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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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Wednesday, 26 November 14
OVERSUPPLY OF TONNAGE PUSHED PANAMAX SEGMENT DOWN FOR ANOTHER WEEK
COALspot.com: The Dry Bulk market managed to reverse its course from the week prior and with the sole exception of the Panamax segment, we witnesse ...
Wednesday, 26 November 14
SHIPPING MARKET INSIGHT - EVA TZIMA
The tanker market has been enjoying some good returns lately. Ok, that may be a big understatement, but with all the ups and downs of the past year ...
Tuesday, 25 November 14
FISCAL BREAKEVEN OIL PRICES SHOW SOVEREIGN VULNERABILITY - FITCH
COALspot.com: The vulnerability of the sovereign credit profiles of net oil exporters, as shown by their fiscal breakeven oil prices, suggests that ...
Tuesday, 25 November 14
UK: TRIBUNAL RULES ON SPEED AND PERFORMANCE CLAIMS UNDER TWO CONSECUTIVE TIME CHARTERPARTIES - REED SMITH
KNOWLEDGE TO ELEVATE
“Owners not to be responsible if the vessel under the currency of this charter party stays at port or anchorage or ...
Tuesday, 25 November 14
FOB RICHARDS BAY COAL SWAP FOR Q4' 15 DELIVERY CLOSED AT US$ 68.20
COALspot.com: API 4 FOB Richards Bay Coal for delivery Q1' 2015 gained month on month, week on week and day over day.
The Q1 swap has gain ...
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- Alfred C Toepfer International GmbH - Germany
- Standard Chartered Bank - UAE
- Australian Commodity Traders Exchange
- Altura Mining Limited, Indonesia
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- International Coal Ventures Pvt Ltd - India
- Siam City Cement - Thailand
- Metalloyd Limited - United Kingdom
- Sarangani Energy Corporation, Philippines
- Electricity Authority, New Zealand
- Vizag Seaport Private Limited - India
- Rio Tinto Coal - Australia
- Wilmar Investment Holdings
- Makarim & Taira - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
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- Indika Energy - Indonesia
- Mjunction Services Limited - India
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- Indo Tambangraya Megah - Indonesia
- Port Waratah Coal Services - Australia
- GVK Power & Infra Limited - India
- McConnell Dowell - Australia
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- Singapore Mercantile Exchange
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- Sindya Power Generating Company Private Ltd
- Mercator Lines Limited - India
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- PTC India Limited - India
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- Central Electricity Authority - India
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- Sical Logistics Limited - India
- Uttam Galva Steels Limited - India
- Asmin Koalindo Tuhup - Indonesia
- India Bulls Power Limited - India
- Economic Council, Georgia
- Energy Link Ltd, New Zealand
- Kaltim Prima Coal - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
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- AsiaOL BioFuels Corp., Philippines
- Kepco SPC Power Corporation, Philippines
- Romanian Commodities Exchange
- Formosa Plastics Group - Taiwan
- Leighton Contractors Pty Ltd - Australia
- Pendopo Energi Batubara - Indonesia
- Parliament of New Zealand
- Indian Oil Corporation Limited
- GAC Shipping (India) Pvt Ltd
- Ministry of Mines - Canada
- Binh Thuan Hamico - Vietnam
- Aditya Birla Group - India
- Oldendorff Carriers - Singapore
- Timah Investasi Mineral - Indoneisa
- New Zealand Coal & Carbon
- Bulk Trading Sa - Switzerland
- European Bulk Services B.V. - Netherlands
- CNBM International Corporation - China
- Bukit Baiduri Energy - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Aboitiz Power Corporation - Philippines
- MS Steel International - UAE
- Energy Development Corp, Philippines
- Banpu Public Company Limited - Thailand
- Kartika Selabumi Mining - Indonesia
- Attock Cement Pakistan Limited
- Eastern Coal Council - USA
- Coal and Oil Company - UAE
- Gujarat Sidhee Cement - India
- Indonesian Coal Mining Association
- Kalimantan Lumbung Energi - Indonesia
- Commonwealth Bank - Australia
- Rashtriya Ispat Nigam Limited - India
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- Planning Commission, India
- Power Finance Corporation Ltd., India
- PowerSource Philippines DevCo
- Mintek Dendrill Indonesia
- White Energy Company Limited
- Semirara Mining and Power Corporation, Philippines
- Directorate Of Revenue Intelligence - India
