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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, 24 May 17
LR MARKET IT SEEMS THAT EARNINGS ARE STILL UNDER PRESSURE - INTERMODAL
As we are approaching the summer season, the Clean Product market appears poised to become more challenging, either on East or West of Suez.
L ...
Tuesday, 23 May 17
TANKERS WEEKLY MARKET NOTE - ALLIED
It’s been a turbulent couple of weeks on the oil front, with the effectiveness of OPEC’s policy being under debate amongst most traders ...
Monday, 22 May 17
THE SHIPPING INDEX DECLINES AGAIN
COALspot.com: The Freight market again decline this past week, as BDI and all other indexes show a negative trend week over week.
The Baltic E ...
Friday, 19 May 17
U.S WEEKLY COAL OUTPUT UP 1.2% WEEK OVER WEEK - EIA
COALspot.com – U.S., the world’s second largest coal producers have produced approximately totalled an estimated 13.5 million short ton ...
Thursday, 18 May 17
SUPRAMAX : COAL TRIPS TO CHINA WITH VESSELS OPEN INDO HAVE BEEN FIXED AROUND $8000
Supramax
Atlantic market has stayed quiet with no substantial developments.
Cont to Med scrap cargoes have concluded around 11k says Fearnle ...
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- Global Coal Blending Company Limited - Australia
- CIMB Investment Bank - Malaysia
- Directorate General of MIneral and Coal - Indonesia
- SMG Consultants - Indonesia
- Coal and Oil Company - UAE
- Bukit Makmur.PT - Indonesia
- Wood Mackenzie - Singapore
- London Commodity Brokers - England
- Ind-Barath Power Infra Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Cement Manufacturers Association - India
- Sical Logistics Limited - India
- Madhucon Powers Ltd - India
- Thai Mozambique Logistica
- Neyveli Lignite Corporation Ltd, - India
- Globalindo Alam Lestari - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- ICICI Bank Limited - India
- PNOC Exploration Corporation - Philippines
- Timah Investasi Mineral - Indoneisa
- Makarim & Taira - Indonesia
- Sojitz Corporation - Japan
- Global Green Power PLC Corporation, Philippines
- OPG Power Generation Pvt Ltd - India
- Barasentosa Lestari - Indonesia
- Rio Tinto Coal - Australia
- Jaiprakash Power Ventures ltd
- Kepco SPC Power Corporation, Philippines
- Semirara Mining Corp, Philippines
- Formosa Plastics Group - Taiwan
- Eastern Coal Council - USA
- Tata Chemicals Ltd - India
- Edison Trading Spa - Italy
- Global Business Power Corporation, Philippines
- ASAPP Information Group - India
- Bhatia International Limited - India
- Kartika Selabumi Mining - Indonesia
- IHS Mccloskey Coal Group - USA
- Samtan Co., Ltd - South Korea
- Bukit Baiduri Energy - Indonesia
- Planning Commission, India
- Altura Mining Limited, Indonesia
- Baramulti Group, Indonesia
- International Coal Ventures Pvt Ltd - India
- Meenaskhi Energy Private Limited - India
- Antam Resourcindo - Indonesia
- Indogreen Group - Indonesia
- Minerals Council of Australia
- Indonesian Coal Mining Association
- Directorate Of Revenue Intelligence - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Xindia Steels Limited - India
- Borneo Indobara - Indonesia
- Orica Australia Pty. Ltd.
