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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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- Kumho Petrochemical, South Korea
- Maheswari Brothers Coal Limited - India
- Lanco Infratech Ltd - India
- GAC Shipping (India) Pvt Ltd
- South Luzon Thermal Energy Corporation
- Antam Resourcindo - Indonesia
- Orica Mining Services - Indonesia
- Bhushan Steel Limited - India
- Riau Bara Harum - Indonesia
- Chamber of Mines of South Africa
- Directorate General of MIneral and Coal - Indonesia
- Interocean Group of Companies - India
- Siam City Cement - Thailand
- Bhatia International Limited - India
- Sakthi Sugars Limited - India
- San Jose City I Power Corp, Philippines
- London Commodity Brokers - England
- Medco Energi Mining Internasional
- IEA Clean Coal Centre - UK
- Simpson Spence & Young - Indonesia
- PowerSource Philippines DevCo
- GN Power Mariveles Coal Plant, Philippines
- Jaiprakash Power Ventures ltd
- SMG Consultants - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Videocon Industries ltd - India
- Heidelberg Cement - Germany
- Parliament of New Zealand
- Billiton Holdings Pty Ltd - Australia
- Directorate Of Revenue Intelligence - India
- Central Java Power - Indonesia
- Merrill Lynch Commodities Europe
- Offshore Bulk Terminal Pte Ltd, Singapore
- Ind-Barath Power Infra Limited - India
- Eastern Energy - Thailand
- Leighton Contractors Pty Ltd - Australia
- Bahari Cakrawala Sebuku - Indonesia
- Australian Commodity Traders Exchange
- Global Green Power PLC Corporation, Philippines
- Indian Energy Exchange, India
- Kartika Selabumi Mining - Indonesia
- Independent Power Producers Association of India
- Miang Besar Coal Terminal - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- India Bulls Power Limited - India
- Agrawal Coal Company - India
- Formosa Plastics Group - Taiwan
- Posco Energy - South Korea
- IHS Mccloskey Coal Group - USA
- Ministry of Mines - Canada
- Thiess Contractors Indonesia
- Borneo Indobara - Indonesia
- PNOC Exploration Corporation - Philippines
- Gujarat Electricity Regulatory Commission - India
- Dalmia Cement Bharat India
- SN Aboitiz Power Inc, Philippines
- Electricity Authority, New Zealand
- Attock Cement Pakistan Limited
- Malabar Cements Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- CIMB Investment Bank - Malaysia
- Globalindo Alam Lestari - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Salva Resources Pvt Ltd - India
- Energy Link Ltd, New Zealand
- Deloitte Consulting - India
- OPG Power Generation Pvt Ltd - India
- Trasteel International SA, Italy
- Semirara Mining and Power Corporation, Philippines
- Larsen & Toubro Limited - India
- Anglo American - United Kingdom
- Uttam Galva Steels Limited - India
- Aditya Birla Group - India
- New Zealand Coal & Carbon
- Therma Luzon, Inc, Philippines
- Indo Tambangraya Megah - Indonesia
- Manunggal Multi Energi - Indonesia
- Metalloyd Limited - United Kingdom
- Sojitz Corporation - Japan
- Kepco SPC Power Corporation, Philippines
- Kideco Jaya Agung - Indonesia
- Banpu Public Company Limited - Thailand
- Savvy Resources Ltd - HongKong
- Karbindo Abesyapradhi - Indoneisa
- Singapore Mercantile Exchange
- Kaltim Prima Coal - Indonesia
- Mercator Lines Limited - India
- Orica Australia Pty. Ltd.
