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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, 04 February 16
CAPESIZE: WEST AUSTRALIAN TO CHINA HAS BEEN CONCLUDED AT US$ 2.85 PMT AND THE C3 MARKET REMAINS INACTIVE - FEARNLEYS
Capesize
As everyone is getting ready for the Chinese new year, already depressed rates are under further pressure.
According to Fearnleys, ...
Wednesday, 03 February 16
DRY BULK MARKET CONTINUES TO BE UNDER PRESSURE - INTERMODAL
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Tuesday, 02 February 16
RECORD EXPORTS THROUGH SOUTH AFRICA'S RICHARDS BAY COAL TERMINAL MADE AT EXPENSE OF SMALLER RIVALS, IHS SAYS
Five percent increase in coal exports through South Africa’s dominant Richards Bay Coal Terminal in 2015 unlikely to accelerate country&rsquo ...
Tuesday, 02 February 16
SETTING ASIDE, STRIKING OUT AND APPEALS TO THE COURT OF APPEAL IN SHIP ARRESTS - RAJAH & TANN ASIA LLP
KNOWLEDGE TO ELEVATE
The Singapore Court of Appeal once again has had to grapple with ship arrest, setting aside and appeals to the Court unde ...
Monday, 01 February 16
DRY BULK SUFFERS FROM POSEIDON'S POTENT PRONGS - CLARKSONS
It has been a grim start to 2016 for the bulkcarrier market, with the Baltic Dry Index sliding to new record lows on almost every day of the year s ...
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- Kapuas Tunggal Persada - Indonesia
- LBH Netherlands Bv - Netherlands
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Standard Chartered Bank - UAE
- Vedanta Resources Plc - India
- South Luzon Thermal Energy Corporation
- Indonesian Coal Mining Association
- Indo Tambangraya Megah - Indonesia
- Bhatia International Limited - India
- Australian Coal Association
- Manunggal Multi Energi - Indonesia
- Deloitte Consulting - India
- Savvy Resources Ltd - HongKong
- Trasteel International SA, Italy
- International Coal Ventures Pvt Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- White Energy Company Limited
- European Bulk Services B.V. - Netherlands
- Orica Mining Services - Indonesia
- The State Trading Corporation of India Ltd
- Kohat Cement Company Ltd. - Pakistan
- Sree Jayajothi Cements Limited - India
- Essar Steel Hazira Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Maheswari Brothers Coal Limited - India
- Ministry of Mines - Canada
- Romanian Commodities Exchange
- Salva Resources Pvt Ltd - India
- Agrawal Coal Company - India
- SMC Global Power, Philippines
- ICICI Bank Limited - India
- PNOC Exploration Corporation - Philippines
- Thiess Contractors Indonesia
- Medco Energi Mining Internasional
- Binh Thuan Hamico - Vietnam
- Central Java Power - Indonesia
- Port Waratah Coal Services - Australia
- Riau Bara Harum - Indonesia
- OPG Power Generation Pvt Ltd - India
- London Commodity Brokers - England
- Mintek Dendrill Indonesia
- Sical Logistics Limited - India
- Aboitiz Power Corporation - Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Rio Tinto Coal - Australia
- PTC India Limited - India
- Straits Asia Resources Limited - Singapore
- Minerals Council of Australia
- Global Business Power Corporation, Philippines
- CNBM International Corporation - China
- Renaissance Capital - South Africa
- Kaltim Prima Coal - Indonesia
- Ambuja Cements Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Marubeni Corporation - India
- Coastal Gujarat Power Limited - India
- Baramulti Group, Indonesia
- Toyota Tsusho Corporation, Japan
- Leighton Contractors Pty Ltd - Australia
- Makarim & Taira - Indonesia
- Eastern Energy - Thailand
- Banpu Public Company Limited - Thailand
- Grasim Industreis Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Bhushan Steel Limited - India
- Bhoruka Overseas - Indonesia
- GMR Energy Limited - India
- Economic Council, Georgia
- Tamil Nadu electricity Board
- Bharathi Cement Corporation - India
- Commonwealth Bank - Australia
- Meralco Power Generation, Philippines
- Posco Energy - South Korea
- Global Green Power PLC Corporation, Philippines
- Altura Mining Limited, Indonesia
- Indian Energy Exchange, India
- Power Finance Corporation Ltd., India
- Semirara Mining Corp, Philippines
- Price Waterhouse Coopers - Russia
- Kalimantan Lumbung Energi - Indonesia
- Bayan Resources Tbk. - Indonesia
- Vizag Seaport Private Limited - India
- Siam City Cement PLC, Thailand
- Georgia Ports Authority, United States
- Gujarat Sidhee Cement - India
- Karaikal Port Pvt Ltd - India
- CIMB Investment Bank - Malaysia
- The University of Queensland
- Dalmia Cement Bharat India
- Globalindo Alam Lestari - Indonesia
- Intertek Mineral Services - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Barasentosa Lestari - Indonesia
- TeaM Sual Corporation - Philippines
- Indian Oil Corporation Limited
- Central Electricity Authority - India
- Gujarat Mineral Development Corp Ltd - India
- Metalloyd Limited - United Kingdom
- Bukit Makmur.PT - Indonesia
- Merrill Lynch Commodities Europe
- PetroVietnam Power Coal Import and Supply Company
- Samtan Co., Ltd - South Korea
- Kartika Selabumi Mining - Indonesia
- Kumho Petrochemical, South Korea
- Gujarat Electricity Regulatory Commission - India
- Simpson Spence & Young - Indonesia
- Sojitz Corporation - Japan
- Orica Australia Pty. Ltd.
