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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, 16 October 14
PANAMAX OWNERS RECEIVE A PREMIUM FOR GOING TO INDIA VIA INDONESIA - FEARNLEYS AS
Handy
The Handy/Supra market continues to slide in both hemispheres, said Fearnleys AS in its latest week report. In the Atlantic we see rates co ...
Thursday, 16 October 14
ARE WE GOING TO SHOOT OURSELVES IN THE FOOT ONCE AGAIN? - PANOS MAKRINOS
As the East part of our globe was coming back from its October holidays last week, everyone expected that the Dry Bulk market would follow suit and ...
Wednesday, 15 October 14
PANAMAX: ACTIVITY IN THE PACIFIC WAS UNIMPRESSIVE
The Dry Bulk market noted another weekly decline last week, while the BDI moved below 1,000 points taking down with it expectations that a post hol ...
Wednesday, 15 October 14
INDONESIAN COAL PRICE REFERENCE FELL TO FRESH MULTI-YEAR LOWS IN OCTOBER
COALspot.com - The Ministry of Energy & Mineral Resources of Indonesia revised down the coal bench mark price once again in October 2014.
...
Wednesday, 15 October 14
DRY BULK SHIPPING: RATE IMPROVEMENTS ARRIVED AS FORECAST, BUT UNCERTAINTY MOUNTS FOR 2015 DEMAND - BIMCO
BIMCO released its latest short term assessment of the dry bulk market, estimating that over the October-November period, the level of Capesize TC ...
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- The Treasury - Australian Government
- Siam City Cement PLC, Thailand
- Jaiprakash Power Ventures ltd
- Karbindo Abesyapradhi - Indoneisa
- Videocon Industries ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- GN Power Mariveles Coal Plant, Philippines
- Bukit Baiduri Energy - Indonesia
- Dalmia Cement Bharat India
- SMC Global Power, Philippines
- Energy Link Ltd, New Zealand
- SMG Consultants - Indonesia
- Savvy Resources Ltd - HongKong
- Electricity Generating Authority of Thailand
- Miang Besar Coal Terminal - Indonesia
- Bhatia International Limited - India
- Toyota Tsusho Corporation, Japan
- Meenaskhi Energy Private Limited - India
- White Energy Company Limited
- MS Steel International - UAE
- OPG Power Generation Pvt Ltd - India
- Coal and Oil Company - UAE
- Central Java Power - Indonesia
- Bayan Resources Tbk. - Indonesia
- Central Electricity Authority - India
- Power Finance Corporation Ltd., India
- Xindia Steels Limited - India
- Star Paper Mills Limited - India
- AsiaOL BioFuels Corp., Philippines
- Merrill Lynch Commodities Europe
- Maharashtra Electricity Regulatory Commission - India
- Indonesian Coal Mining Association
- GAC Shipping (India) Pvt Ltd
- Bulk Trading Sa - Switzerland
- Anglo American - United Kingdom
- Barasentosa Lestari - Indonesia
- Eastern Energy - Thailand
- Energy Development Corp, Philippines
- Sakthi Sugars Limited - India
- Altura Mining Limited, Indonesia
- Ceylon Electricity Board - Sri Lanka
- Grasim Industreis Ltd - India
- Ministry of Mines - Canada
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Alfred C Toepfer International GmbH - Germany
- Banpu Public Company Limited - Thailand
- London Commodity Brokers - England
- Oldendorff Carriers - Singapore
- Wood Mackenzie - Singapore
- Mercuria Energy - Indonesia
- ICICI Bank Limited - India
- Mintek Dendrill Indonesia
- Borneo Indobara - Indonesia
- Thai Mozambique Logistica
- Economic Council, Georgia
- Kohat Cement Company Ltd. - Pakistan
- New Zealand Coal & Carbon
- Ind-Barath Power Infra Limited - India
- Semirara Mining and Power Corporation, Philippines
- PTC India Limited - India
- Kapuas Tunggal Persada - Indonesia
- Price Waterhouse Coopers - Russia
- Bharathi Cement Corporation - India
- Attock Cement Pakistan Limited
- Sinarmas Energy and Mining - Indonesia
- Mercator Lines Limited - India
- Australian Commodity Traders Exchange
- Ministry of Finance - Indonesia
- Jindal Steel & Power Ltd - India
- Orica Mining Services - Indonesia
- Sindya Power Generating Company Private Ltd
- Rashtriya Ispat Nigam Limited - India
- Bukit Makmur.PT - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- VISA Power Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Parliament of New Zealand
- Eastern Coal Council - USA
- Aditya Birla Group - India
- Asmin Koalindo Tuhup - Indonesia
- Kartika Selabumi Mining - Indonesia
- Madhucon Powers Ltd - India
- PNOC Exploration Corporation - Philippines
- European Bulk Services B.V. - Netherlands
- Malabar Cements Ltd - India
- Bhoruka Overseas - Indonesia
- Indian Oil Corporation Limited
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Agrawal Coal Company - India
- Marubeni Corporation - India
- Larsen & Toubro Limited - India
