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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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Friday, 12 May 17
SLOW AND UNEVENTFUL WEEK FOR THE PANAMAX MARKET
Supramax
In the Atlantic, only USG were showing some improvement, where pet-coke cargoes to India was fixed in the range of 19-23k daily and to C ...
Wednesday, 10 May 17
MARKET INSIGHT - INTERMODAL
Up until a few weeks ago, demo deals were being concluded at just a fraction below $400/ldt. Last time we saw demo prices around that level was in ...
Tuesday, 09 May 17
DRY BULK TRADE IS STILL HEAVILY RELIANT ON CHINA - GEORGE LAZARIDIS
We have seen an overall cool down in the dry bulk and tanker markets over the final two weeks of April, sparking worries amongst ship-owners that t ...
Monday, 08 May 17
INDONESIAN COAL PRICE REFERENCE RISES FOR SECOND STRAIGHT MONTH IN MAY
COALspot.com: Indonesian government declared coal benchmark price rose in May, government data showed.
The benchmark price of Indonesian therm ...
Monday, 08 May 17
OCEAN BULK CARGO RATES FALL FURTHER THIS PAST WEEK
COALspot.com: The Freight market continues to slump this past week, with all segments show a negative downward trend week over week.
The Balti ...
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- Mjunction Services Limited - India
- Sakthi Sugars Limited - India
- Globalindo Alam Lestari - Indonesia
- Malabar Cements Ltd - India
- Bhushan Steel Limited - India
- Coalindo Energy - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Holcim Trading Pte Ltd - Singapore
- Agrawal Coal Company - India
- Latin American Coal - Colombia
- London Commodity Brokers - England
- Bukit Makmur.PT - Indonesia
- Rashtriya Ispat Nigam Limited - India
- GMR Energy Limited - India
- MS Steel International - UAE
- India Bulls Power Limited - India
- Directorate Of Revenue Intelligence - India
- Formosa Plastics Group - Taiwan
- Maharashtra Electricity Regulatory Commission - India
- Dalmia Cement Bharat India
- Kaltim Prima Coal - Indonesia
- The State Trading Corporation of India Ltd
- ASAPP Information Group - India
- Lanco Infratech Ltd - India
- CNBM International Corporation - China
- Indonesian Coal Mining Association
- Pipit Mutiara Jaya. PT, Indonesia
- Riau Bara Harum - Indonesia
- Ind-Barath Power Infra Limited - India
- Sarangani Energy Corporation, Philippines
- SMG Consultants - Indonesia
- Eastern Energy - Thailand
- Indian Energy Exchange, India
- Chamber of Mines of South Africa
- Timah Investasi Mineral - Indoneisa
- TNB Fuel Sdn Bhd - Malaysia
- Meenaskhi Energy Private Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- New Zealand Coal & Carbon
- Central Electricity Authority - India
- Leighton Contractors Pty Ltd - Australia
- Australian Coal Association
- Pendopo Energi Batubara - Indonesia
- Sical Logistics Limited - India
- Altura Mining Limited, Indonesia
- Deloitte Consulting - India
- Price Waterhouse Coopers - Russia
- Coastal Gujarat Power Limited - India
- Bhoruka Overseas - Indonesia
- Coal and Oil Company - UAE
- Siam City Cement - Thailand
- Miang Besar Coal Terminal - Indonesia
- Anglo American - United Kingdom
- Indogreen Group - Indonesia
- Medco Energi Mining Internasional
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Gujarat Sidhee Cement - India
- GN Power Mariveles Coal Plant, Philippines
- Heidelberg Cement - Germany
- Gujarat Mineral Development Corp Ltd - India
- Kartika Selabumi Mining - Indonesia
- Cement Manufacturers Association - India
- Toyota Tsusho Corporation, Japan
- Directorate General of MIneral and Coal - Indonesia
- Madhucon Powers Ltd - India
- Iligan Light & Power Inc, Philippines
- IEA Clean Coal Centre - UK
- Standard Chartered Bank - UAE
- Energy Development Corp, Philippines
- Bangladesh Power Developement Board
- Commonwealth Bank - Australia
- Bayan Resources Tbk. - Indonesia
- Attock Cement Pakistan Limited
- Interocean Group of Companies - India
- Oldendorff Carriers - Singapore
- OPG Power Generation Pvt Ltd - India
- VISA Power Limited - India
- Simpson Spence & Young - Indonesia
- Makarim & Taira - Indonesia
- Chettinad Cement Corporation Ltd - India
- Therma Luzon, Inc, Philippines
- Savvy Resources Ltd - HongKong
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Ministry of Mines - Canada
- Larsen & Toubro Limited - India
- Bhatia International Limited - India
- Sindya Power Generating Company Private Ltd
- Grasim Industreis Ltd - India
- European Bulk Services B.V. - Netherlands
- Kumho Petrochemical, South Korea
- Wilmar Investment Holdings
