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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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Sunday, 09 November 14
CAPE INDEX UP 3.06%; PANAMAX INDEX FELL 4.05%
COALspot.com: The BDI was almost at same levels compared to last week closing or just increased 0.77 pct from last week. The BDI was closed at 1437 ...
Friday, 07 November 14
U.S. PRODUCED 85.60 MILLION SHORT TONS OF COAL IN OCTOBER, UP 2.88% M-O-M
COALspot.com – United States the world's one of the largest coal producers, produced approximately 19.0 million short tons (mmst) of coal ...
Thursday, 06 November 14
THE ATLANTIC HAS REMAINED STRONG WITH A HEALTHY SUPPLY OF NEW CARGOES
Handy
This week has continued its slow trend in both hemispheres and even though rates are a bit up w-o-w it is not a clear sign for any improvem ...
Wednesday, 05 November 14
CAPESIZE SEGMENT ENJOYED FIRMING RATES ACROSS BOTH BASINS
Following a fantastic week in terms of rate performance for Capes, the Dry Bulk market managed to note another positive weekly closing, which stron ...
Wednesday, 05 November 14
SHIPPING MARKET INSIGHT - PANOS TSILINGIRIS
COALspot.com: The steep appreciation in dry bulker values between late 2012 and March 2014 resulted in unrealistically expensive ship values compar ...
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- Sarangani Energy Corporation, Philippines
- Commonwealth Bank - Australia
- Formosa Plastics Group - Taiwan
- Banpu Public Company Limited - Thailand
- Tata Chemicals Ltd - India
- Marubeni Corporation - India
- Antam Resourcindo - Indonesia
- New Zealand Coal & Carbon
- Mintek Dendrill Indonesia
- Bhatia International Limited - India
- White Energy Company Limited
- Simpson Spence & Young - Indonesia
- Merrill Lynch Commodities Europe
- Deloitte Consulting - India
- Sakthi Sugars Limited - India
- Sical Logistics Limited - India
- SMG Consultants - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- GMR Energy Limited - India
- Lanco Infratech Ltd - India
- Siam City Cement - Thailand
- Orica Mining Services - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Goldman Sachs - Singapore
- Grasim Industreis Ltd - India
- Chamber of Mines of South Africa
- Gujarat Electricity Regulatory Commission - India
- OPG Power Generation Pvt Ltd - India
- PNOC Exploration Corporation - Philippines
- Billiton Holdings Pty Ltd - Australia
- Kohat Cement Company Ltd. - Pakistan
- Renaissance Capital - South Africa
- Mercuria Energy - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Eastern Coal Council - USA
- Wood Mackenzie - Singapore
- Sojitz Corporation - Japan
- Holcim Trading Pte Ltd - Singapore
- Semirara Mining Corp, Philippines
- Videocon Industries ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Indika Energy - Indonesia
- Parliament of New Zealand
- Australian Coal Association
- Indian Energy Exchange, India
- Barasentosa Lestari - Indonesia
- Thiess Contractors Indonesia
- Port Waratah Coal Services - Australia
- Gujarat Mineral Development Corp Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Kumho Petrochemical, South Korea
- Larsen & Toubro Limited - India
- Timah Investasi Mineral - Indoneisa
- Maharashtra Electricity Regulatory Commission - India
- Wilmar Investment Holdings
- Tamil Nadu electricity Board
- Indian Oil Corporation Limited
- The State Trading Corporation of India Ltd
- Petrochimia International Co. Ltd.- Taiwan
- Kalimantan Lumbung Energi - Indonesia
- Georgia Ports Authority, United States
- Energy Development Corp, Philippines
- Bhoruka Overseas - Indonesia
- Ministry of Transport, Egypt
- Globalindo Alam Lestari - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Kartika Selabumi Mining - Indonesia
- Salva Resources Pvt Ltd - India
- Bhushan Steel Limited - India
- Maheswari Brothers Coal Limited - India
- Global Business Power Corporation, Philippines
- Edison Trading Spa - Italy
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bukit Makmur.PT - Indonesia
- Agrawal Coal Company - India
- European Bulk Services B.V. - Netherlands
- Kaltim Prima Coal - Indonesia
- The University of Queensland
- Borneo Indobara - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Global Green Power PLC Corporation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Krishnapatnam Port Company Ltd. - India
- TeaM Sual Corporation - Philippines
- Sindya Power Generating Company Private Ltd
- Karaikal Port Pvt Ltd - India
- Altura Mining Limited, Indonesia
- Australian Commodity Traders Exchange
- Indonesian Coal Mining Association
- Madhucon Powers Ltd - India
