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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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Friday, 19 September 14
PRICES FOR DRY BULK CARRIERS HAVEN'T CORRECTED ENOUGH, DESPITE LOWER THAN EXPECTED FREIGHT RATES - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
A lot has been said and written about the looming dry bulk market recovery over the past few months. However, even if this hasn’t been materi ...
Thursday, 18 September 14
INDONESIA'S JULY COAL EXPORT VOLUME DROPPED 5.13% M-O-M
COALspot.com: Indonesia, one of the world's largest coal producer and the global leading multi grade coal exporter shipped around $1.65* ...
Thursday, 18 September 14
PANAMAX : US GULF/CHINA FRONTHAUL ARE NOW PAYING TYPICALLY 14.5K + 450K BB - FEARNRESEARCH
Handy
We still see a firming tendency in the Atlantic and it is still ECSA and USG leading on. USG/Cont now up in about USD 17/18k for a Smax whi ...
Thursday, 18 September 14
ELECTRONIC BILLS OF LADING: A GUIDE TO PAPERLESS TRADING WHICH HAS TAKEN THE SHIPPING INDUSTRY BY STORM
Bimco has recently developed and published a charter party clause that specifically addresses the use of electronic bills of lading. Increasing use ...
Wednesday, 17 September 14
PANAMAX: LIMITED INTEREST IN BOTH BASINS; RISING TONNAGE - INTERMODAL
With the week starting off at a fast pace and with the positive momentum from the previous Friday seemingly sticking around for a bit longer, most ...
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- Australian Coal Association
- TeaM Sual Corporation - Philippines
- Salva Resources Pvt Ltd - India
- Videocon Industries ltd - India
- Cement Manufacturers Association - India
- Rashtriya Ispat Nigam Limited - India
- Global Coal Blending Company Limited - Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Rio Tinto Coal - Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kumho Petrochemical, South Korea
- TNB Fuel Sdn Bhd - Malaysia
- Aditya Birla Group - India
- Tamil Nadu electricity Board
- Bhoruka Overseas - Indonesia
- European Bulk Services B.V. - Netherlands
- Electricity Generating Authority of Thailand
- LBH Netherlands Bv - Netherlands
- Central Electricity Authority - India
- Mercuria Energy - Indonesia
- Toyota Tsusho Corporation, Japan
- Globalindo Alam Lestari - Indonesia
- Essar Steel Hazira Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Kepco SPC Power Corporation, Philippines
- Indogreen Group - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Parliament of New Zealand
- Karaikal Port Pvt Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Aboitiz Power Corporation - Philippines
- Xindia Steels Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- India Bulls Power Limited - India
- Meralco Power Generation, Philippines
- Sarangani Energy Corporation, Philippines
- Jaiprakash Power Ventures ltd
- Wood Mackenzie - Singapore
- Wilmar Investment Holdings
- Miang Besar Coal Terminal - Indonesia
- Electricity Authority, New Zealand
- Economic Council, Georgia
- Borneo Indobara - Indonesia
- Timah Investasi Mineral - Indoneisa
- Jorong Barutama Greston.PT - Indonesia
- Ind-Barath Power Infra Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Kohat Cement Company Ltd. - Pakistan
- Barasentosa Lestari - Indonesia
- PNOC Exploration Corporation - Philippines
- Indonesian Coal Mining Association
- Energy Development Corp, Philippines
- Makarim & Taira - Indonesia
- Gujarat Sidhee Cement - India
- GVK Power & Infra Limited - India
- Chamber of Mines of South Africa
- Chettinad Cement Corporation Ltd - India
- Singapore Mercantile Exchange
- The Treasury - Australian Government
- Vedanta Resources Plc - India
- Kapuas Tunggal Persada - Indonesia
- Baramulti Group, Indonesia
- Meenaskhi Energy Private Limited - India
- Sakthi Sugars Limited - India
- Pendopo Energi Batubara - Indonesia
- Altura Mining Limited, Indonesia
- Dalmia Cement Bharat India
- Petrochimia International Co. Ltd.- Taiwan
- London Commodity Brokers - England
- Petron Corporation, Philippines
- Power Finance Corporation Ltd., India
- Merrill Lynch Commodities Europe
- GAC Shipping (India) Pvt Ltd
- Ministry of Finance - Indonesia
- Planning Commission, India
- Sical Logistics Limited - India
- The State Trading Corporation of India Ltd
- Therma Luzon, Inc, Philippines
- San Jose City I Power Corp, Philippines
- VISA Power Limited - India
- Carbofer General Trading SA - India
- Intertek Mineral Services - Indonesia
- Samtan Co., Ltd - South Korea
- Kaltim Prima Coal - Indonesia
- Parry Sugars Refinery, India
- Goldman Sachs - Singapore
- AsiaOL BioFuels Corp., Philippines
- Lanco Infratech Ltd - India
- SN Aboitiz Power Inc, Philippines
- Mjunction Services Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Antam Resourcindo - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Minerals Council of Australia
- Ceylon Electricity Board - Sri Lanka
- Africa Commodities Group - South Africa
- Uttam Galva Steels Limited - India
- Malabar Cements Ltd - India
- Mintek Dendrill Indonesia
- PTC India Limited - India
- South Luzon Thermal Energy Corporation
- McConnell Dowell - Australia
- Directorate Of Revenue Intelligence - India
- Sojitz Corporation - Japan
- Anglo American - United Kingdom
- Binh Thuan Hamico - Vietnam
- Semirara Mining Corp, Philippines
- Bayan Resources Tbk. - Indonesia
- Coalindo Energy - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Indian Energy Exchange, India
- Ministry of Transport, Egypt
- Latin American Coal - Colombia
- Vijayanagar Sugar Pvt Ltd - India
- International Coal Ventures Pvt Ltd - India
- Kartika Selabumi Mining - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Orica Australia Pty. Ltd.
