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