- Central Electricity Authority - India
- Parry Sugars Refinery, India
- Samtan Co., Ltd - South Korea
- GAC Shipping (India) Pvt Ltd
- Electricity Authority, New Zealand
- ASAPP Information Group - India
- Rio Tinto Coal - Australia
- Kepco SPC Power Corporation, Philippines
- Planning Commission, India
- Mjunction Services Limited - India
- Central Java Power - Indonesia
- CNBM International Corporation - China
- McConnell Dowell - Australia
- Star Paper Mills Limited - India
- IHS Mccloskey Coal Group - USA
- Asmin Koalindo Tuhup - Indonesia
- Electricity Generating Authority of Thailand
- GVK Power & Infra Limited - India
- Coal and Oil Company - UAE
- Medco Energi Mining Internasional
- Vijayanagar Sugar Pvt Ltd - India
- Metalloyd Limited - United Kingdom
- Eastern Energy - Thailand
- Mercator Lines Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Aboitiz Power Corporation - Philippines
- Jaiprakash Power Ventures ltd
- Aditya Birla Group - India
- Straits Asia Resources Limited - Singapore
- Vizag Seaport Private Limited - India
- SN Aboitiz Power Inc, Philippines
- San Jose City I Power Corp, Philippines
- London Commodity Brokers - England
- PTC India Limited - India
- AsiaOL BioFuels Corp., Philippines
- Standard Chartered Bank - UAE
- Meenaskhi Energy Private Limited - India
- Directorate Of Revenue Intelligence - India
- Africa Commodities Group - South Africa
- Kobexindo Tractors - Indoneisa
- Essar Steel Hazira Ltd - India
- Uttam Galva Steels Limited - India
- Malabar Cements Ltd - India
- Independent Power Producers Association of India
- Coastal Gujarat Power Limited - India
- Economic Council, Georgia
- Bukit Asam (Persero) Tbk - Indonesia
- Posco Energy - South Korea
- Bahari Cakrawala Sebuku - Indonesia
- Price Waterhouse Coopers - Russia
- Dalmia Cement Bharat India
- ICICI Bank Limited - India
- Thai Mozambique Logistica
- Baramulti Group, Indonesia
- Minerals Council of Australia
- Carbofer General Trading SA - India
- MS Steel International - UAE
- Singapore Mercantile Exchange
- Makarim & Taira - Indonesia
- PowerSource Philippines DevCo
- Therma Luzon, Inc, Philippines
- SMC Global Power, Philippines
- Latin American Coal - Colombia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Gujarat Sidhee Cement - India
- Pendopo Energi Batubara - Indonesia
- Riau Bara Harum - Indonesia
- Attock Cement Pakistan Limited
- Cigading International Bulk Terminal - Indonesia
- Indo Tambangraya Megah - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Ceylon Electricity Board - Sri Lanka
- Sree Jayajothi Cements Limited - India
- Indogreen Group - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Miang Besar Coal Terminal - Indonesia
- VISA Power Limited - India
- Heidelberg Cement - Germany
- Ambuja Cements Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Cement Manufacturers Association - India
- Bangladesh Power Developement Board
- Toyota Tsusho Corporation, Japan
- Iligan Light & Power Inc, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Energy Link Ltd, New Zealand
- Interocean Group of Companies - India
- South Luzon Thermal Energy Corporation
- Intertek Mineral Services - Indonesia
- Ministry of Mines - Canada
- Xindia Steels Limited - India
- Kapuas Tunggal Persada - Indonesia
- Ind-Barath Power Infra Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Oldendorff Carriers - Singapore
- International Coal Ventures Pvt Ltd - India
- IEA Clean Coal Centre - UK
- The Treasury - Australian Government
- Global Coal Blending Company Limited - Australia
- Trasteel International SA, Italy
- Romanian Commodities Exchange
- Manunggal Multi Energi - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Petron Corporation, Philippines
- Bayan Resources Tbk. - Indonesia
- Anglo American - United Kingdom
- Siam City Cement PLC, Thailand
- Bulk Trading Sa - Switzerland
- Savvy Resources Ltd - HongKong
- CIMB Investment Bank - Malaysia
- Binh Thuan Hamico - Vietnam
- Alfred C Toepfer International GmbH - Germany
- LBH Netherlands Bv - Netherlands
- Bukit Baiduri Energy - Indonesia
- Meralco Power Generation, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Power Finance Corporation Ltd., India
- Bharathi Cement Corporation - India
- Coalindo Energy - Indonesia
- Orica Australia Pty. Ltd.
- Jindal Steel & Power Ltd - India
- Kideco Jaya Agung - Indonesia
- Ministry of Finance - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Chettinad Cement Corporation Ltd - India
- India Bulls Power Limited - India
- Vedanta Resources Plc - India
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