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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, 29 September 16
FREIGHT RATES MIGHT CONTINUE TO SLIDE NEXT WEEK DUE TO HOLIDAYS IN CHINA
Supramax
Flat start to week followed by a slight gain in rates for Supramaxes, says Fearnleys in its latest weekly report.
According to Fear ...
Wednesday, 28 September 16
WITHOUT A DOUBT FREIGHT RATES HAVE MOVED UP A BIT TO HEALTHIER LEVELS - INTERMODAL
As we are approaching Q4, it is interesting to perform a review of the last nine months with respect to the second-hand prices of Supramax and Pana ...
Tuesday, 27 September 16
THE CAPESIZE RATE OF INCREASE HAS BEEN IMPRESSIVE, UP 39% W/W AND 123% MONTH TO DATE - ALLIED
The Dry bulk market has seen a rare shine in its performance as the capesize sector manages to rally at an unprecedented rate compared to its perfo ...
Monday, 26 September 16
COAL PRICES HAVE BEEN MOVING STEADILY HIGHER AFTER YEARS OF DECLINE
COALspot.com: A rally in thermal coal prices over the past few months, after years of decline, is still continuing and it is expected to rally at l ...
Monday, 26 September 16
THE FREIGHT MARKET WAS FIRM; ALL SEGMENTS WERE UP THIS PAST WEEK
COALspot.com: The Baltic Exchange, tracking rates for ships carrying dry bulk commodities rose and ending in a positive note this past week. The BD ...
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- Aboitiz Power Corporation - Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Energy Development Corp, Philippines
- Bayan Resources Tbk. - Indonesia
- Riau Bara Harum - Indonesia
- Kumho Petrochemical, South Korea
- Electricity Authority, New Zealand
- Globalindo Alam Lestari - Indonesia
- Bhoruka Overseas - Indonesia
- McConnell Dowell - Australia
- SMG Consultants - Indonesia
- Vizag Seaport Private Limited - India
- LBH Netherlands Bv - Netherlands
- International Coal Ventures Pvt Ltd - India
- CIMB Investment Bank - Malaysia
- Interocean Group of Companies - India
- Holcim Trading Pte Ltd - Singapore
- Dalmia Cement Bharat India
- Deloitte Consulting - India
- Rashtriya Ispat Nigam Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Uttam Galva Steels Limited - India
- Indo Tambangraya Megah - Indonesia
- Ministry of Mines - Canada
- Indonesian Coal Mining Association
- Intertek Mineral Services - Indonesia
- Wood Mackenzie - Singapore
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Miang Besar Coal Terminal - Indonesia
- Jaiprakash Power Ventures ltd
- Bangladesh Power Developement Board
- Ministry of Finance - Indonesia
- Siam City Cement PLC, Thailand
- Offshore Bulk Terminal Pte Ltd, Singapore
- Maheswari Brothers Coal Limited - India
- Mercuria Energy - Indonesia
- Planning Commission, India
- Orica Mining Services - Indonesia
- Manunggal Multi Energi - Indonesia
- Bhatia International Limited - India
- PowerSource Philippines DevCo
- Leighton Contractors Pty Ltd - Australia
- The University of Queensland
- Carbofer General Trading SA - India
- Oldendorff Carriers - Singapore
- Tata Chemicals Ltd - India
- Medco Energi Mining Internasional
- Orica Australia Pty. Ltd.
- Simpson Spence & Young - Indonesia
- Anglo American - United Kingdom
- Australian Commodity Traders Exchange
- Therma Luzon, Inc, Philippines
- Bukit Baiduri Energy - Indonesia
- Sindya Power Generating Company Private Ltd
- Metalloyd Limited - United Kingdom
- Asmin Koalindo Tuhup - Indonesia
- IHS Mccloskey Coal Group - USA
- Borneo Indobara - Indonesia
- Africa Commodities Group - South Africa
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Billiton Holdings Pty Ltd - Australia
- New Zealand Coal & Carbon
- GAC Shipping (India) Pvt Ltd
- Formosa Plastics Group - Taiwan
- Singapore Mercantile Exchange
- PetroVietnam Power Coal Import and Supply Company
- Karbindo Abesyapradhi - Indoneisa
- Banpu Public Company Limited - Thailand
- Pipit Mutiara Jaya. PT, Indonesia
- AsiaOL BioFuels Corp., Philippines
- Global Business Power Corporation, Philippines
- Ambuja Cements Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Neyveli Lignite Corporation Ltd, - India
- Karaikal Port Pvt Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Kaltim Prima Coal - Indonesia
- Parliament of New Zealand
- Mjunction Services Limited - India
- Ceylon Electricity Board - Sri Lanka
- Ministry of Transport, Egypt
- Mercator Lines Limited - India
- Jindal Steel & Power Ltd - India
- Tamil Nadu electricity Board
- Bulk Trading Sa - Switzerland
- Commonwealth Bank - Australia
- Attock Cement Pakistan Limited
- Independent Power Producers Association of India