- Billiton Holdings Pty Ltd - Australia
- PTC India Limited - India
- Indo Tambangraya Megah - Indonesia
- Barasentosa Lestari - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Semirara Mining Corp, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Australian Commodity Traders Exchange
- Semirara Mining and Power Corporation, Philippines
- White Energy Company Limited
- PNOC Exploration Corporation - Philippines
- PetroVietnam Power Coal Import and Supply Company
- Economic Council, Georgia
- Independent Power Producers Association of India
- Intertek Mineral Services - Indonesia
- Edison Trading Spa - Italy
- South Luzon Thermal Energy Corporation
- Jaiprakash Power Ventures ltd
- Neyveli Lignite Corporation Ltd, - India
- Gujarat Electricity Regulatory Commission - India
- Romanian Commodities Exchange
- Bukit Asam (Persero) Tbk - Indonesia
- Jindal Steel & Power Ltd - India
- Kobexindo Tractors - Indoneisa
- IHS Mccloskey Coal Group - USA
- Kalimantan Lumbung Energi - Indonesia
- International Coal Ventures Pvt Ltd - India
- Vedanta Resources Plc - India
- Ambuja Cements Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Africa Commodities Group - South Africa
- Sojitz Corporation - Japan
- Mintek Dendrill Indonesia
- Aboitiz Power Corporation - Philippines
- Orica Mining Services - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Electricity Generating Authority of Thailand
- Goldman Sachs - Singapore
- Kepco SPC Power Corporation, Philippines
- GAC Shipping (India) Pvt Ltd
- Cigading International Bulk Terminal - Indonesia
- Global Coal Blending Company Limited - Australia
- Bulk Trading Sa - Switzerland
- Rio Tinto Coal - Australia
- McConnell Dowell - Australia
- Banpu Public Company Limited - Thailand
- Maheswari Brothers Coal Limited - India
- Alfred C Toepfer International GmbH - Germany
- AsiaOL BioFuels Corp., Philippines
- Power Finance Corporation Ltd., India
- Baramulti Group, Indonesia
- Global Business Power Corporation, Philippines
- Marubeni Corporation - India
- Tamil Nadu electricity Board
- Ministry of Transport, Egypt
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Thai Mozambique Logistica
- Renaissance Capital - South Africa
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Indian Oil Corporation Limited
- Binh Thuan Hamico - Vietnam
- Salva Resources Pvt Ltd - India
- LBH Netherlands Bv - Netherlands
- Central Java Power - Indonesia
- Georgia Ports Authority, United States
- Electricity Authority, New Zealand
- Orica Australia Pty. Ltd.
- Siam City Cement PLC, Thailand
- GVK Power & Infra Limited - India
- ICICI Bank Limited - India
- Minerals Council of Australia
- Mercator Lines Limited - India
- Parry Sugars Refinery, India
- Wood Mackenzie - Singapore
- The University of Queensland
- Singapore Mercantile Exchange
- Global Green Power PLC Corporation, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Planning Commission, India
- CIMB Investment Bank - Malaysia
- SN Aboitiz Power Inc, Philippines
- Krishnapatnam Port Company Ltd. - India
- Eastern Coal Council - USA
- Kideco Jaya Agung - Indonesia
- Essar Steel Hazira Ltd - India
- Vizag Seaport Private Limited - India
- Sree Jayajothi Cements Limited - India
- Trasteel International SA, Italy
- Kapuas Tunggal Persada - Indonesia
- TeaM Sual Corporation - Philippines
- Antam Resourcindo - Indonesia
- Mercuria Energy - Indonesia
- Ministry of Finance - Indonesia
- Energy Link Ltd, New Zealand
- Uttam Galva Steels Limited - India
- Thiess Contractors Indonesia
- Straits Asia Resources Limited - Singapore
- Aditya Birla Group - India
- Karaikal Port Pvt Ltd - India
- San Jose City I Power Corp, Philippines
- Petron Corporation, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Metalloyd Limited - United Kingdom
- Bharathi Cement Corporation - India
- Port Waratah Coal Services - Australia
- Carbofer General Trading SA - India
- Borneo Indobara - Indonesia
- Indika Energy - Indonesia
- Samtan Co., Ltd - South Korea
- PowerSource Philippines DevCo
- SMC Global Power, Philippines
- Meralco Power Generation, Philippines
- Merrill Lynch Commodities Europe
- Sinarmas Energy and Mining - Indonesia
- Ceylon Electricity Board - Sri Lanka
- The Treasury - Australian Government
- Tata Chemicals Ltd - India
- Xindia Steels Limited - India
- Star Paper Mills Limited - India
- Parliament of New Zealand
- Videocon Industries ltd - India
- Posco Energy - South Korea
- Manunggal Multi Energi - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Bukit Baiduri Energy - Indonesia
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