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