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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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Monday, 12 October 15
DRY BULK SHIPPING: MARKETS ARE SLOWLY IMPROVING FROM A VERY LOW LEVEL AS THE DEMAND SIDE FALTERS - HELLENIC SHIPPING NEWS
The dry bulk market is in the midst of a shift in demand patterns, which coupled with a tonnage supply overhang, has been facing headwinds over the ...
Monday, 12 October 15
BDI WEIGHED DOWN BY CAPE
COALspot.com: The BDI (Baltic Dry Index) has come back down again this week. The BDI is a benchmark index used to assess the overall cost of moving ...
Sunday, 11 October 15
TANKER SHIPPING: MORE OPTIMISM IN SIGHT FOR TANKERS IN THE WINTER SEASON - BIMCO
Demand:
2015 has been the year of the tanker. The fundamental improvements with slow supply-side growth for some years coupled with low oil pri ...
Friday, 09 October 15
US WEEKLY COAL OUTPUT UP 1.2 PERCENT TO 17.7 MMST
COALspot.com – United States the world’s second largest coal producer has produced approximately totaled an estimated 17.7 million shor ...
Thursday, 08 October 15
CAPESIZE: MOST PEOPLE AGREE A SPIKE IN RATES WILL HAPPEN; WHEN, HOW LONG AND HOW SUBSTANTIAL? - FEARNLEYS
Cape
Depressives start of the fourth quarter, with c3 approaching USD 12 pmt and c5 presently in the mind 5's. According to Fearnleys ship br ...
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- Pipit Mutiara Jaya. PT, Indonesia
- Power Finance Corporation Ltd., India
- Billiton Holdings Pty Ltd - Australia
- Economic Council, Georgia
- White Energy Company Limited
- Dalmia Cement Bharat India
- Ministry of Transport, Egypt
- Videocon Industries ltd - India
- European Bulk Services B.V. - Netherlands
- The State Trading Corporation of India Ltd
- Minerals Council of Australia
- CIMB Investment Bank - Malaysia
- Kumho Petrochemical, South Korea
- Thiess Contractors Indonesia
- Kepco SPC Power Corporation, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Bayan Resources Tbk. - Indonesia
- Energy Link Ltd, New Zealand
- Directorate Of Revenue Intelligence - India
- Larsen & Toubro Limited - India
- VISA Power Limited - India
- Antam Resourcindo - Indonesia
- McConnell Dowell - Australia
- Indo Tambangraya Megah - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Singapore Mercantile Exchange
- Bukit Baiduri Energy - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Kobexindo Tractors - Indoneisa
- Ambuja Cements Ltd - India
- SN Aboitiz Power Inc, Philippines
- Ceylon Electricity Board - Sri Lanka
- Gujarat Electricity Regulatory Commission - India
- Eastern Energy - Thailand
- Intertek Mineral Services - Indonesia
- Madhucon Powers Ltd - India
- Timah Investasi Mineral - Indoneisa
- Petrochimia International Co. Ltd.- Taiwan
- SMG Consultants - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- South Luzon Thermal Energy Corporation
- Orica Australia Pty. Ltd.
- Bahari Cakrawala Sebuku - Indonesia
- Coalindo Energy - Indonesia
- Orica Mining Services - Indonesia
- Meenaskhi Energy Private Limited - India
- Price Waterhouse Coopers - Russia
- Sakthi Sugars Limited - India
- Port Waratah Coal Services - Australia
- Indian Oil Corporation Limited
- Africa Commodities Group - South Africa
- Grasim Industreis Ltd - India
- Jindal Steel & Power Ltd - India
- Star Paper Mills Limited - India
- Aboitiz Power Corporation - Philippines
- Petron Corporation, Philippines
- Ind-Barath Power Infra Limited - India
- Iligan Light & Power Inc, Philippines
- Renaissance Capital - South Africa
- Bhushan Steel Limited - India
- Sree Jayajothi Cements Limited - India
- Global Business Power Corporation, Philippines
- Banpu Public Company Limited - Thailand
- Globalindo Alam Lestari - Indonesia
- Central Java Power - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Borneo Indobara - Indonesia
- Central Electricity Authority - India
- PNOC Exploration Corporation - Philippines
- Lanco Infratech Ltd - India
- Vedanta Resources Plc - India
- Interocean Group of Companies - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Samtan Co., Ltd - South Korea
- Siam City Cement - Thailand
- Edison Trading Spa - Italy
- Bulk Trading Sa - Switzerland
- Straits Asia Resources Limited - Singapore
- Cigading International Bulk Terminal - Indonesia
- TeaM Sual Corporation - Philippines
- Pendopo Energi Batubara - Indonesia
- GVK Power & Infra Limited - India
- Sinarmas Energy and Mining - Indonesia
- Siam City Cement PLC, Thailand
- Tamil Nadu electricity Board
- Medco Energi Mining Internasional
- Planning Commission, India
