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