- Bhatia International Limited - India
- Barasentosa Lestari - Indonesia
- Toyota Tsusho Corporation, Japan
- Gujarat Electricity Regulatory Commission - India
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- Tata Chemicals Ltd - India
- Petron Corporation, Philippines
- Dalmia Cement Bharat India
- Cement Manufacturers Association - India
- Wood Mackenzie - Singapore
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- Australian Coal Association
- Sree Jayajothi Cements Limited - India
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- Iligan Light & Power Inc, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- LBH Netherlands Bv - Netherlands
- Renaissance Capital - South Africa
- Bhoruka Overseas - Indonesia
- Trasteel International SA, Italy
- South Luzon Thermal Energy Corporation
- Mercuria Energy - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- The State Trading Corporation of India Ltd
- Bharathi Cement Corporation - India
- Therma Luzon, Inc, Philippines
- Jindal Steel & Power Ltd - India
- Holcim Trading Pte Ltd - Singapore
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- The Treasury - Australian Government
- Global Business Power Corporation, Philippines
- Maheswari Brothers Coal Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Intertek Mineral Services - Indonesia
- TeaM Sual Corporation - Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- The University of Queensland
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- Billiton Holdings Pty Ltd - Australia
- Kobexindo Tractors - Indoneisa
- Carbofer General Trading SA - India
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- Indian Energy Exchange, India
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- Minerals Council of Australia
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- PNOC Exploration Corporation - Philippines
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- Madhucon Powers Ltd - India
- Borneo Indobara - Indonesia
- Bangladesh Power Developement Board
- Larsen & Toubro Limited - India
- Siam City Cement PLC, Thailand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Karbindo Abesyapradhi - Indoneisa
- Deloitte Consulting - India
- Global Coal Blending Company Limited - Australia
- Georgia Ports Authority, United States
- Meralco Power Generation, Philippines
- Bukit Makmur.PT - Indonesia
- Price Waterhouse Coopers - Russia
- GMR Energy Limited - India
- Malabar Cements Ltd - India
- Manunggal Multi Energi - Indonesia
- Global Green Power PLC Corporation, Philippines
- Sojitz Corporation - Japan
- Antam Resourcindo - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Thiess Contractors Indonesia
- IEA Clean Coal Centre - UK
- Goldman Sachs - Singapore
- IHS Mccloskey Coal Group - USA
- VISA Power Limited - India
- Medco Energi Mining Internasional
- Sinarmas Energy and Mining - Indonesia
- Orica Australia Pty. Ltd.
- Coastal Gujarat Power Limited - India
- Savvy Resources Ltd - HongKong
- Orica Mining Services - Indonesia
- Ambuja Cements Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Coalindo Energy - Indonesia
- Jaiprakash Power Ventures ltd
- Ceylon Electricity Board - Sri Lanka
- Star Paper Mills Limited - India
- SMC Global Power, Philippines
- Latin American Coal - Colombia
- PetroVietnam Power Coal Import and Supply Company
- Krishnapatnam Port Company Ltd. - India
- Anglo American - United Kingdom
- Independent Power Producers Association of India
- Chamber of Mines of South Africa
- Kohat Cement Company Ltd. - Pakistan
- ASAPP Information Group - India
- Merrill Lynch Commodities Europe
- Essar Steel Hazira Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- SMG Consultants - Indonesia
- Riau Bara Harum - Indonesia
- Simpson Spence & Young - Indonesia
- Thai Mozambique Logistica
- Maharashtra Electricity Regulatory Commission - India
- ICICI Bank Limited - India
- London Commodity Brokers - England
- Parry Sugars Refinery, India
- Heidelberg Cement - Germany
- Agrawal Coal Company - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Africa Commodities Group - South Africa
- Neyveli Lignite Corporation Ltd, - India
- Bayan Resources Tbk. - Indonesia
- Xindia Steels Limited - India
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- Miang Besar Coal Terminal - Indonesia
- Kumho Petrochemical, South Korea
- CIMB Investment Bank - Malaysia
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- Globalindo Alam Lestari - Indonesia
- Edison Trading Spa - Italy
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