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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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Wednesday, 12 September 18
MARINE BUNKERS: THE END OF THE WORLD AS WE KNOW IT - IBIA
KNOWLEDGE TO ELEVATE
The world of bunkers is heading for rapid and fundamental changes and not just because of the 0.50% sulphur cap in 2020. ...
Wednesday, 12 September 18
SHIPPING MARKET INSIGHT - THEODORE NTALAKOS
A recovery in the shipping market since last year has buoyed optimism amongst the people in the industry. Yet if you are to ask most ship-owners if ...
Monday, 10 September 18
HANDYSIZE: PERIOD ACTIVITY REMAINED LIMITED WITH A 37,000DWT REPORTEDLY FIXED FOR FOUR TO SIX MONTHS AT $10,500, OPEN IN MALAYSIA IN MID-SEPTEMBER - BALTIC BRIEFING
Capesize
Rates came under pressure for the big ships last week, despite paper values holding at reasonable levels as these trades continued to ...
Thursday, 06 September 18
INDONESIAN COAL PRICE REFERENCE FALLS FOR FIRST TIME IN 3 MONTHS
COALspot.com: The benchmark price of Indonesian thermal coal falls for first time in three months.
According to the latest min ...
Thursday, 06 September 18
SUPRAMAX: SE ASIA-INDO ROUNDS WITH COAL HAVE BEEN CONCLUDED IN THE $13000S RANGE - FEARNLEYS
Capesize
The big ships experiencing a bump in the road towards what is commonly expected to be by far the best period of this year. Average dai ...
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- Standard Chartered Bank - UAE
- IHS Mccloskey Coal Group - USA
- Kapuas Tunggal Persada - Indonesia
- Aditya Birla Group - India
- McConnell Dowell - Australia
- Ceylon Electricity Board - Sri Lanka
- Toyota Tsusho Corporation, Japan
- Carbofer General Trading SA - India
- Sree Jayajothi Cements Limited - India
- Edison Trading Spa - Italy
- Energy Development Corp, Philippines
- Central Electricity Authority - India
- San Jose City I Power Corp, Philippines
- Directorate General of MIneral and Coal - Indonesia
- GMR Energy Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Baramulti Group, Indonesia
- Straits Asia Resources Limited - Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bhushan Steel Limited - India
- Bulk Trading Sa - Switzerland
- Global Coal Blending Company Limited - Australia
- Malabar Cements Ltd - India
- Binh Thuan Hamico - Vietnam
- The University of Queensland
- Savvy Resources Ltd - HongKong
- The Treasury - Australian Government
- Krishnapatnam Port Company Ltd. - India
- Vedanta Resources Plc - India
- Pipit Mutiara Jaya. PT, Indonesia
- Mercator Lines Limited - India
- European Bulk Services B.V. - Netherlands
- Bukit Baiduri Energy - Indonesia
- ICICI Bank Limited - India
- Therma Luzon, Inc, Philippines
- Makarim & Taira - Indonesia
- Thiess Contractors Indonesia
- AsiaOL BioFuels Corp., Philippines
- Altura Mining Limited, Indonesia
- Ind-Barath Power Infra Limited - India
- Semirara Mining and Power Corporation, Philippines
- Dalmia Cement Bharat India
- Sakthi Sugars Limited - India
- Petron Corporation, Philippines
- Grasim Industreis Ltd - India
- Coastal Gujarat Power Limited - India
- Meralco Power Generation, Philippines
- Coal and Oil Company - UAE
- Commonwealth Bank - Australia
- Kepco SPC Power Corporation, Philippines
- Orica Mining Services - Indonesia
- International Coal Ventures Pvt Ltd - India
- Kumho Petrochemical, South Korea
- Parry Sugars Refinery, India
- Ministry of Finance - Indonesia
- Lanco Infratech Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Xindia Steels Limited - India
- Electricity Authority, New Zealand
- Leighton Contractors Pty Ltd - Australia
- Merrill Lynch Commodities Europe
- Rio Tinto Coal - Australia
- Independent Power Producers Association of India
- Port Waratah Coal Services - Australia
- Australian Commodity Traders Exchange
- Singapore Mercantile Exchange
- Eastern Energy - Thailand
- Aboitiz Power Corporation - Philippines
- Posco Energy - South Korea
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Metalloyd Limited - United Kingdom
- Vizag Seaport Private Limited - India
- Ministry of Mines - Canada
- Planning Commission, India
- Directorate Of Revenue Intelligence - India
- Bayan Resources Tbk. - Indonesia
- Pendopo Energi Batubara - Indonesia
- IEA Clean Coal Centre - UK
- Alfred C Toepfer International GmbH - Germany
- Indonesian Coal Mining Association
- Gujarat Mineral Development Corp Ltd - India
- Bukit Makmur.PT - Indonesia
- SMC Global Power, Philippines
- Mjunction Services Limited - India
- Africa Commodities Group - South Africa
- Tamil Nadu electricity Board
- Orica Australia Pty. Ltd.