- Thai Mozambique Logistica
- Vedanta Resources Plc - India
- Rio Tinto Coal - Australia
- Barasentosa Lestari - Indonesia
- Bhoruka Overseas - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Sical Logistics Limited - India
- Makarim & Taira - Indonesia
- Timah Investasi Mineral - Indoneisa
- Africa Commodities Group - South Africa
- Electricity Generating Authority of Thailand
- VISA Power Limited - India
- Star Paper Mills Limited - India
- Mintek Dendrill Indonesia
- TeaM Sual Corporation - Philippines
- Neyveli Lignite Corporation Ltd, - India
- Georgia Ports Authority, United States
- Aboitiz Power Corporation - Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Australian Coal Association
- Planning Commission, India
- Cement Manufacturers Association - India
- GVK Power & Infra Limited - India
- Chettinad Cement Corporation Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Standard Chartered Bank - UAE
- Bukit Asam (Persero) Tbk - Indonesia
- ASAPP Information Group - India
- Madhucon Powers Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Pendopo Energi Batubara - Indonesia
- Carbofer General Trading SA - India
- White Energy Company Limited
- Gujarat Sidhee Cement - India
- Parry Sugars Refinery, India
- Latin American Coal - Colombia
- Cigading International Bulk Terminal - Indonesia
- Semirara Mining Corp, Philippines
- Meenaskhi Energy Private Limited - India
- Intertek Mineral Services - Indonesia
- Price Waterhouse Coopers - Russia
- Sindya Power Generating Company Private Ltd
- Jorong Barutama Greston.PT - Indonesia
- Renaissance Capital - South Africa
- Coal and Oil Company - UAE
- Indika Energy - Indonesia
- Global Business Power Corporation, Philippines
- Indian Oil Corporation Limited
- Romanian Commodities Exchange
- Commonwealth Bank - Australia
- LBH Netherlands Bv - Netherlands
- PetroVietnam Power Coal Import and Supply Company
- Sinarmas Energy and Mining - Indonesia
- GMR Energy Limited - India
- Power Finance Corporation Ltd., India
- Bukit Baiduri Energy - Indonesia
- McConnell Dowell - Australia
- Binh Thuan Hamico - Vietnam
- Port Waratah Coal Services - Australia
- The Treasury - Australian Government
- SMC Global Power, Philippines
- Grasim Industreis Ltd - India
- Bukit Makmur.PT - Indonesia
- Baramulti Group, Indonesia
- Tamil Nadu electricity Board
- Wilmar Investment Holdings
- Bulk Trading Sa - Switzerland
- The University of Queensland
- Edison Trading Spa - Italy
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Indonesian Coal Mining Association
- Tata Chemicals Ltd - India
- Oldendorff Carriers - Singapore
- Essar Steel Hazira Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- European Bulk Services B.V. - Netherlands
- Wood Mackenzie - Singapore
- CNBM International Corporation - China
- Maharashtra Electricity Regulatory Commission - India
- Straits Asia Resources Limited - Singapore
- Eastern Coal Council - USA
- Bangladesh Power Developement Board
- Ministry of Transport, Egypt
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Energy Development Corp, Philippines
- Economic Council, Georgia
- Rashtriya Ispat Nigam Limited - India
- Xindia Steels Limited - India
- Siam City Cement PLC, Thailand
- Toyota Tsusho Corporation, Japan
- Central Electricity Authority - India
- Kohat Cement Company Ltd. - Pakistan
- Ambuja Cements Ltd - India
- ICICI Bank Limited - India
- Vizag Seaport Private Limited - India
- Marubeni Corporation - India
- Vijayanagar Sugar Pvt Ltd - India
- Holcim Trading Pte Ltd - Singapore
- PTC India Limited - India
- Mjunction Services Limited - India
- Ceylon Electricity Board - Sri Lanka
- Altura Mining Limited, Indonesia
- Mercuria Energy - Indonesia
- Ministry of Finance - Indonesia
- Kobexindo Tractors - Indoneisa
- Global Coal Blending Company Limited - Australia
- Meralco Power Generation, Philippines
- Indogreen Group - Indonesia
- Coalindo Energy - Indonesia
- Sree Jayajothi Cements Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- International Coal Ventures Pvt Ltd - India
- Sarangani Energy Corporation, Philippines
- Jindal Steel & Power Ltd - India
- Petron Corporation, Philippines
- The State Trading Corporation of India Ltd
- Iligan Light & Power Inc, Philippines
- Karaikal Port Pvt Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Samtan Co., Ltd - South Korea
- Bharathi Cement Corporation - India
- Goldman Sachs - Singapore
- Krishnapatnam Port Company Ltd. - India
- Minerals Council of Australia
- Bayan Resources Tbk. - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Coastal Gujarat Power Limited - India
- MS Steel International - UAE
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