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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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Friday, 05 August 16
CAPESIZE : RATES ARE REMAINING AT DEPRESSING LEVELS DUE TO LACK OF FRESH CARGOES - FEARNLEYS
Supramax
Last week has been one of the slowest for some time with rates under pressure in most areas.
In its latest weekly report, shipbroke ...
Thursday, 04 August 16
INDONESIAN COAL PRICES ARE STARTING TO ZOOM HIGHER; HBA ROSE 10.13% TO US$ 58.37 PER TON
COALspot.com: The Indonesia coal benchmark price hits to its highest level since August 2015.
The Director General of Mineral and Coa ...
Thursday, 04 August 16
BREXIT: IMPLICATIONS FOR GLOBAL SHIPPING AND SEA TRADE - EVERSHEDS
The buzzword for the post-Brexit landscape both in Europe and further afield is ‘uncertainty’. No-one really knows the long term effect ...
Wednesday, 03 August 16
RECAAP INFORMATION SHARING CENTRE ISSUES SPECIAL REPORT ON THE ABDUCTING OF CREW FROM SHIPS IN WATERS OFF EASTERN SABAH AND SOUTHERN PHILIPPINES - THE STANDARD CLUB
KNOWLEDGE TO ELEVATE
In the light of three incidents where the crew of tug boats were abducted in the waters off Eastern Sabah and Southern Ph ...
Wednesday, 03 August 16
SHIPPING MARKET INSIGHT - EVA TZIMA
The Good…
Demand. Amidst all the unprecedented geopolitical turmoil and shifts in the likes of Brexit, the IMF lowered last month its glob ...
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- Asmin Koalindo Tuhup - Indonesia
- Barasentosa Lestari - Indonesia
- GMR Energy Limited - India
- Bulk Trading Sa - Switzerland
- Pendopo Energi Batubara - Indonesia
- Global Business Power Corporation, Philippines
- Marubeni Corporation - India
- Banpu Public Company Limited - Thailand
- Independent Power Producers Association of India
- MS Steel International - UAE
- Binh Thuan Hamico - Vietnam
- San Jose City I Power Corp, Philippines
- Madhucon Powers Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Tata Chemicals Ltd - India
- Sical Logistics Limited - India
- Indonesian Coal Mining Association
- Borneo Indobara - Indonesia
- Standard Chartered Bank - UAE
- Videocon Industries ltd - India
- Eastern Coal Council - USA
- Aboitiz Power Corporation - Philippines
- Therma Luzon, Inc, Philippines
- Singapore Mercantile Exchange
- Electricity Generating Authority of Thailand
- SMG Consultants - Indonesia
- Agrawal Coal Company - India
- SMC Global Power, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Energy Link Ltd, New Zealand
- The State Trading Corporation of India Ltd
- Global Green Power PLC Corporation, Philippines
- Uttam Galva Steels Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Planning Commission, India
- Holcim Trading Pte Ltd - Singapore
- India Bulls Power Limited - India
- Malabar Cements Ltd - India
- Toyota Tsusho Corporation, Japan
- Oldendorff Carriers - Singapore
- Makarim & Taira - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Alfred C Toepfer International GmbH - Germany
- Ind-Barath Power Infra Limited - India
- Kartika Selabumi Mining - Indonesia
- Ministry of Finance - Indonesia
- Indian Oil Corporation Limited
- Australian Commodity Traders Exchange
- Maheswari Brothers Coal Limited - India
- Trasteel International SA, Italy
- Edison Trading Spa - Italy
- Pipit Mutiara Jaya. PT, Indonesia
- Kobexindo Tractors - Indoneisa
- Gujarat Sidhee Cement - India
- Central Java Power - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Bhoruka Overseas - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Romanian Commodities Exchange
- Deloitte Consulting - India
- Mjunction Services Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- IHS Mccloskey Coal Group - USA
- Xindia Steels Limited - India
- Petron Corporation, Philippines
- Wilmar Investment Holdings
- PetroVietnam Power Coal Import and Supply Company
- Vizag Seaport Private Limited - India
- Parliament of New Zealand
- Electricity Authority, New Zealand
- Salva Resources Pvt Ltd - India
- Renaissance Capital - South Africa
- CIMB Investment Bank - Malaysia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- South Luzon Thermal Energy Corporation
- LBH Netherlands Bv - Netherlands
- Altura Mining Limited, Indonesia
- Global Coal Blending Company Limited - Australia
- The University of Queensland
- Lanco Infratech Ltd - India
- Riau Bara Harum - Indonesia
- Wood Mackenzie - Singapore
- Bharathi Cement Corporation - India
- Semirara Mining and Power Corporation, Philippines
- Coal and Oil Company - UAE
- Thiess Contractors Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Sree Jayajothi Cements Limited - India
- Mintek Dendrill Indonesia
