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