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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, 18 March 16
OUTLOOK ON GLOBAL SHIPPING SECTOR TURNS NEGATIVE AS SUPPLY-DEMAND GAP WIDENS AND EBITDA DECLINES - MOODY'S
Moody’s Investors Service (Moody’s) has changed its outlook on the global shipping sector to negative as it expects supply growth to ou ...
Friday, 18 March 16
DRY BULK MARKET HAS LITTLE TO LOOK FORWARD TO FROM CHINA AT THE MOMENT - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market’s rebound is long overdue, but when it comes, it won’t be because of China’s strong demand for commodities, o ...
Friday, 18 March 16
COAL PRODUCTION IN THE UNITED STATES SLIGHTLY DECREASED THIS WEEK - EIA
COALspot.com – United States the world’s second largest coal producer has produced approximately totaled an estimated 12.5 million shor ...
Thursday, 17 March 16
THE PANAMAX MARKET SEEMS TO BE A BIT TOPPISH THIS WEEK - FEARNLEYS
Cape
There are challenging days with rates or less unchanged from last week; West Australia to China still below US$ 3 pmt, and Tuarao to China i ...
Wednesday, 16 March 16
OIL SUPPLY OUTPACES DEMAND ON ANY GIVEN DAY, AND BILLIONS OF BARRELS OF OIL ARE BEING STORED RATHER THAN CONSUMED - CHRISTOPHER
Oil producers have turned to the concept of limiting their output to January levels as a certain form of action to boost prices that have fallen mo ...
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- Meenaskhi Energy Private Limited - India
- PTC India Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Orica Mining Services - Indonesia
- Mintek Dendrill Indonesia
- London Commodity Brokers - England
- Coal and Oil Company - UAE
- Kaltim Prima Coal - Indonesia
- CNBM International Corporation - China
- Indo Tambangraya Megah - Indonesia
- Indogreen Group - Indonesia
- Ambuja Cements Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Cement Manufacturers Association - India
- Power Finance Corporation Ltd., India
- Toyota Tsusho Corporation, Japan
- Wilmar Investment Holdings
- Jorong Barutama Greston.PT - Indonesia
- Rio Tinto Coal - Australia
- Tata Chemicals Ltd - India
- Ministry of Transport, Egypt
- Sree Jayajothi Cements Limited - India
- Singapore Mercantile Exchange
- Alfred C Toepfer International GmbH - Germany
- Iligan Light & Power Inc, Philippines
- Intertek Mineral Services - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Bulk Trading Sa - Switzerland
- Independent Power Producers Association of India
- Sindya Power Generating Company Private Ltd
- Aboitiz Power Corporation - Philippines
- Gujarat Electricity Regulatory Commission - India
- Riau Bara Harum - Indonesia
- Kobexindo Tractors - Indoneisa
- Posco Energy - South Korea
- Chettinad Cement Corporation Ltd - India
- Interocean Group of Companies - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Siam City Cement - Thailand
- OPG Power Generation Pvt Ltd - India
- LBH Netherlands Bv - Netherlands
- TNB Fuel Sdn Bhd - Malaysia
- Vijayanagar Sugar Pvt Ltd - India
- Coalindo Energy - Indonesia
- Lanco Infratech Ltd - India
- Electricity Generating Authority of Thailand
- Malabar Cements Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Uttam Galva Steels Limited - India
- Medco Energi Mining Internasional
- Port Waratah Coal Services - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Cigading International Bulk Terminal - Indonesia
- McConnell Dowell - Australia
- PNOC Exploration Corporation - Philippines
- GVK Power & Infra Limited - India
- Oldendorff Carriers - Singapore
- IHS Mccloskey Coal Group - USA
- New Zealand Coal & Carbon
- Globalindo Alam Lestari - Indonesia
- Mercator Lines Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Global Green Power PLC Corporation, Philippines
- Maharashtra Electricity Regulatory Commission - India
- ICICI Bank Limited - India
- Sojitz Corporation - Japan
- Holcim Trading Pte Ltd - Singapore
- Vedanta Resources Plc - India
- Maheswari Brothers Coal Limited - India
- Simpson Spence & Young - Indonesia
- Banpu Public Company Limited - Thailand
- Bahari Cakrawala Sebuku - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Xindia Steels Limited - India
- Bukit Baiduri Energy - Indonesia
- Eastern Coal Council - USA
- Madhucon Powers Ltd - India
- Timah Investasi Mineral - Indoneisa
- Salva Resources Pvt Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Price Waterhouse Coopers - Russia
- Aditya Birla Group - India
- SN Aboitiz Power Inc, Philippines
- Antam Resourcindo - Indonesia
- Baramulti Group, Indonesia
- AsiaOL BioFuels Corp., Philippines
- The Treasury - Australian Government
