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