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