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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, 12 February 15
DRY BULK OWNERS SCRAP MORE VESSELS, AS MARKET REACHES HISTORICAL LOWS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market has reached historical lows this week, with the Baltic Dry Index (BDI) now trading at levels below operating expense levels for ...
Thursday, 12 February 15
INDONESIAN COAL PRICE REFERENCE INCHED DOWN 1.44% IN FEBRUARY
COALspot.com - The Ministry of Energy & Mineral Resources of Indonesia revised down Indonesian coal bench mark price this month to US$ 62.92 pe ...
Thursday, 12 February 15
NEWBUILDING ORDERING ACTIVITY DRAGS ON, AS OWNERS ARE LOOKING FOR LOWER PRICES - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
Ship owners appear to be waiting for lower prices in their dealings with Asian shipyards, as the dry bulk market is at historical lows. According t ...
Wednesday, 11 February 15
DRY BULK MARKET REMAINED UNDER PRESSURE : STABILIZING CAPE MARKET HARDLY HELPED SENTIMENT
COALspot.com: The Dry Bulk market remained under pressure last week, while the stabilizing Cape market hardly helped sentiment.
Greece based s ...
Wednesday, 11 February 15
BDI HITTING THE ALL-TIME LOW; FFA MARKETS NOT SHOWING ANY POSITIVE SIGNS
With the BDI hitting the all-time low and with FFA markets not showing any positive signs for a possible recovery in the near future, pessimism is ...
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- Indogreen Group - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Therma Luzon, Inc, Philippines
- The State Trading Corporation of India Ltd
- Coalindo Energy - Indonesia
- VISA Power Limited - India
- Savvy Resources Ltd - HongKong
- Rashtriya Ispat Nigam Limited - India
- Malabar Cements Ltd - India
- Standard Chartered Bank - UAE
- Bukit Baiduri Energy - Indonesia
- Latin American Coal - Colombia
- Madhucon Powers Ltd - India
- London Commodity Brokers - England
- Price Waterhouse Coopers - Russia
- Kideco Jaya Agung - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Kepco SPC Power Corporation, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Tata Chemicals Ltd - India
- Wilmar Investment Holdings
- Intertek Mineral Services - Indonesia
- McConnell Dowell - Australia
- Attock Cement Pakistan Limited
- Makarim & Taira - Indonesia
- Sarangani Energy Corporation, Philippines
- Xindia Steels Limited - India
- Cement Manufacturers Association - India
- Bhushan Steel Limited - India
- Mjunction Services Limited - India
- Kapuas Tunggal Persada - Indonesia
- ICICI Bank Limited - India
- Samtan Co., Ltd - South Korea
- Siam City Cement - Thailand
- Merrill Lynch Commodities Europe
- Posco Energy - South Korea
- CIMB Investment Bank - Malaysia
- Electricity Generating Authority of Thailand
- Energy Link Ltd, New Zealand
- Dalmia Cement Bharat India
- Medco Energi Mining Internasional
- Straits Asia Resources Limited - Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- Manunggal Multi Energi - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Bhoruka Overseas - Indonesia
- Ministry of Transport, Egypt
- Central Electricity Authority - India
- Kohat Cement Company Ltd. - Pakistan
- GMR Energy Limited - India
- Vedanta Resources Plc - India
- Rio Tinto Coal - Australia
- Mercuria Energy - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Energy Development Corp, Philippines
- SMC Global Power, Philippines
- Petron Corporation, Philippines
- Electricity Authority, New Zealand
- Metalloyd Limited - United Kingdom
- Deloitte Consulting - India
- Ministry of Finance - Indonesia
- Bayan Resources Tbk. - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Central Java Power - Indonesia
- Ministry of Mines - Canada
- Altura Mining Limited, Indonesia
- Vizag Seaport Private Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Orica Australia Pty. Ltd.