- Bangladesh Power Developement Board
- LBH Netherlands Bv - Netherlands
- Coastal Gujarat Power Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Kartika Selabumi Mining - Indonesia
- Aditya Birla Group - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Latin American Coal - Colombia
- PTC India Limited - India
- Vizag Seaport Private Limited - India
- Ministry of Mines - Canada
- Kohat Cement Company Ltd. - Pakistan
- Gujarat Sidhee Cement - India
- Energy Development Corp, Philippines
- The University of Queensland
- San Jose City I Power Corp, Philippines
- Heidelberg Cement - Germany
- Global Green Power PLC Corporation, Philippines
- Georgia Ports Authority, United States
- Binh Thuan Hamico - Vietnam
- Carbofer General Trading SA - India
- Makarim & Taira - Indonesia
- Wilmar Investment Holdings
- IHS Mccloskey Coal Group - USA
- Electricity Generating Authority of Thailand
- PetroVietnam Power Coal Import and Supply Company
- Savvy Resources Ltd - HongKong
- Manunggal Multi Energi - Indonesia
- Rio Tinto Coal - Australia
- PowerSource Philippines DevCo
- Bukit Makmur.PT - Indonesia
- Oldendorff Carriers - Singapore
- Parry Sugars Refinery, India
- ASAPP Information Group - India
- Semirara Mining Corp, Philippines
- Uttam Galva Steels Limited - India
- Sical Logistics Limited - India
- Ministry of Finance - Indonesia
- Bhatia International Limited - India
- Trasteel International SA, Italy
- Metalloyd Limited - United Kingdom
- Mercuria Energy - Indonesia
- Maheswari Brothers Coal Limited - India
- Essar Steel Hazira Ltd - India
- Global Coal Blending Company Limited - Australia
- Xindia Steels Limited - India
- CNBM International Corporation - China
- Karaikal Port Pvt Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Therma Luzon, Inc, Philippines
- Standard Chartered Bank - UAE
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Toyota Tsusho Corporation, Japan
- Sojitz Corporation - Japan
- Kideco Jaya Agung - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Coal and Oil Company - UAE
- Jaiprakash Power Ventures ltd
- Semirara Mining and Power Corporation, Philippines
- Malabar Cements Ltd - India
- Posco Energy - South Korea
- SMC Global Power, Philippines
- Marubeni Corporation - India
- Formosa Plastics Group - Taiwan
- Indonesian Coal Mining Association
- Bharathi Cement Corporation - India
- Meralco Power Generation, Philippines
- Baramulti Group, Indonesia
- AsiaOL BioFuels Corp., Philippines
- Merrill Lynch Commodities Europe
- TNB Fuel Sdn Bhd - Malaysia
- Indian Energy Exchange, India
- GN Power Mariveles Coal Plant, Philippines
- Jorong Barutama Greston.PT - Indonesia
- The Treasury - Australian Government
- Bukit Asam (Persero) Tbk - Indonesia
- Mercator Lines Limited - India
- New Zealand Coal & Carbon
- Indika Energy - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- GMR Energy Limited - India
- Simpson Spence & Young - Indonesia
- Barasentosa Lestari - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Parliament of New Zealand
- Bhoruka Overseas - Indonesia
- Chamber of Mines of South Africa
- International Coal Ventures Pvt Ltd - India
- GAC Shipping (India) Pvt Ltd
- Anglo American - United Kingdom
- Leighton Contractors Pty Ltd - Australia
- Kapuas Tunggal Persada - Indonesia
- India Bulls Power Limited - India
- Eastern Coal Council - USA
- Kaltim Prima Coal - Indonesia
- Attock Cement Pakistan Limited
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- IEA Clean Coal Centre - UK
- Altura Mining Limited, Indonesia
- London Commodity Brokers - England
- Romanian Commodities Exchange
- Tata Chemicals Ltd - India
- Goldman Sachs - Singapore
- Cement Manufacturers Association - India
- Riau Bara Harum - Indonesia
- Independent Power Producers Association of India
- Wood Mackenzie - Singapore
- ICICI Bank Limited - India
- Thai Mozambique Logistica
- Mintek Dendrill Indonesia
- Holcim Trading Pte Ltd - Singapore
- MS Steel International - UAE
- Krishnapatnam Port Company Ltd. - India
- Sindya Power Generating Company Private Ltd
- Australian Coal Association
- Electricity Authority, New Zealand
- Directorate General of MIneral and Coal - Indonesia
- Sarangani Energy Corporation, Philippines
- Commonwealth Bank - Australia
- Mjunction Services Limited - India
- Chettinad Cement Corporation Ltd - India
- Deloitte Consulting - India
- Australian Commodity Traders Exchange
- Alfred C Toepfer International GmbH - Germany
- OPG Power Generation Pvt Ltd - India
- Indogreen Group - Indonesia
- Agrawal Coal Company - India
- Salva Resources Pvt Ltd - India
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