarmas Energy and Mining - Indonesia
- Bukit Makmur.PT - Indonesia
- Coastal Gujarat Power Limited - India
- SMG Consultants - Indonesia
- Eastern Energy - Thailand
- Sakthi Sugars Limited - India
- Thiess Contractors Indonesia
- Chamber of Mines of South Africa
- Videocon Industries ltd - India
- Wilmar Investment Holdings
- Posco Energy - South Korea
- Karbindo Abesyapradhi - Indoneisa
- Thai Mozambique Logistica
- Gujarat Electricity Regulatory Commission - India
- Orica Australia Pty. Ltd.
- Grasim Industreis Ltd - India
- Energy Development Corp, Philippines
- Straits Asia Resources Limited - Singapore
- Kepco SPC Power Corporation, Philippines
- GMR Energy Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- European Bulk Services B.V. - Netherlands
- Africa Commodities Group - South Africa
- Krishnapatnam Port Company Ltd. - India
- Bhushan Steel Limited - India
- Petron Corporation, Philippines
- Mjunction Services Limited - India
- Central Electricity Authority - India
- South Luzon Thermal Energy Corporation
- Samtan Co., Ltd - South Korea
- Mintek Dendrill Indonesia
- New Zealand Coal & Carbon
- Global Green Power PLC Corporation, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Interocean Group of Companies - India
- Marubeni Corporation - India
- OPG Power Generation Pvt Ltd - India
- Edison Trading Spa - Italy
- Simpson Spence & Young - Indonesia
- GVK Power & Infra Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Minerals Council of Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Metalloyd Limited - United Kingdom
- Kapuas Tunggal Persada - Indonesia
- Orica Mining Services - Indonesia
- Agrawal Coal Company - India
- International Coal Ventures Pvt Ltd - India
- Coalindo Energy - Indonesia
- Parry Sugars Refinery, India
- Trasteel International SA, Italy
- Altura Mining Limited, Indonesia
- Goldman Sachs - Singapore
- Miang Besar Coal Terminal - Indonesia
- Independent Power Producers Association of India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Anglo American - United Kingdom
- Banpu Public Company Limited - Thailand
- Global Business Power Corporation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kalimantan Lumbung Energi - Indonesia
- Bulk Trading Sa - Switzerland
- Bhatia International Limited - India
- Maheswari Brothers Coal Limited - India
- Central Java Power - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- India Bulls Power Limited - India
- Manunggal Multi Energi - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Ministry of Mines - Canada
- Aboitiz Power Corporation - Philippines
- Coal and Oil Company - UAE
- Tata Chemicals Ltd - India
- McConnell Dowell - Australia
- Leighton Contractors Pty Ltd - Australia
- Wood Mackenzie - Singapore
- Standard Chartered Bank - UAE
- PetroVietnam Power Coal Import and Supply Company
- Directorate General of MIneral and Coal - Indonesia
- Baramulti Group, Indonesia
- Eastern Coal Council - USA
- Borneo Indobara - Indonesia
- Electricity Generating Authority of Thailand
- Parliament of New Zealand
- Formosa Plastics Group - Taiwan
- Kobexindo Tractors - Indoneisa
- TeaM Sual Corporation - Philippines
- AsiaOL BioFuels Corp., Philippines
- Savvy Resources Ltd - HongKong
- Siam City Cement PLC, Thailand
- ASAPP Information Group - India
- Indian Energy Exchange, India
- Commonwealth Bank - Australia
- Meralco Power Generation, Philippines
- Australian Coal Association
- White Energy Company Limited
- Chettinad Cement Corporation Ltd - India
- IEA Clean Coal Centre - UK
- Therma Luzon, Inc, Philippines
- Toyota Tsusho Corporation, Japan
- Gujarat Sidhee Cement - India
- Antam Resourcindo - Indonesia
- Australian Commodity Traders Exchange
- CIMB Investment Bank - Malaysia
- Makarim & Taira - Indonesia
- Power Finance Corporation Ltd., India
- Essar Steel Hazira Ltd - India
- Indonesian Coal Mining Association
- Cigading International Bulk Terminal - Indonesia
- Dalmia Cement Bharat India
- Price Waterhouse Coopers - Russia
- Salva Resources Pvt Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Vizag Seaport Private Limited - India
- Bangladesh Power Developement Board
- Singapore Mercantile Exchange
- Pendopo Energi Batubara - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Deloitte Consulting - India
- Star Paper Mills Limited - India
- Lanco Infratech Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Iligan Light & Power Inc, Philippines
- Economic Council, Georgia
- PTC India Limited - India
- Oldendorff Carriers - Singapore
- Planning Commission, India
- Jindal Steel & Power Ltd - India
- Madhucon Powers Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Meenaskhi Energy Private Limited - India
- Riau Bara Harum - Indonesia
- Latin American Coal - Colombia
- Sical Logistics Limited - India
- Kohat Cement Company Ltd. - Pakistan
- VISA Power Limited - India
- PowerSource Philippines DevCo
- Billiton Holdings Pty Ltd - Australia
- Semirara Mining Corp, Philippines
- Directorate Of Revenue Intelligence - India
- Kumho Petrochemical, South Korea
- Cement Manufacturers Association - India
- Indika Energy - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Romanian Commodities Exchange
- IHS Mccloskey Coal Group - USA
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Electricity Authority, New Zealand
- LBH Netherlands Bv - Netherlands
- Globalindo Alam Lestari - Indonesia
- Xindia Steels Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Bhoruka Overseas - Indonesia
- Alfred C Toepfer International GmbH - Germany
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