- South Luzon Thermal Energy Corporation
- Indian Energy Exchange, India
- Gujarat Electricity Regulatory Commission - India
- Sarangani Energy Corporation, Philippines
- White Energy Company Limited
- Jindal Steel & Power Ltd - India
- Central Java Power - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kobexindo Tractors - Indoneisa
- Kalimantan Lumbung Energi - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Wood Mackenzie - Singapore
- Jorong Barutama Greston.PT - Indonesia
- Star Paper Mills Limited - India
- LBH Netherlands Bv - Netherlands
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Interocean Group of Companies - India
- The State Trading Corporation of India Ltd
- Romanian Commodities Exchange
- VISA Power Limited - India
- Miang Besar Coal Terminal - Indonesia
- Bharathi Cement Corporation - India
- Borneo Indobara - Indonesia
- SMG Consultants - Indonesia
- Kartika Selabumi Mining - Indonesia
- Samtan Co., Ltd - South Korea
- Timah Investasi Mineral - Indoneisa
- PetroVietnam Power Coal Import and Supply Company
- Petrochimia International Co. Ltd.- Taiwan
- Tata Chemicals Ltd - India
- PNOC Exploration Corporation - Philippines
- Sinarmas Energy and Mining - Indonesia
- Deloitte Consulting - India
- CIMB Investment Bank - Malaysia
- Indo Tambangraya Megah - Indonesia
- Antam Resourcindo - Indonesia
- Karaikal Port Pvt Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Ministry of Transport, Egypt
- Maharashtra Electricity Regulatory Commission - India
- Chamber of Mines of South Africa
- Maheswari Brothers Coal Limited - India
- Wilmar Investment Holdings
- Indika Energy - Indonesia
- Georgia Ports Authority, United States
- New Zealand Coal & Carbon
- PTC India Limited - India
- Indian Oil Corporation Limited
- Cement Manufacturers Association - India
- Agrawal Coal Company - India
- Rashtriya Ispat Nigam Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Electricity Generating Authority of Thailand
- Australian Coal Association
- Larsen & Toubro Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- SN Aboitiz Power Inc, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Globalindo Alam Lestari - Indonesia
- Barasentosa Lestari - Indonesia
- Semirara Mining Corp, Philippines
- Banpu Public Company Limited - Thailand
- Marubeni Corporation - India
- Iligan Light & Power Inc, Philippines
- Indogreen Group - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Siam City Cement PLC, Thailand
- Heidelberg Cement - Germany
- Bhoruka Overseas - Indonesia
- MS Steel International - UAE
- Kideco Jaya Agung - Indonesia
- PowerSource Philippines DevCo
- Energy Link Ltd, New Zealand
- Trasteel International SA, Italy
- Meenaskhi Energy Private Limited - India
- OPG Power Generation Pvt Ltd - India
- Eastern Coal Council - USA
- Renaissance Capital - South Africa
- Sindya Power Generating Company Private Ltd
- Siam City Cement - Thailand
- Holcim Trading Pte Ltd - Singapore
- TNB Fuel Sdn Bhd - Malaysia
- Simpson Spence & Young - Indonesia
- Minerals Council of Australia
- Thai Mozambique Logistica
- Attock Cement Pakistan Limited
- Madhucon Powers Ltd - India
- Salva Resources Pvt Ltd - India
- Bhatia International Limited - India
- Oldendorff Carriers - Singapore
- Latin American Coal - Colombia
- Sical Logistics Limited - India
- India Bulls Power Limited - India
- Parliament of New Zealand
- Manunggal Multi Energi - Indonesia
- Kaltim Prima Coal - Indonesia
- Economic Council, Georgia
- Coalindo Energy - Indonesia
- Global Green Power PLC Corporation, Philippines
- Mintek Dendrill Indonesia
- Cigading International Bulk Terminal - Indonesia
- Sojitz Corporation - Japan
- Essar Steel Hazira Ltd - India
- Intertek Mineral Services - Indonesia
- Price Waterhouse Coopers - Russia
- Bangladesh Power Developement Board
- Uttam Galva Steels Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- ASAPP Information Group - India
- Goldman Sachs - Singapore
- Medco Energi Mining Internasional
- Riau Bara Harum - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- London Commodity Brokers - England
- Jaiprakash Power Ventures ltd
- Mercuria Energy - Indonesia
- Chettinad Cement Corporation Ltd - India
- GVK Power & Infra Limited - India
- Global Business Power Corporation, Philippines
- Anglo American - United Kingdom
- Formosa Plastics Group - Taiwan
- Videocon Industries ltd - India
- GAC Shipping (India) Pvt Ltd
- CNBM International Corporation - China
- Gujarat Sidhee Cement - India
- Ambuja Cements Ltd - India
- TeaM Sual Corporation - Philippines
- Power Finance Corporation Ltd., India
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