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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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Thursday, 16 March 17
CAPESIZE: SHOWING STRENGTH; PANAMAX: VERY QUIET - FEARNLEYS
Supramax
The Atlantic market faced less activity from the USG whereas at the Cont tonnage seemed to tighten up with more cargoes emerging. Despit ...
Wednesday, 15 March 17
SHIPPING MARKET INSIGHT - GEORGE PANAGOPOULOS
Over the past two weeks, the Dry Baltic Index has been on an upward trend, breaking the 1000 point mark and creating a positive sentiment for the u ...
Tuesday, 14 March 17
ORDERBOOK-TO-FEET RATIO DECREASING; THE FREIGHT MARKET IMPROVING
It seems as though the renewed optimism that has arisen from the recent upward trends being noted in the freight market, the dry bulk market has be ...
Monday, 13 March 17
PORT OF NEWCASTLE HAS SHIPPED 11.563 MILLION TONS COAL IN FEBRUARY 2017; DECLINED 12.19 PERCENT M/M
COALspot.com: The Port of Newcastle, Australia’s major trading ports and the world’s largest coal export ports has shipped $AU 1,4 ...
Monday, 13 March 17
INDO - INDIA COAL FREIGHT RATES STAY FIRM
COALspot.com: The Freight market was continuing to firming up.
The Baltic Exchange, tracking rates for ships carrying dry bulk commodities ros ...
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- Kumho Petrochemical, South Korea
- Alfred C Toepfer International GmbH - Germany
- Sakthi Sugars Limited - India
- Manunggal Multi Energi - Indonesia
- Sindya Power Generating Company Private Ltd
- San Jose City I Power Corp, Philippines
- Neyveli Lignite Corporation Ltd, - India
- GMR Energy Limited - India
- Coal and Oil Company - UAE
- Coastal Gujarat Power Limited - India
- Thai Mozambique Logistica
- Borneo Indobara - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Indian Oil Corporation Limited
- Merrill Lynch Commodities Europe
- Sinarmas Energy and Mining - Indonesia
- Posco Energy - South Korea
- Mercator Lines Limited - India
- Kartika Selabumi Mining - Indonesia
- Cement Manufacturers Association - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- International Coal Ventures Pvt Ltd - India
- Orica Mining Services - Indonesia
- Bhushan Steel Limited - India
- Ceylon Electricity Board - Sri Lanka
- New Zealand Coal & Carbon
- Oldendorff Carriers - Singapore
- The Treasury - Australian Government
- Bhatia International Limited - India
- PowerSource Philippines DevCo
- SN Aboitiz Power Inc, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Samtan Co., Ltd - South Korea
- ASAPP Information Group - India
- Heidelberg Cement - Germany
- Riau Bara Harum - Indonesia
- Madhucon Powers Ltd - India
- Vedanta Resources Plc - India
- Xindia Steels Limited - India
- Central Electricity Authority - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Essar Steel Hazira Ltd - India
- Directorate Of Revenue Intelligence - India
- Bulk Trading Sa - Switzerland
- Kohat Cement Company Ltd. - Pakistan
- India Bulls Power Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Standard Chartered Bank - UAE
- AsiaOL BioFuels Corp., Philippines
- Meralco Power Generation, Philippines
- Coalindo Energy - Indonesia
- Ministry of Finance - Indonesia
- Straits Asia Resources Limited - Singapore
- Indian Energy Exchange, India
- PNOC Exploration Corporation - Philippines
- Kapuas Tunggal Persada - Indonesia
- Sojitz Corporation - Japan
- Africa Commodities Group - South Africa
- Trasteel International SA, Italy
- GN Power Mariveles Coal Plant, Philippines
- Mercuria Energy - Indonesia
- Ind-Barath Power Infra Limited - India
- Aditya Birla Group - India
- Ministry of Mines - Canada
- IEA Clean Coal Centre - UK
- Grasim Industreis Ltd - India
- McConnell Dowell - Australia
- Electricity Authority, New Zealand
- Petron Corporation, Philippines
- Sarangani Energy Corporation, Philippines
- Aboitiz Power Corporation - Philippines
- Dalmia Cement Bharat India
- Kepco SPC Power Corporation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Power Finance Corporation Ltd., India
- Jindal Steel & Power Ltd - India
- Port Waratah Coal Services - Australia
- Directorate General of MIneral and Coal - Indonesia
- London Commodity Brokers - England
- Global Business Power Corporation, Philippines
- Deloitte Consulting - India
- Bharathi Cement Corporation - India
- Bukit Makmur.PT - Indonesia
- Timah Investasi Mineral - Indoneisa
- Indonesian Coal Mining Association
- Parry Sugars Refinery, India
- Meenaskhi Energy Private Limited - India
- Medco Energi Mining Internasional
