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