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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, 28 August 14
PANAMAX: OWNERS CAN GET AROUND USD 16000 FOR A FRONTHAUL; PERIOD MARKET - VERY QUIET - FEARNLEYS
Handy
The activity and sentiment is improving in the Atlantic with the general TA rate is up about US$ 800 w-o-w. We see more South American carg ...
Thursday, 28 August 14
BANPU REPORTS HIGHER FIRST-HALF YEAR RESULTS FOR 2014
COALspot.com: Banpu Public Company Limited (BANPU) reports higher first half-year financial results for 2014 having its gross profit increasing 3 p ...
Wednesday, 27 August 14
FREIGHT MARKET: IS THE MARKET IN A RECOVERY MOOD? - GEORGE ILIOPOULOS
Is the market in a recovery mood?
August is typically a time when the shipping industry takes it easy… charter-ers book their requireme ...
Tuesday, 26 August 14
4TH ANNUAL ASIA NICKEL
4th Annual Asia Nickel
19-20 Nov 2014
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Web Site
Asia’s Premier Nickel Conference
Regulation in ...
Tuesday, 26 August 14
DESPITE LOW DRY BULK RATES, BULKER PRICES ARE STILL HIGH - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
Traditionally, August tends to be a month of slow activity in the sale and purchasing market and this year has been no exception. However, as shipb ...
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- Meralco Power Generation, Philippines
- Makarim & Taira - Indonesia
- Sarangani Energy Corporation, Philippines
- Price Waterhouse Coopers - Russia
- Sinarmas Energy and Mining - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Vizag Seaport Private Limited - India
- Coastal Gujarat Power Limited - India
- Thai Mozambique Logistica
- Kartika Selabumi Mining - Indonesia
- Chamber of Mines of South Africa
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sindya Power Generating Company Private Ltd
- Cement Manufacturers Association - India
- Port Waratah Coal Services - Australia
- Pipit Mutiara Jaya. PT, Indonesia
- PowerSource Philippines DevCo
- Binh Thuan Hamico - Vietnam
- Ministry of Mines - Canada
- Bayan Resources Tbk. - Indonesia
- Posco Energy - South Korea
- Bukit Baiduri Energy - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Heidelberg Cement - Germany
- Kapuas Tunggal Persada - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Salva Resources Pvt Ltd - India
- Indonesian Coal Mining Association
- Renaissance Capital - South Africa
- The University of Queensland
- Indogreen Group - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Medco Energi Mining Internasional
- Sojitz Corporation - Japan
- Altura Mining Limited, Indonesia
- Goldman Sachs - Singapore
- ASAPP Information Group - India
- Bhatia International Limited - India
- PetroVietnam Power Coal Import and Supply Company
- SMG Consultants - Indonesia
- Attock Cement Pakistan Limited
- Rashtriya Ispat Nigam Limited - India
- Cigading International Bulk Terminal - Indonesia
- Grasim Industreis Ltd - India
- Bhushan Steel Limited - India
- Wood Mackenzie - Singapore
- Directorate Of Revenue Intelligence - India
- Borneo Indobara - Indonesia
- Singapore Mercantile Exchange
- San Jose City I Power Corp, Philippines
- Carbofer General Trading SA - India
- Uttam Galva Steels Limited - India
- Leighton Contractors Pty Ltd - Australia
- Iligan Light & Power Inc, Philippines
- Baramulti Group, Indonesia
- Standard Chartered Bank - UAE
- Alfred C Toepfer International GmbH - Germany
- Electricity Authority, New Zealand
- Australian Commodity Traders Exchange
- IEA Clean Coal Centre - UK
- Edison Trading Spa - Italy
- Latin American Coal - Colombia
- Mjunction Services Limited - India
- Meenaskhi Energy Private Limited - India
- Global Coal Blending Company Limited - Australia
- Mintek Dendrill Indonesia
- Lanco Infratech Ltd - India
- Sakthi Sugars Limited - India
- Chettinad Cement Corporation Ltd - India
- Africa Commodities Group - South Africa
- Metalloyd Limited - United Kingdom
- Sree Jayajothi Cements Limited - India
- Bhoruka Overseas - Indonesia
- Marubeni Corporation - India
- Madhucon Powers Ltd - India
- Siam City Cement - Thailand
- MS Steel International - UAE
- TNB Fuel Sdn Bhd - Malaysia
- Commonwealth Bank - Australia
- Semirara Mining and Power Corporation, Philippines
- Ind-Barath Power Infra Limited - India
- Banpu Public Company Limited - Thailand
- Indian Oil Corporation Limited
- Manunggal Multi Energi - Indonesia
- Jindal Steel & Power Ltd - India
- Independent Power Producers Association of India
- Mercuria Energy - Indonesia
- Xindia Steels Limited - India
- IHS Mccloskey Coal Group - USA
- GAC Shipping (India) Pvt Ltd
- Formosa Plastics Group - Taiwan
- Kobexindo Tractors - Indoneisa
- Straits Asia Resources Limited - Singapore
- Wilmar Investment Holdings
- Barasentosa Lestari - Indonesia
- Coalindo Energy - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- CNBM International Corporation - China
- Jorong Barutama Greston.PT - Indonesia
- London Commodity Brokers - England
- Orica Australia Pty. Ltd.