- Chettinad Cement Corporation Ltd - India
- Intertek Mineral Services - Indonesia
- Sree Jayajothi Cements Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Metalloyd Limited - United Kingdom
- Pendopo Energi Batubara - Indonesia
- Kideco Jaya Agung - Indonesia
- Meralco Power Generation, Philippines
- Lanco Infratech Ltd - India
- Semirara Mining Corp, Philippines
- Leighton Contractors Pty Ltd - Australia
- Samtan Co., Ltd - South Korea
- Riau Bara Harum - Indonesia
- Baramulti Group, Indonesia
- Globalindo Alam Lestari - Indonesia
- Kepco SPC Power Corporation, Philippines
- Therma Luzon, Inc, Philippines
- Minerals Council of Australia
- Holcim Trading Pte Ltd - Singapore
- Billiton Holdings Pty Ltd - Australia
- Karaikal Port Pvt Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Makarim & Taira - Indonesia
- Ambuja Cements Ltd - India
- Vizag Seaport Private Limited - India
- Singapore Mercantile Exchange
- PetroVietnam Power Coal Import and Supply Company
- Sical Logistics Limited - India
- Sarangani Energy Corporation, Philippines
- Standard Chartered Bank - UAE
- Renaissance Capital - South Africa
- The University of Queensland
- Kaltim Prima Coal - Indonesia
- Posco Energy - South Korea
- Timah Investasi Mineral - Indoneisa
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- PowerSource Philippines DevCo
- Jorong Barutama Greston.PT - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Carbofer General Trading SA - India
- GMR Energy Limited - India
- GVK Power & Infra Limited - India
- Interocean Group of Companies - India
- Essar Steel Hazira Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- ASAPP Information Group - India
- TeaM Sual Corporation - Philippines
- Cigading International Bulk Terminal - Indonesia
- Edison Trading Spa - Italy
- Binh Thuan Hamico - Vietnam
- Cement Manufacturers Association - India
- Formosa Plastics Group - Taiwan
- Independent Power Producers Association of India
- Mjunction Services Limited - India
- Gujarat Sidhee Cement - India
- TNB Fuel Sdn Bhd - Malaysia
- Port Waratah Coal Services - Australia
- San Jose City I Power Corp, Philippines
- Global Business Power Corporation, Philippines
- Siam City Cement - Thailand
- Indogreen Group - Indonesia
- Global Coal Blending Company Limited - Australia
- South Luzon Thermal Energy Corporation
- Commonwealth Bank - Australia
- The State Trading Corporation of India Ltd
- Directorate Of Revenue Intelligence - India
- Goldman Sachs - Singapore
- India Bulls Power Limited - India
- Medco Energi Mining Internasional
- Simpson Spence & Young - Indonesia
- Petron Corporation, Philippines
- Orica Australia Pty. Ltd.
- Deloitte Consulting - India
- Thiess Contractors Indonesia
- Gujarat Electricity Regulatory Commission - India
- LBH Netherlands Bv - Netherlands
- Australian Coal Association
- Ministry of Transport, Egypt
- Tata Chemicals Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Maheswari Brothers Coal Limited - India
- Straits Asia Resources Limited - Singapore
- Parry Sugars Refinery, India
- IHS Mccloskey Coal Group - USA
- Kumho Petrochemical, South Korea
- Global Green Power PLC Corporation, Philippines
- CNBM International Corporation - China
- Uttam Galva Steels Limited - India
- Heidelberg Cement - Germany
- International Coal Ventures Pvt Ltd - India
- Indo Tambangraya Megah - Indonesia
- Romanian Commodities Exchange
- Vijayanagar Sugar Pvt Ltd - India
- Kobexindo Tractors - Indoneisa
- SN Aboitiz Power Inc, Philippines
- Salva Resources Pvt Ltd - India
- Wilmar Investment Holdings
- Coastal Gujarat Power Limited - India
- Africa Commodities Group - South Africa
- Kalimantan Lumbung Energi - Indonesia
- McConnell Dowell - Australia
- Planning Commission, India
- Rio Tinto Coal - Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Indika Energy - Indonesia
- Vedanta Resources Plc - India
- IEA Clean Coal Centre - UK
- Coalindo Energy - Indonesia
- Manunggal Multi Energi - Indonesia
- Georgia Ports Authority, United States
- Sojitz Corporation - Japan
- CIMB Investment Bank - Malaysia
- Bangladesh Power Developement Board
- Antam Resourcindo - Indonesia
- Trasteel International SA, Italy
- Petrochimia International Co. Ltd.- Taiwan
- Indian Energy Exchange, India
- Chamber of Mines of South Africa
- Aboitiz Power Corporation - Philippines
- Krishnapatnam Port Company Ltd. - India
- Tamil Nadu electricity Board
- Bhushan Steel Limited - India
- Electricity Authority, New Zealand
- Latin American Coal - Colombia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Iligan Light & Power Inc, Philippines
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