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