- Energy Development Corp, Philippines
- Global Business Power Corporation, Philippines
- Intertek Mineral Services - Indonesia
- Central Java Power - Indonesia
- Ambuja Cements Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Agrawal Coal Company - India
- Pendopo Energi Batubara - Indonesia
- Coal and Oil Company - UAE
- Deloitte Consulting - India
- Kaltim Prima Coal - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Orica Mining Services - Indonesia
- VISA Power Limited - India
- Timah Investasi Mineral - Indoneisa
- White Energy Company Limited
- Billiton Holdings Pty Ltd - Australia
- Toyota Tsusho Corporation, Japan
- Globalindo Alam Lestari - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Riau Bara Harum - Indonesia
- Trasteel International SA, Italy
- SMC Global Power, Philippines
- Miang Besar Coal Terminal - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Samtan Co., Ltd - South Korea
- The Treasury - Australian Government
- Electricity Generating Authority of Thailand
- Malabar Cements Ltd - India
- Antam Resourcindo - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Aboitiz Power Corporation - Philippines
- European Bulk Services B.V. - Netherlands
- India Bulls Power Limited - India
- Petron Corporation, Philippines
- Savvy Resources Ltd - HongKong
- Anglo American - United Kingdom
- Oldendorff Carriers - Singapore
- Bulk Trading Sa - Switzerland
- Planning Commission, India
- Holcim Trading Pte Ltd - Singapore
- OPG Power Generation Pvt Ltd - India
- Rio Tinto Coal - Australia
- Aditya Birla Group - India
- Siam City Cement PLC, Thailand
- Kideco Jaya Agung - Indonesia
- Vedanta Resources Plc - India
- Energy Link Ltd, New Zealand
- Neyveli Lignite Corporation Ltd, - India
- Tata Chemicals Ltd - India
- South Luzon Thermal Energy Corporation
- GMR Energy Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Indika Energy - Indonesia
- Economic Council, Georgia
- PNOC Exploration Corporation - Philippines
- Gujarat Sidhee Cement - India
- Eastern Energy - Thailand
- Global Green Power PLC Corporation, Philippines
- Mercator Lines Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Larsen & Toubro Limited - India
- Merrill Lynch Commodities Europe
- Maheswari Brothers Coal Limited - India
- SN Aboitiz Power Inc, Philippines
- Parry Sugars Refinery, India
- GVK Power & Infra Limited - India
- Australian Coal Association
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kepco SPC Power Corporation, Philippines
- Sical Logistics Limited - India
- Bangladesh Power Developement Board
- Parliament of New Zealand
- Ministry of Finance - Indonesia
- Essar Steel Hazira Ltd - India
- Semirara Mining Corp, Philippines
- Maharashtra Electricity Regulatory Commission - India
- AsiaOL BioFuels Corp., Philippines
- ICICI Bank Limited - India
- Therma Luzon, Inc, Philippines
- International Coal Ventures Pvt Ltd - India
- Dalmia Cement Bharat India
- Thiess Contractors Indonesia
- Bharathi Cement Corporation - India
- TeaM Sual Corporation - Philippines
- Karaikal Port Pvt Ltd - India
- Romanian Commodities Exchange
- Bahari Cakrawala Sebuku - Indonesia
- Star Paper Mills Limited - India
- Eastern Coal Council - USA
- Interocean Group of Companies - India
- The State Trading Corporation of India Ltd
- Tamil Nadu electricity Board
- PTC India Limited - India
- Gujarat Electricity Regulatory Commission - India
- Asmin Koalindo Tuhup - Indonesia
- Indo Tambangraya Megah - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- New Zealand Coal & Carbon
- LBH Netherlands Bv - Netherlands
- Karbindo Abesyapradhi - Indoneisa
- Minerals Council of Australia
- Simpson Spence & Young - Indonesia
- Ministry of Transport, Egypt
- Bukit Makmur.PT - Indonesia
- Kumho Petrochemical, South Korea
- McConnell Dowell - Australia
- Georgia Ports Authority, United States
- Power Finance Corporation Ltd., India
- Videocon Industries ltd - India
- Jaiprakash Power Ventures ltd
- CIMB Investment Bank - Malaysia
- Indian Energy Exchange, India
- Central Electricity Authority - India
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