- Directorate Of Revenue Intelligence - India
- Iligan Light & Power Inc, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- TeaM Sual Corporation - Philippines
- Directorate General of MIneral and Coal - Indonesia
- The Treasury - Australian Government
- Intertek Mineral Services - Indonesia
- Baramulti Group, Indonesia
- Mercuria Energy - Indonesia
- Mercator Lines Limited - India
- Posco Energy - South Korea
- Thai Mozambique Logistica
- Gujarat Mineral Development Corp Ltd - India
- Attock Cement Pakistan Limited
- Timah Investasi Mineral - Indoneisa
- OPG Power Generation Pvt Ltd - India
- Sojitz Corporation - Japan
- McConnell Dowell - Australia
- Ministry of Transport, Egypt
- International Coal Ventures Pvt Ltd - India
- Australian Coal Association
- Coastal Gujarat Power Limited - India
- Vedanta Resources Plc - India
- Bukit Baiduri Energy - Indonesia
- Indian Energy Exchange, India
- Goldman Sachs - Singapore
- New Zealand Coal & Carbon
- Cigading International Bulk Terminal - Indonesia
- Dalmia Cement Bharat India
- Indo Tambangraya Megah - Indonesia
- Semirara Mining Corp, Philippines
- Port Waratah Coal Services - Australia
- GVK Power & Infra Limited - India
- Leighton Contractors Pty Ltd - Australia
- Krishnapatnam Port Company Ltd. - India
- Sakthi Sugars Limited - India
- Billiton Holdings Pty Ltd - Australia
- Medco Energi Mining Internasional
- Kumho Petrochemical, South Korea
- Siam City Cement - Thailand
- Latin American Coal - Colombia
- Sinarmas Energy and Mining - Indonesia
- Heidelberg Cement - Germany
- Rashtriya Ispat Nigam Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Carbofer General Trading SA - India
- CNBM International Corporation - China
- Straits Asia Resources Limited - Singapore
- Bhushan Steel Limited - India
- Essar Steel Hazira Ltd - India
- Minerals Council of Australia
- Meralco Power Generation, Philippines
- Tamil Nadu electricity Board
- Formosa Plastics Group - Taiwan
- Larsen & Toubro Limited - India
- Simpson Spence & Young - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Orica Mining Services - Indonesia
- Indika Energy - Indonesia
- Aditya Birla Group - India
- GAC Shipping (India) Pvt Ltd
- Samtan Co., Ltd - South Korea
- Energy Development Corp, Philippines
- Kideco Jaya Agung - Indonesia
- Siam City Cement PLC, Thailand
- Coalindo Energy - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- European Bulk Services B.V. - Netherlands
- Jaiprakash Power Ventures ltd
- Anglo American - United Kingdom
- Bahari Cakrawala Sebuku - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Chettinad Cement Corporation Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Metalloyd Limited - United Kingdom
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- White Energy Company Limited
- Ceylon Electricity Board - Sri Lanka
- PowerSource Philippines DevCo
- SN Aboitiz Power Inc, Philippines
- London Commodity Brokers - England
- Interocean Group of Companies - India
- Indogreen Group - Indonesia
- Meenaskhi Energy Private Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Gujarat Electricity Regulatory Commission - India
- Bukit Asam (Persero) Tbk - Indonesia
- Chamber of Mines of South Africa
- Sarangani Energy Corporation, Philippines
- Africa Commodities Group - South Africa
- Cement Manufacturers Association - India
- Rio Tinto Coal - Australia
- Commonwealth Bank - Australia
- Kepco SPC Power Corporation, Philippines
- Merrill Lynch Commodities Europe
- Georgia Ports Authority, United States
- Globalindo Alam Lestari - Indonesia
- Bhatia International Limited - India
- IEA Clean Coal Centre - UK
- Orica Australia Pty. Ltd.
- Kaltim Prima Coal - Indonesia
- Economic Council, Georgia
- Ministry of Mines - Canada
- Sindya Power Generating Company Private Ltd
- Eastern Energy - Thailand
- VISA Power Limited - India
- Antam Resourcindo - Indonesia
- Price Waterhouse Coopers - Russia
- PNOC Exploration Corporation - Philippines
- Bangladesh Power Developement Board
- Savvy Resources Ltd - HongKong
- Kapuas Tunggal Persada - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Central Electricity Authority - India
- Power Finance Corporation Ltd., India
- Bayan Resources Tbk. - Indonesia
- Jindal Steel & Power Ltd - India
- Bukit Makmur.PT - Indonesia
- Manunggal Multi Energi - Indonesia
- PTC India Limited - India
- Miang Besar Coal Terminal - Indonesia
- ICICI Bank Limited - India
- Star Paper Mills Limited - India
- Ambuja Cements Ltd - India
- ASAPP Information Group - India
- Grasim Industreis Ltd - India
- Parry Sugars Refinery, India
- Karaikal Port Pvt Ltd - India
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