- PowerSource Philippines DevCo
- Carbofer General Trading SA - India
- India Bulls Power Limited - India
- Kobexindo Tractors - Indoneisa
- Miang Besar Coal Terminal - Indonesia
- Bukit Baiduri Energy - Indonesia
- VISA Power Limited - India
- Sakthi Sugars Limited - India
- Timah Investasi Mineral - Indoneisa
- Directorate General of MIneral and Coal - Indonesia
- Jaiprakash Power Ventures ltd
- GAC Shipping (India) Pvt Ltd
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Iligan Light & Power Inc, Philippines
- Lanco Infratech Ltd - India
- Coalindo Energy - Indonesia
- IHS Mccloskey Coal Group - USA
- Chettinad Cement Corporation Ltd - India
- Kideco Jaya Agung - Indonesia
- Mercuria Energy - Indonesia
- Anglo American - United Kingdom
- Antam Resourcindo - Indonesia
- Edison Trading Spa - Italy
- SN Aboitiz Power Inc, Philippines
- Asmin Koalindo Tuhup - Indonesia
- New Zealand Coal & Carbon
- MS Steel International - UAE
- Alfred C Toepfer International GmbH - Germany
- Vijayanagar Sugar Pvt Ltd - India
- ASAPP Information Group - India
- Ministry of Transport, Egypt
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Tata Chemicals Ltd - India
- Energy Development Corp, Philippines
- Cigading International Bulk Terminal - Indonesia
- Global Coal Blending Company Limited - Australia
- Energy Link Ltd, New Zealand
- The Treasury - Australian Government
- San Jose City I Power Corp, Philippines
- Independent Power Producers Association of India
- Thai Mozambique Logistica
- Ind-Barath Power Infra Limited - India
- Madhucon Powers Ltd - India
- Star Paper Mills Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Cement Manufacturers Association - India
- AsiaOL BioFuels Corp., Philippines
- Billiton Holdings Pty Ltd - Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Pipit Mutiara Jaya. PT, Indonesia
- Indogreen Group - Indonesia
- Electricity Generating Authority of Thailand
- Videocon Industries ltd - India
- Therma Luzon, Inc, Philippines
- Attock Cement Pakistan Limited
- Petron Corporation, Philippines
- Meenaskhi Energy Private Limited - India
- Wilmar Investment Holdings
- Holcim Trading Pte Ltd - Singapore
- Borneo Indobara - Indonesia
- Directorate Of Revenue Intelligence - India
- SMG Consultants - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- GN Power Mariveles Coal Plant, Philippines
- Oldendorff Carriers - Singapore
- Neyveli Lignite Corporation Ltd, - India
- Uttam Galva Steels Limited - India
- Heidelberg Cement - Germany
- Parliament of New Zealand
- Mjunction Services Limited - India
- Formosa Plastics Group - Taiwan
- Coal and Oil Company - UAE
- Siam City Cement - Thailand
- Mercator Lines Limited - India
- Ministry of Finance - Indonesia
- McConnell Dowell - Australia
- Maharashtra Electricity Regulatory Commission - India
- Singapore Mercantile Exchange
- Interocean Group of Companies - India
- Australian Commodity Traders Exchange
- Africa Commodities Group - South Africa
- Bukit Asam (Persero) Tbk - Indonesia
- Electricity Authority, New Zealand
- Jindal Steel & Power Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Pendopo Energi Batubara - Indonesia
- Kepco SPC Power Corporation, Philippines
- Malabar Cements Ltd - India
- Sindya Power Generating Company Private Ltd
- Sinarmas Energy and Mining - Indonesia
- Chamber of Mines of South Africa
- Eastern Coal Council - USA
- Bangladesh Power Developement Board
- IEA Clean Coal Centre - UK
- GVK Power & Infra Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Larsen & Toubro Limited - India
- Sarangani Energy Corporation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Goldman Sachs - Singapore
- Wood Mackenzie - Singapore
- Planning Commission, India
- Latin American Coal - Colombia
- Indika Energy - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Parry Sugars Refinery, India
- Bulk Trading Sa - Switzerland
- Aditya Birla Group - India
- Xindia Steels Limited - India
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