- Straits Asia Resources Limited - Singapore
- Romanian Commodities Exchange
- Eastern Energy - Thailand
- Toyota Tsusho Corporation, Japan
- Siam City Cement - Thailand
- Standard Chartered Bank - UAE
- Economic Council, Georgia
- Central Electricity Authority - India
- Thiess Contractors Indonesia
- Kapuas Tunggal Persada - Indonesia
- Samtan Co., Ltd - South Korea
- Ind-Barath Power Infra Limited - India
- European Bulk Services B.V. - Netherlands
- ICICI Bank Limited - India
- Australian Coal Association
- Coastal Gujarat Power Limited - India
- Minerals Council of Australia
- San Jose City I Power Corp, Philippines
- Goldman Sachs - Singapore
- Kideco Jaya Agung - Indonesia
- Electricity Generating Authority of Thailand
- Baramulti Group, Indonesia
- Edison Trading Spa - Italy
- Sojitz Corporation - Japan
- GN Power Mariveles Coal Plant, Philippines
- Kartika Selabumi Mining - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Binh Thuan Hamico - Vietnam
- Kepco SPC Power Corporation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Price Waterhouse Coopers - Russia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Port Waratah Coal Services - Australia
- Sree Jayajothi Cements Limited - India
- Coalindo Energy - Indonesia
- GVK Power & Infra Limited - India
- Trasteel International SA, Italy
- Aditya Birla Group - India
- Chamber of Mines of South Africa
- Coal and Oil Company - UAE
- Barasentosa Lestari - Indonesia
- Pendopo Energi Batubara - Indonesia
- Grasim Industreis Ltd - India
- Indogreen Group - Indonesia
- Petron Corporation, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Chettinad Cement Corporation Ltd - India
- Bhushan Steel Limited - India
- Global Green Power PLC Corporation, Philippines
- Agrawal Coal Company - India
- TeaM Sual Corporation - Philippines
- Essar Steel Hazira Ltd - India
- Sarangani Energy Corporation, Philippines
- Bharathi Cement Corporation - India
- Vedanta Resources Plc - India
- India Bulls Power Limited - India
- Semirara Mining Corp, Philippines
- Savvy Resources Ltd - HongKong
- Marubeni Corporation - India
- Rio Tinto Coal - Australia
- Kobexindo Tractors - Indoneisa
- Larsen & Toubro Limited - India
- GMR Energy Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- South Luzon Thermal Energy Corporation
- Directorate Of Revenue Intelligence - India
- White Energy Company Limited
- CNBM International Corporation - China
- Parry Sugars Refinery, India
- Global Coal Blending Company Limited - Australia
- Sical Logistics Limited - India
- Bukit Makmur.PT - Indonesia
- Iligan Light & Power Inc, Philippines
- Altura Mining Limited, Indonesia
- Merrill Lynch Commodities Europe
- Latin American Coal - Colombia
- Timah Investasi Mineral - Indoneisa
- Indian Oil Corporation Limited
- Star Paper Mills Limited - India
- Directorate General of MIneral and Coal - Indonesia
- PNOC Exploration Corporation - Philippines
- VISA Power Limited - India
- Power Finance Corporation Ltd., India
- Thai Mozambique Logistica
- Lanco Infratech Ltd - India
- OPG Power Generation Pvt Ltd - India
- Posco Energy - South Korea
- Cigading International Bulk Terminal - Indonesia
- Heidelberg Cement - Germany
- Semirara Mining and Power Corporation, Philippines
- Madhucon Powers Ltd - India
- Cement Manufacturers Association - India
- Renaissance Capital - South Africa
- Malabar Cements Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Indian Energy Exchange, India
- Xindia Steels Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Indika Energy - Indonesia
- Antam Resourcindo - Indonesia
- Gujarat Sidhee Cement - India
- ASAPP Information Group - India
- Georgia Ports Authority, United States
- Makarim & Taira - Indonesia
- Mintek Dendrill Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- The State Trading Corporation of India Ltd
- MS Steel International - UAE
- Sakthi Sugars Limited - India
- Sinarmas Energy and Mining - Indonesia
- Eastern Coal Council - USA
- Salva Resources Pvt Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- SMC Global Power, Philippines
- London Commodity Brokers - England
- Meralco Power Generation, Philippines
- IEA Clean Coal Centre - UK
- SN Aboitiz Power Inc, Philippines
- Videocon Industries ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Meenaskhi Energy Private Limited - India
- Energy Link Ltd, New Zealand
- Wilmar Investment Holdings
- The Treasury - Australian Government
- Krishnapatnam Port Company Ltd. - India
- Central Java Power - Indonesia
- PTC India Limited - India
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