- Bangladesh Power Developement Board
- Bhushan Steel Limited - India
- Coal and Oil Company - UAE
- Banpu Public Company Limited - Thailand
- Kobexindo Tractors - Indoneisa
- MS Steel International - UAE
- Kideco Jaya Agung - Indonesia
- Jindal Steel & Power Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Orica Mining Services - Indonesia
- Oldendorff Carriers - Singapore
- New Zealand Coal & Carbon
- Star Paper Mills Limited - India
- Maheswari Brothers Coal Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Interocean Group of Companies - India
- IHS Mccloskey Coal Group - USA
- ICICI Bank Limited - India
- Bhatia International Limited - India
- Savvy Resources Ltd - HongKong
- Thiess Contractors Indonesia
- Thai Mozambique Logistica
- ASAPP Information Group - India
- Larsen & Toubro Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Siam City Cement PLC, Thailand
- Indika Energy - Indonesia
- Energy Link Ltd, New Zealand
- Indo Tambangraya Megah - Indonesia
- CNBM International Corporation - China
- Bharathi Cement Corporation - India
- Manunggal Multi Energi - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Vizag Seaport Private Limited - India
- Indian Oil Corporation Limited
- Commonwealth Bank - Australia
- Marubeni Corporation - India
- SMG Consultants - Indonesia
- Simpson Spence & Young - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Deloitte Consulting - India
- Mercator Lines Limited - India
- Iligan Light & Power Inc, Philippines
- Australian Commodity Traders Exchange
- Riau Bara Harum - Indonesia
- Global Green Power PLC Corporation, Philippines
- Heidelberg Cement - Germany
- Metalloyd Limited - United Kingdom
- Posco Energy - South Korea
- Trasteel International SA, Italy
- Independent Power Producers Association of India
- Bukit Makmur.PT - Indonesia
- Global Business Power Corporation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Edison Trading Spa - Italy
- Eastern Coal Council - USA
- Bulk Trading Sa - Switzerland
- Price Waterhouse Coopers - Russia
- Coastal Gujarat Power Limited - India
- Agrawal Coal Company - India
- OPG Power Generation Pvt Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Eastern Energy - Thailand
- Billiton Holdings Pty Ltd - Australia
- Tata Chemicals Ltd - India
- GMR Energy Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Attock Cement Pakistan Limited
- SMC Global Power, Philippines
- Medco Energi Mining Internasional
- PowerSource Philippines DevCo
- Port Waratah Coal Services - Australia
- Alfred C Toepfer International GmbH - Germany
- Grasim Industreis Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Bukit Baiduri Energy - Indonesia
- Sree Jayajothi Cements Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sindya Power Generating Company Private Ltd
- Renaissance Capital - South Africa
- CIMB Investment Bank - Malaysia
- Straits Asia Resources Limited - Singapore
- Formosa Plastics Group - Taiwan
- Central Java Power - Indonesia
- Ambuja Cements Ltd - India
- Madhucon Powers Ltd - India
- The University of Queensland
- Siam City Cement - Thailand
- Standard Chartered Bank - UAE
- IEA Clean Coal Centre - UK
- Ministry of Mines - Canada
- Karbindo Abesyapradhi - Indoneisa
- Romanian Commodities Exchange
- White Energy Company Limited
- Georgia Ports Authority, United States
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