- Kalimantan Lumbung Energi - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Metalloyd Limited - United Kingdom
- Intertek Mineral Services - Indonesia
- Star Paper Mills Limited - India
- Mintek Dendrill Indonesia
- Romanian Commodities Exchange
- Ambuja Cements Ltd - India
- SMC Global Power, Philippines
- Indika Energy - Indonesia
- Central Java Power - Indonesia
- Lanco Infratech Ltd - India
- Ministry of Transport, Egypt
- Agrawal Coal Company - India
- Uttam Galva Steels Limited - India
- ICICI Bank Limited - India
- Makarim & Taira - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Australian Coal Association
- Renaissance Capital - South Africa
- White Energy Company Limited
- Kideco Jaya Agung - Indonesia
- The State Trading Corporation of India Ltd
- Vijayanagar Sugar Pvt Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Baramulti Group, Indonesia
- Commonwealth Bank - Australia
- Maheswari Brothers Coal Limited - India
- Miang Besar Coal Terminal - Indonesia
- Sical Logistics Limited - India
- Eastern Coal Council - USA
- Iligan Light & Power Inc, Philippines
- GAC Shipping (India) Pvt Ltd
- LBH Netherlands Bv - Netherlands
- Rio Tinto Coal - Australia
- PTC India Limited - India
- Interocean Group of Companies - India
- Parliament of New Zealand
- Larsen & Toubro Limited - India
- CNBM International Corporation - China
- Vizag Seaport Private Limited - India
- Karaikal Port Pvt Ltd - India
- Carbofer General Trading SA - India
- Petrochimia International Co. Ltd.- Taiwan
- Georgia Ports Authority, United States
- Mjunction Services Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- The University of Queensland
- Tamil Nadu electricity Board
- Indo Tambangraya Megah - Indonesia
- Toyota Tsusho Corporation, Japan
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sree Jayajothi Cements Limited - India
- Videocon Industries ltd - India
- Malabar Cements Ltd - India
- Altura Mining Limited, Indonesia
- OPG Power Generation Pvt Ltd - India
- CIMB Investment Bank - Malaysia
- Planning Commission, India
- IHS Mccloskey Coal Group - USA
- Tata Chemicals Ltd - India
- Formosa Plastics Group - Taiwan
- VISA Power Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Bhoruka Overseas - Indonesia
- Edison Trading Spa - Italy
- GVK Power & Infra Limited - India
- Minerals Council of Australia
- Anglo American - United Kingdom
- Gujarat Mineral Development Corp Ltd - India
- Antam Resourcindo - Indonesia
- Electricity Generating Authority of Thailand
- Semirara Mining and Power Corporation, Philippines
- Wilmar Investment Holdings
- Energy Development Corp, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Indogreen Group - Indonesia
- Jaiprakash Power Ventures ltd
- European Bulk Services B.V. - Netherlands
- Thiess Contractors Indonesia
- Global Green Power PLC Corporation, Philippines
- Global Coal Blending Company Limited - Australia
- Gujarat Electricity Regulatory Commission - India
- Independent Power Producers Association of India
- Rashtriya Ispat Nigam Limited - India
- Latin American Coal - Colombia
- MS Steel International - UAE
- Marubeni Corporation - India
- Bukit Baiduri Energy - Indonesia
- Chettinad Cement Corporation Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Pendopo Energi Batubara - Indonesia
- Eastern Energy - Thailand
- Gujarat Sidhee Cement - India
- Australian Commodity Traders Exchange
- Kaltim Prima Coal - Indonesia
- Energy Link Ltd, New Zealand
- Siam City Cement - Thailand
- Kobexindo Tractors - Indoneisa
- TeaM Sual Corporation - Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Goldman Sachs - Singapore
- Price Waterhouse Coopers - Russia
- Therma Luzon, Inc, Philippines
- Simpson Spence & Young - Indonesia
- Globalindo Alam Lestari - Indonesia
- South Luzon Thermal Energy Corporation
- Orica Australia Pty. Ltd.
- Siam City Cement PLC, Thailand
- Chamber of Mines of South Africa
- Salva Resources Pvt Ltd - India
- Binh Thuan Hamico - Vietnam
- Wood Mackenzie - Singapore
- Bayan Resources Tbk. - Indonesia
- Singapore Mercantile Exchange
- Savvy Resources Ltd - HongKong
- Bangladesh Power Developement Board
- Jorong Barutama Greston.PT - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Semirara Mining Corp, Philippines
- Barasentosa Lestari - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Banpu Public Company Limited - Thailand
- Economic Council, Georgia
- PetroVietnam Power Coal Import and Supply Company
- SMG Consultants - Indonesia
- Attock Cement Pakistan Limited
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