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