- Uttam Galva Steels Limited - India
- Parry Sugars Refinery, India
- The State Trading Corporation of India Ltd
- Goldman Sachs - Singapore
- IEA Clean Coal Centre - UK
- TNB Fuel Sdn Bhd - Malaysia
- Eastern Energy - Thailand
- Africa Commodities Group - South Africa
- GAC Shipping (India) Pvt Ltd
- Gujarat Electricity Regulatory Commission - India
- Savvy Resources Ltd - HongKong
- Ministry of Finance - Indonesia
- Ministry of Mines - Canada
- Trasteel International SA, Italy
- McConnell Dowell - Australia
- TeaM Sual Corporation - Philippines
- Intertek Mineral Services - Indonesia
- Chettinad Cement Corporation Ltd - India
- PTC India Limited - India
- Aditya Birla Group - India
- Gujarat Mineral Development Corp Ltd - India
- GMR Energy Limited - India
- Attock Cement Pakistan Limited
- Larsen & Toubro Limited - India
- Indian Oil Corporation Limited
- Thiess Contractors Indonesia
- Salva Resources Pvt Ltd - India
- Therma Luzon, Inc, Philippines
- Australian Commodity Traders Exchange
- LBH Netherlands Bv - Netherlands
- Sarangani Energy Corporation, Philippines
- Parliament of New Zealand
- Cigading International Bulk Terminal - Indonesia
- Indo Tambangraya Megah - Indonesia
- Mjunction Services Limited - India
- Grasim Industreis Ltd - India
- Kaltim Prima Coal - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Miang Besar Coal Terminal - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Coalindo Energy - Indonesia
- Romanian Commodities Exchange
- Commonwealth Bank - Australia
- The University of Queensland
- Holcim Trading Pte Ltd - Singapore
- Ceylon Electricity Board - Sri Lanka
- Agrawal Coal Company - India
- Kalimantan Lumbung Energi - Indonesia
- Indika Energy - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Star Paper Mills Limited - India
- Malabar Cements Ltd - India
- Ambuja Cements Ltd - India
- Toyota Tsusho Corporation, Japan
- Deloitte Consulting - India
- Sinarmas Energy and Mining - Indonesia
- New Zealand Coal & Carbon
- Renaissance Capital - South Africa
- Billiton Holdings Pty Ltd - Australia
- Marubeni Corporation - India
- Gujarat Sidhee Cement - India
- Standard Chartered Bank - UAE
- Kumho Petrochemical, South Korea
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- The Treasury - Australian Government
- Meralco Power Generation, Philippines
- Energy Link Ltd, New Zealand
- Rashtriya Ispat Nigam Limited - India
- AsiaOL BioFuels Corp., Philippines
- Mercator Lines Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Siam City Cement PLC, Thailand
- Sindya Power Generating Company Private Ltd
- Port Waratah Coal Services - Australia
- Merrill Lynch Commodities Europe
- Australian Coal Association
- Kobexindo Tractors - Indoneisa
- Simpson Spence & Young - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- PetroVietnam Power Coal Import and Supply Company
- Bharathi Cement Corporation - India
- Jindal Steel & Power Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Sakthi Sugars Limited - India
- Maheswari Brothers Coal Limited - India
- Binh Thuan Hamico - Vietnam
- Bukit Asam (Persero) Tbk - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- GVK Power & Infra Limited - India
- Pendopo Energi Batubara - Indonesia
- Bhushan Steel Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Vedanta Resources Plc - India
- European Bulk Services B.V. - Netherlands
- Vizag Seaport Private Limited - India
- Medco Energi Mining Internasional
- Kideco Jaya Agung - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Riau Bara Harum - Indonesia
- Latin American Coal - Colombia
- MS Steel International - UAE
- Oldendorff Carriers - Singapore
- Dalmia Cement Bharat India
- Tamil Nadu electricity Board
- Central Java Power - Indonesia
- Interocean Group of Companies - India
- Manunggal Multi Energi - Indonesia
- Petron Corporation, Philippines
- India Bulls Power Limited - India
- South Luzon Thermal Energy Corporation
- Carbofer General Trading SA - India
- Videocon Industries ltd - India
- Ministry of Transport, Egypt
- Bahari Cakrawala Sebuku - Indonesia
- Electricity Generating Authority of Thailand
- VISA Power Limited - India
- Central Electricity Authority - India
- Economic Council, Georgia
- Maharashtra Electricity Regulatory Commission - India
- Bhoruka Overseas - Indonesia
- Lanco Infratech Ltd - India
- Price Waterhouse Coopers - Russia
- Kapuas Tunggal Persada - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Singapore Mercantile Exchange
- Karaikal Port Pvt Ltd - India
- Power Finance Corporation Ltd., India
- San Jose City I Power Corp, Philippines
- CNBM International Corporation - China
- Essar Steel Hazira Ltd - India
- Anglo American - United Kingdom
- Energy Development Corp, Philippines
- Bulk Trading Sa - Switzerland
- Bayan Resources Tbk. - Indonesia
- Bangladesh Power Developement Board
- Straits Asia Resources Limited - Singapore
- Wilmar Investment Holdings
- Posco Energy - South Korea
- Indian Energy Exchange, India
- Mercuria Energy - Indonesia
- SN Aboitiz Power Inc, Philippines
- Siam City Cement - Thailand
- Banpu Public Company Limited - Thailand
- White Energy Company Limited
- Georgia Ports Authority, United States
- SMC Global Power, Philippines
- PowerSource Philippines DevCo
- Coastal Gujarat Power Limited - India
- Heidelberg Cement - Germany
- Pipit Mutiara Jaya. PT, Indonesia
- Electricity Authority, New Zealand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Sree Jayajothi Cements Limited - India
- Iligan Light & Power Inc, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Aboitiz Power Corporation - Philippines
- GN Power Mariveles Coal Plant, Philippines
- Independent Power Producers Association of India
- Orica Mining Services - Indonesia
- Metalloyd Limited - United Kingdom
- Krishnapatnam Port Company Ltd. - India
- Mintek Dendrill Indonesia
- Chamber of Mines of South Africa
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