- Economic Council, Georgia
- Australian Commodity Traders Exchange
- Sinarmas Energy and Mining - Indonesia
- San Jose City I Power Corp, Philippines
- Therma Luzon, Inc, Philippines
- Jindal Steel & Power Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Dalmia Cement Bharat India
- Thiess Contractors Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Renaissance Capital - South Africa
- Parliament of New Zealand
- Energy Development Corp, Philippines
- VISA Power Limited - India
- IEA Clean Coal Centre - UK
- Energy Link Ltd, New Zealand
- Kideco Jaya Agung - Indonesia
- MS Steel International - UAE
- Ceylon Electricity Board - Sri Lanka
- Formosa Plastics Group - Taiwan
- Ind-Barath Power Infra Limited - India
- Ministry of Finance - Indonesia
- Larsen & Toubro Limited - India
- Marubeni Corporation - India
- Carbofer General Trading SA - India
- Sical Logistics Limited - India
- Bhatia International Limited - India
- Borneo Indobara - Indonesia
- ASAPP Information Group - India
- Latin American Coal - Colombia
- Bhushan Steel Limited - India
- White Energy Company Limited
- Barasentosa Lestari - Indonesia
- Electricity Authority, New Zealand
- Deloitte Consulting - India
- Goldman Sachs - Singapore
- Kapuas Tunggal Persada - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Binh Thuan Hamico - Vietnam
- Indian Oil Corporation Limited
- SMC Global Power, Philippines
- Metalloyd Limited - United Kingdom
- Africa Commodities Group - South Africa
- Rashtriya Ispat Nigam Limited - India
- Parry Sugars Refinery, India
- Chamber of Mines of South Africa
- Pendopo Energi Batubara - Indonesia
- The University of Queensland
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Directorate Of Revenue Intelligence - India
- Petrochimia International Co. Ltd.- Taiwan
- International Coal Ventures Pvt Ltd - India
- Bharathi Cement Corporation - India
- Sarangani Energy Corporation, Philippines
- Minerals Council of Australia
- Anglo American - United Kingdom
- Global Coal Blending Company Limited - Australia
- The State Trading Corporation of India Ltd
- Karaikal Port Pvt Ltd - India
- Star Paper Mills Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Central Java Power - Indonesia
- Jaiprakash Power Ventures ltd
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Petron Corporation, Philippines
- Semirara Mining Corp, Philippines
- Mercuria Energy - Indonesia
- CIMB Investment Bank - Malaysia
- Kumho Petrochemical, South Korea
- Altura Mining Limited, Indonesia
- Eastern Energy - Thailand
- Indika Energy - Indonesia
- Mjunction Services Limited - India
- Savvy Resources Ltd - HongKong
- Manunggal Multi Energi - Indonesia
- Romanian Commodities Exchange
- Thai Mozambique Logistica
- Karbindo Abesyapradhi - Indoneisa
- Indonesian Coal Mining Association
- Heidelberg Cement - Germany
- Coastal Gujarat Power Limited - India
- Makarim & Taira - Indonesia
- Straits Asia Resources Limited - Singapore
- Edison Trading Spa - Italy
- SMG Consultants - Indonesia
- Siam City Cement PLC, Thailand
- Commonwealth Bank - Australia
- Georgia Ports Authority, United States
- South Luzon Thermal Energy Corporation
- Bhoruka Overseas - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Bukit Makmur.PT - Indonesia
- Bangladesh Power Developement Board
- PowerSource Philippines DevCo
- Vizag Seaport Private Limited - India
- Kohat Cement Company Ltd. - Pakistan
- European Bulk Services B.V. - Netherlands
- Videocon Industries ltd - India
- Tamil Nadu electricity Board
- Samtan Co., Ltd - South Korea
- Australian Coal Association
- Kalimantan Lumbung Energi - Indonesia
- GMR Energy Limited - India
- Grasim Industreis Ltd - India
- Attock Cement Pakistan Limited
- Ministry of Mines - Canada
- Essar Steel Hazira Ltd - India
- India Bulls Power Limited - India
- Kartika Selabumi Mining - Indonesia
- Merrill Lynch Commodities Europe
- Bayan Resources Tbk. - Indonesia
- Standard Chartered Bank - UAE
- Meralco Power Generation, Philippines
- Wood Mackenzie - Singapore
- Billiton Holdings Pty Ltd - Australia
- Global Business Power Corporation, Philippines
- Indian Energy Exchange, India
- Kepco SPC Power Corporation, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- GAC Shipping (India) Pvt Ltd
- Sakthi Sugars Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Gujarat Sidhee Cement - India
- Central Electricity Authority - India
- Agrawal Coal Company - India
- Trasteel International SA, Italy
- GN Power Mariveles Coal Plant, Philippines
- Orica Australia Pty. Ltd.
- Planning Commission, India
- TeaM Sual Corporation - Philippines
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