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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, 03 November 16
THE INDEX BASED COAL SALES & PURCHASE STRATEGY MAKES MORE EFFICIENT, SAYS 55.17% END-USERS
Considering the current coal market condition, the Index based coal sales & purchase strategy make more efficient was deemed the winner by 57.0 ...
Thursday, 03 November 16
CAPESIZE: BRAZIL/CHINA RATES MOVED TO THE $11 PMT LEVEL; WEST AUSTRALIA/CHINA ROUTE MOVED UP CLOSE TO MID $5 PMT LEVEL - FEARNLEYS
Supramax
In the Atlantic we see a bit more activity than in the eastern hemisphere, says Fearnleys in its latest weekly report. Fhauls via Black ...
Wednesday, 02 November 16
SHIPPING MARKET INSIGHT
A week before the U.S. presidential election, everyone is eager to see the socio-political effects that the result of these elections will have. As ...
Wednesday, 02 November 16
SHIP OPERATING COSTS ARE EXPECTED TO RISE IN BOTH 2016 AND 2017 - MOORE STEPHENS
Vessel operating costs are expected to rise in both 2016 and 2017. Repairs and maintenance and spares are the cost categories which are likely to i ...
Tuesday, 01 November 16
PANAMAX : A FAIR AMOUNT OF SIDEWAYS SHIPPING IN RATES - ALLIED SHIPPING
Capesize
A very sluggish start to the week, with rates dropping considerably as all optimism seems to have evaporated over the weekend. According ...
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- Meralco Power Generation, Philippines
- Tata Chemicals Ltd - India
- Mercuria Energy - Indonesia
- Bukit Baiduri Energy - Indonesia
- Global Coal Blending Company Limited - Australia
- Deloitte Consulting - India
- Riau Bara Harum - Indonesia
- Indika Energy - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Marubeni Corporation - India
- Posco Energy - South Korea
- Sical Logistics Limited - India
- European Bulk Services B.V. - Netherlands
- Therma Luzon, Inc, Philippines
- Malabar Cements Ltd - India
- PNOC Exploration Corporation - Philippines
- The State Trading Corporation of India Ltd
- VISA Power Limited - India
- Bayan Resources Tbk. - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Sakthi Sugars Limited - India
- OPG Power Generation Pvt Ltd - India
- Maheswari Brothers Coal Limited - India
- Barasentosa Lestari - Indonesia
- Sinarmas Energy and Mining - Indonesia
- MS Steel International - UAE
- Chamber of Mines of South Africa
- Vedanta Resources Plc - India
- Commonwealth Bank - Australia
- New Zealand Coal & Carbon
- Indo Tambangraya Megah - Indonesia
- Mintek Dendrill Indonesia
- Cement Manufacturers Association - India
- Kapuas Tunggal Persada - Indonesia
- Bukit Makmur.PT - Indonesia
- Edison Trading Spa - Italy
- Indonesian Coal Mining Association
- Kalimantan Lumbung Energi - Indonesia
- Mjunction Services Limited - India
- Renaissance Capital - South Africa
- Latin American Coal - Colombia
- Savvy Resources Ltd - HongKong
- Borneo Indobara - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Indian Oil Corporation Limited
- Bulk Trading Sa - Switzerland
- Bhatia International Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Karaikal Port Pvt Ltd - India
- Sree Jayajothi Cements Limited - India
- Planning Commission, India
- GAC Shipping (India) Pvt Ltd
- Coalindo Energy - Indonesia
- Larsen & Toubro Limited - India
- Sindya Power Generating Company Private Ltd
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Altura Mining Limited, Indonesia
- International Coal Ventures Pvt Ltd - India
- Ambuja Cements Ltd - India
- Xindia Steels Limited - India
- Wilmar Investment Holdings
- Global Business Power Corporation, Philippines
- Makarim & Taira - Indonesia
- Metalloyd Limited - United Kingdom
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kartika Selabumi Mining - Indonesia
- Price Waterhouse Coopers - Russia
- PowerSource Philippines DevCo
- Coal and Oil Company - UAE
- Romanian Commodities Exchange
- Port Waratah Coal Services - Australia
- ICICI Bank Limited - India
- Attock Cement Pakistan Limited
- Ministry of Finance - Indonesia
- Manunggal Multi Energi - Indonesia
- Central Electricity Authority - India
- Kepco SPC Power Corporation, Philippines
- TeaM Sual Corporation - Philippines
- South Luzon Thermal Energy Corporation
- Billiton Holdings Pty Ltd - Australia
- Electricity Generating Authority of Thailand
- London Commodity Brokers - England
- Thai Mozambique Logistica
- Bahari Cakrawala Sebuku - Indonesia
- Ind-Barath Power Infra Limited - India
- Iligan Light & Power Inc, Philippines
- Oldendorff Carriers - Singapore
- Australian Coal Association
- Directorate General of MIneral and Coal - Indonesia
- McConnell Dowell - Australia
- Pendopo Energi Batubara - Indonesia
- Thiess Contractors Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Africa Commodities Group - South Africa
- Gujarat Sidhee Cement - India
- Ministry of Mines - Canada
- Krishnapatnam Port Company Ltd. - India
- Gujarat Electricity Regulatory Commission - India
- CIMB Investment Bank - Malaysia
- Merrill Lynch Commodities Europe
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Pipit Mutiara Jaya. PT, Indonesia
- Ministry of Transport, Egypt
- Bhoruka Overseas - Indonesia
- India Bulls Power Limited - India
- Aditya Birla Group - India
- Holcim Trading Pte Ltd - Singapore
- Leighton Contractors Pty Ltd - Australia
- Orica Australia Pty. Ltd.
