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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, 07 April 16
PANAMAX RATES ARE FIRMING IN BOTH HEMISHEPHERES - FEARNLEYS
Capesize
With a great volume our of west Australia, rates were finally moving to upper 3's. and stabilizing towards the middle of the week in ...
Thursday, 07 April 16
BIMCO AND GIIGNL PUBLISH A GROUNDBREAKING VOYAGE CHARTER PARTY FOR LNG TRADE
BIMCO and the International Group of Liquefied Natural Gas Importers (GIIGNL) have today jointly issued the first definitive voyage charter party & ...
Wednesday, 06 April 16
HOW LONG SHIPPING CRISIS WILL BE; WHEN SHOULD OWNERS EXPECT THE BULK CARRIERS TO BECOME PROFITABLE? - INTERMODAL
It is the consensus that dry bulk shipping has been in a crisis for quite some time now. Bulk carrier values are at historical low levels, therefor ...
Tuesday, 05 April 16
DRY BULK REVISITS 1980S LOWS AND FACES UNCERTAIN LONGER TERM OUTLOOK - MSI | HELLENIC SHIPPING NEWS
With the market near bottom, attention is turning to the length of the downturn, the effect on asset values and the impact of broader demand side c ...
Monday, 04 April 16
THE LOADING, AND SUBSEQUENT DISCHARGE, OF UNSAFE NICKEL ORE - ALL TIME TO 'COUNT' - THE STANDARD CLUB
KNOWLEDGE TO ELEVATE
In a recent, published, London arbitration award the English tribunal has held that all time lost as a result of loading, ...
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- Kepco SPC Power Corporation, Philippines
- Port Waratah Coal Services - Australia
- Kohat Cement Company Ltd. - Pakistan
- Global Coal Blending Company Limited - Australia
- Sinarmas Energy and Mining - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Rio Tinto Coal - Australia
- MS Steel International - UAE
- Asmin Koalindo Tuhup - Indonesia
- Global Green Power PLC Corporation, Philippines
- Krishnapatnam Port Company Ltd. - India
- Essar Steel Hazira Ltd - India
- SN Aboitiz Power Inc, Philippines
- Petron Corporation, Philippines
- Oldendorff Carriers - Singapore
- Rashtriya Ispat Nigam Limited - India
- Chamber of Mines of South Africa
- Manunggal Multi Energi - Indonesia
- GVK Power & Infra Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Tamil Nadu electricity Board
- Edison Trading Spa - Italy
- TNB Fuel Sdn Bhd - Malaysia
- Mjunction Services Limited - India
- Therma Luzon, Inc, Philippines
- Madhucon Powers Ltd - India
- Electricity Generating Authority of Thailand
- Deloitte Consulting - India
- OPG Power Generation Pvt Ltd - India
- Baramulti Group, Indonesia
- London Commodity Brokers - England
- Alfred C Toepfer International GmbH - Germany
- Siam City Cement - Thailand
- VISA Power Limited - India
- The Treasury - Australian Government
- Billiton Holdings Pty Ltd - Australia
- Grasim Industreis Ltd - India
- Coal and Oil Company - UAE
- Ambuja Cements Ltd - India
- Salva Resources Pvt Ltd - India
- Antam Resourcindo - Indonesia
- Iligan Light & Power Inc, Philippines
- Leighton Contractors Pty Ltd - Australia
- Sakthi Sugars Limited - India
- Bukit Baiduri Energy - Indonesia
- Parry Sugars Refinery, India
- Meenaskhi Energy Private Limited - India
- Wood Mackenzie - Singapore
- Mercator Lines Limited - India
- Samtan Co., Ltd - South Korea
- Makarim & Taira - Indonesia
- Agrawal Coal Company - India
- Ministry of Transport, Egypt
- Sree Jayajothi Cements Limited - India
- Kartika Selabumi Mining - Indonesia
- Bulk Trading Sa - Switzerland
- Minerals Council of Australia
- Bukit Asam (Persero) Tbk - Indonesia
- Savvy Resources Ltd - HongKong
- Vijayanagar Sugar Pvt Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Australian Commodity Traders Exchange
- CNBM International Corporation - China
- Energy Development Corp, Philippines
- McConnell Dowell - Australia
- Mintek Dendrill Indonesia
- Wilmar Investment Holdings
- ASAPP Information Group - India
- Merrill Lynch Commodities Europe
- Indika Energy - Indonesia
- Kobexindo Tractors - Indoneisa
- Orica Mining Services - Indonesia
- Gujarat Electricity Regulatory Commission - India
- European Bulk Services B.V. - Netherlands
- Independent Power Producers Association of India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- South Luzon Thermal Energy Corporation
- San Jose City I Power Corp, Philippines
- International Coal Ventures Pvt Ltd - India
- Simpson Spence & Young - Indonesia
- CIMB Investment Bank - Malaysia
- Star Paper Mills Limited - India
- Banpu Public Company Limited - Thailand
- India Bulls Power Limited - India
- AsiaOL BioFuels Corp., Philippines
- Metalloyd Limited - United Kingdom
- Petrochimia International Co. Ltd.- Taiwan
- GN Power Mariveles Coal Plant, Philippines
- Borneo Indobara - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Attock Cement Pakistan Limited
- Latin American Coal - Colombia
- Globalindo Alam Lestari - Indonesia
- Anglo American - United Kingdom
- Orica Australia Pty. Ltd.