- Africa Commodities Group - South Africa
- Directorate General of MIneral and Coal - Indonesia
- Mintek Dendrill Indonesia
- Chamber of Mines of South Africa
- SN Aboitiz Power Inc, Philippines
- The Treasury - Australian Government
- Independent Power Producers Association of India
- Kobexindo Tractors - Indoneisa
- Ind-Barath Power Infra Limited - India
- Carbofer General Trading SA - India
- Mercator Lines Limited - India
- Renaissance Capital - South Africa
- Gujarat Electricity Regulatory Commission - India
- Globalindo Alam Lestari - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Cigading International Bulk Terminal - Indonesia
- Toyota Tsusho Corporation, Japan
- Meralco Power Generation, Philippines
- Kumho Petrochemical, South Korea
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Larsen & Toubro Limited - India
- Sical Logistics Limited - India
- Uttam Galva Steels Limited - India
- Coastal Gujarat Power Limited - India
- Bangladesh Power Developement Board
- Billiton Holdings Pty Ltd - Australia
- International Coal Ventures Pvt Ltd - India
- New Zealand Coal & Carbon
- Leighton Contractors Pty Ltd - Australia
- Romanian Commodities Exchange
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sakthi Sugars Limited - India
- Indian Energy Exchange, India
- The University of Queensland
- Global Green Power PLC Corporation, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Minerals Council of Australia
- Indika Energy - Indonesia
- Power Finance Corporation Ltd., India
- Bukit Makmur.PT - Indonesia
- Anglo American - United Kingdom
- Global Business Power Corporation, Philippines
- Barasentosa Lestari - Indonesia
- Global Coal Blending Company Limited - Australia
- Directorate Of Revenue Intelligence - India
- Jindal Steel & Power Ltd - India
- Bharathi Cement Corporation - India
- San Jose City I Power Corp, Philippines
- Formosa Plastics Group - Taiwan
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Pendopo Energi Batubara - Indonesia
- Commonwealth Bank - Australia
- Indian Oil Corporation Limited
- Marubeni Corporation - India
- Asmin Koalindo Tuhup - Indonesia
- Wood Mackenzie - Singapore
- Orica Mining Services - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Eastern Energy - Thailand
- Port Waratah Coal Services - Australia
- Thiess Contractors Indonesia
- Simpson Spence & Young - Indonesia
- Binh Thuan Hamico - Vietnam
- Ceylon Electricity Board - Sri Lanka
- Aditya Birla Group - India
- Eastern Coal Council - USA
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- India Bulls Power Limited - India
- IEA Clean Coal Centre - UK
- Planning Commission, India
- Alfred C Toepfer International GmbH - Germany
- Maharashtra Electricity Regulatory Commission - India
- Vijayanagar Sugar Pvt Ltd - India
- Star Paper Mills Limited - India
- AsiaOL BioFuels Corp., Philippines
- Parry Sugars Refinery, India
- Salva Resources Pvt Ltd - India
- Sindya Power Generating Company Private Ltd
- Neyveli Lignite Corporation Ltd, - India
- Sree Jayajothi Cements Limited - India
- Coal and Oil Company - UAE
- GAC Shipping (India) Pvt Ltd
- PetroVietnam Power Coal Import and Supply Company
- IHS Mccloskey Coal Group - USA
- Grasim Industreis Ltd - India
- Borneo Indobara - Indonesia
- Meenaskhi Energy Private Limited - India
- Indonesian Coal Mining Association
- Siam City Cement PLC, Thailand
- Georgia Ports Authority, United States
- Bulk Trading Sa - Switzerland
- PTC India Limited - India
- CNBM International Corporation - China
- LBH Netherlands Bv - Netherlands
- SMG Consultants - Indonesia
- Lanco Infratech Ltd - India
- GVK Power & Infra Limited - India
- Heidelberg Cement - Germany
- Timah Investasi Mineral - Indoneisa
- Agrawal Coal Company - India
- OPG Power Generation Pvt Ltd - India
- Indo Tambangraya Megah - Indonesia
- Banpu Public Company Limited - Thailand
- Semirara Mining and Power Corporation, Philippines
- Economic Council, Georgia
- Krishnapatnam Port Company Ltd. - India
- Ambuja Cements Ltd - India
- European Bulk Services B.V. - Netherlands
- Goldman Sachs - Singapore
- Oldendorff Carriers - Singapore
- Kartika Selabumi Mining - Indonesia
- Aboitiz Power Corporation - Philippines
- ASAPP Information Group - India
- Maheswari Brothers Coal Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Sojitz Corporation - Japan
- TeaM Sual Corporation - Philippines
- Essar Steel Hazira Ltd - India
- Thai Mozambique Logistica
- Riau Bara Harum - Indonesia
- South Luzon Thermal Energy Corporation
- Parliament of New Zealand
- White Energy Company Limited
- Kaltim Prima Coal - Indonesia
- Australian Commodity Traders Exchange
- Chettinad Cement Corporation Ltd - India
- Antam Resourcindo - Indonesia
- Semirara Mining Corp, Philippines
- PowerSource Philippines DevCo
- PNOC Exploration Corporation - Philippines
- Tamil Nadu electricity Board
- Jaiprakash Power Ventures ltd
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Trasteel International SA, Italy
- Gujarat Sidhee Cement - India
- Bhatia International Limited - India
- Videocon Industries ltd - India
- MS Steel International - UAE
- Interocean Group of Companies - India
- Edison Trading Spa - Italy
- Iligan Light & Power Inc, Philippines
- Miang Besar Coal Terminal - Indonesia
- Baramulti Group, Indonesia
- Karaikal Port Pvt Ltd - India
- Singapore Mercantile Exchange
- Australian Coal Association
- Gujarat Mineral Development Corp Ltd - India
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