- Ceylon Electricity Board - Sri Lanka
- Jindal Steel & Power Ltd - India
- Singapore Mercantile Exchange
- ASAPP Information Group - India
- Bangladesh Power Developement Board
- Neyveli Lignite Corporation Ltd, - India
- Gujarat Mineral Development Corp Ltd - India
- Sarangani Energy Corporation, Philippines
- Kohat Cement Company Ltd. - Pakistan
- GN Power Mariveles Coal Plant, Philippines
- Sojitz Corporation - Japan
- Mercator Lines Limited - India
- Binh Thuan Hamico - Vietnam
- Bhushan Steel Limited - India
- Rio Tinto Coal - Australia
- Georgia Ports Authority, United States
- Eastern Coal Council - USA
- Kaltim Prima Coal - Indonesia
- Bharathi Cement Corporation - India
- Indogreen Group - Indonesia
- Medco Energi Mining Internasional
- Interocean Group of Companies - India
- Simpson Spence & Young - Indonesia
- IEA Clean Coal Centre - UK
- Siam City Cement - Thailand
- The University of Queensland
- Cigading International Bulk Terminal - Indonesia
- PTC India Limited - India
- San Jose City I Power Corp, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Baramulti Group, Indonesia
- Asmin Koalindo Tuhup - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- GVK Power & Infra Limited - India
- AsiaOL BioFuels Corp., Philippines
- Indian Energy Exchange, India
- Essar Steel Hazira Ltd - India
- LBH Netherlands Bv - Netherlands
- SMG Consultants - Indonesia
- Toyota Tsusho Corporation, Japan
- Kideco Jaya Agung - Indonesia
- Australian Commodity Traders Exchange
- Kobexindo Tractors - Indoneisa
- Intertek Mineral Services - Indonesia
- Grasim Industreis Ltd - India
- Central Java Power - Indonesia
- CNBM International Corporation - China
- Agrawal Coal Company - India
- Coastal Gujarat Power Limited - India
- Semirara Mining Corp, Philippines
- Standard Chartered Bank - UAE
- Heidelberg Cement - Germany
- Kumho Petrochemical, South Korea
- Orica Mining Services - Indonesia
- The Treasury - Australian Government
- Vizag Seaport Private Limited - India
- Meenaskhi Energy Private Limited - India
- Dalmia Cement Bharat India
- Power Finance Corporation Ltd., India
- Salva Resources Pvt Ltd - India
- Timah Investasi Mineral - Indoneisa
- Straits Asia Resources Limited - Singapore
- Madhucon Powers Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- IHS Mccloskey Coal Group - USA
- Economic Council, Georgia
- Energy Link Ltd, New Zealand
- Chettinad Cement Corporation Ltd - India
- Petron Corporation, Philippines
- Samtan Co., Ltd - South Korea
- Energy Development Corp, Philippines
- Directorate Of Revenue Intelligence - India
- Minerals Council of Australia
- Banpu Public Company Limited - Thailand
- Lanco Infratech Ltd - India
- GMR Energy Limited - India
- Aboitiz Power Corporation - Philippines
- Anglo American - United Kingdom
- Electricity Authority, New Zealand
- Antam Resourcindo - Indonesia
- Globalindo Alam Lestari - Indonesia
- Parry Sugars Refinery, India
- PetroVietnam Power Coal Import and Supply Company
- Vijayanagar Sugar Pvt Ltd - India
- SN Aboitiz Power Inc, Philippines
- Videocon Industries ltd - India
- Siam City Cement PLC, Thailand
- Global Green Power PLC Corporation, Philippines
- Tamil Nadu electricity Board
- Trasteel International SA, Italy
- Wood Mackenzie - Singapore
- Jorong Barutama Greston.PT - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Formosa Plastics Group - Taiwan
- Independent Power Producers Association of India
- SMC Global Power, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Uttam Galva Steels Limited - India
- Parliament of New Zealand
- Eastern Energy - Thailand
- Goldman Sachs - Singapore
- Rashtriya Ispat Nigam Limited - India
- Star Paper Mills Limited - India
- White Energy Company Limited
- Carbofer General Trading SA - India
- Jaiprakash Power Ventures ltd
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