- Bayan Resources Tbk. - Indonesia
- Coalindo Energy - Indonesia
- PTC India Limited - India
- Straits Asia Resources Limited - Singapore
- IHS Mccloskey Coal Group - USA
- Interocean Group of Companies - India
- Parliament of New Zealand
- Eastern Coal Council - USA
- Central Electricity Authority - India
- Bharathi Cement Corporation - India
- Commonwealth Bank - Australia
- The University of Queensland
- Binh Thuan Hamico - Vietnam
- Kideco Jaya Agung - Indonesia
- Thai Mozambique Logistica
- Riau Bara Harum - Indonesia
- Indonesian Coal Mining Association
- Jaiprakash Power Ventures ltd
- Holcim Trading Pte Ltd - Singapore
- ICICI Bank Limited - India
- Global Business Power Corporation, Philippines
- Electricity Authority, New Zealand
- Karaikal Port Pvt Ltd - India
- Videocon Industries ltd - India
- Energy Link Ltd, New Zealand
- Renaissance Capital - South Africa
- Gujarat Sidhee Cement - India
- Mercuria Energy - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Malabar Cements Ltd - India
- Romanian Commodities Exchange
- The State Trading Corporation of India Ltd
- Sojitz Corporation - Japan
- Tata Chemicals Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Timah Investasi Mineral - Indoneisa
- Offshore Bulk Terminal Pte Ltd, Singapore
- Siam City Cement PLC, Thailand
- Cigading International Bulk Terminal - Indonesia
- Trasteel International SA, Italy
- Ceylon Electricity Board - Sri Lanka
- Sarangani Energy Corporation, Philippines
- Goldman Sachs - Singapore
- Georgia Ports Authority, United States
- Directorate Of Revenue Intelligence - India
- Uttam Galva Steels Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- White Energy Company Limited
- Cement Manufacturers Association - India
- Indo Tambangraya Megah - Indonesia
- PNOC Exploration Corporation - Philippines
- Africa Commodities Group - South Africa
- Ministry of Mines - Canada
- Thiess Contractors Indonesia
- Economic Council, Georgia
- Planning Commission, India
- Indian Oil Corporation Limited
- Carbofer General Trading SA - India
- Altura Mining Limited, Indonesia
- Eastern Energy - Thailand
- Intertek Mineral Services - Indonesia
- Aditya Birla Group - India
- Sindya Power Generating Company Private Ltd
- Sical Logistics Limited - India
- Bangladesh Power Developement Board
- SMG Consultants - Indonesia
- Ind-Barath Power Infra Limited - India
- PowerSource Philippines DevCo
- Neyveli Lignite Corporation Ltd, - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Lanco Infratech Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- New Zealand Coal & Carbon
- Pendopo Energi Batubara - Indonesia
- Semirara Mining and Power Corporation, Philippines
- TeaM Sual Corporation - Philippines
- Gujarat Mineral Development Corp Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Dalmia Cement Bharat India
- Marubeni Corporation - India
- Bukit Makmur.PT - Indonesia
- Posco Energy - South Korea
- Indian Energy Exchange, India
- Central Java Power - Indonesia
- Formosa Plastics Group - Taiwan
- Semirara Mining Corp, Philippines
- Power Finance Corporation Ltd., India
- IEA Clean Coal Centre - UK
- Standard Chartered Bank - UAE
- SMC Global Power, Philippines
- Larsen & Toubro Limited - India
- Medco Energi Mining Internasional
- Directorate General of MIneral and Coal - Indonesia
- Kaltim Prima Coal - Indonesia
- Australian Coal Association
- Maheswari Brothers Coal Limited - India
- Ministry of Finance - Indonesia
- Jindal Steel & Power Ltd - India
- Price Waterhouse Coopers - Russia
- GMR Energy Limited - India
- Xindia Steels Limited - India
- GAC Shipping (India) Pvt Ltd
- Kalimantan Lumbung Energi - Indonesia
- Bhatia International Limited - India
- Indogreen Group - Indonesia
- Bhushan Steel Limited - India
- Vedanta Resources Plc - India
- Bhoruka Overseas - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Vizag Seaport Private Limited - India
- Coastal Gujarat Power Limited - India
- Meralco Power Generation, Philippines
- Chettinad Cement Corporation Ltd - India
- Barasentosa Lestari - Indonesia
- Toyota Tsusho Corporation, Japan
- Heidelberg Cement - Germany
- LBH Netherlands Bv - Netherlands
- Kumho Petrochemical, South Korea
- Aboitiz Power Corporation - Philippines
- Singapore Mercantile Exchange
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