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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, 09 January 14
CAPESIZE: WEST AUSTRALIA FREIGHT IS NOW DOWN IN THE $8S AND STILL DROPPING - FEARNLEYS
Handy
In the Atlantic we see rates sliding slowly for the start of 2014. Several players cvrd over the holidays and the rate decline was som ...
Thursday, 09 January 14
THE SHIPPING MARKET IN 2013 AND LOOKING FORWARD GLOBAL ECONOMY: STEADY AS SHE GOES UPWARDS - BIMCO
Over the past year, developed economies have gained traction while developing and emerging economies have suffered from slower growth. Despite key e ...
Wednesday, 08 January 14
DRY BULK MARKET PROSPECTS LOOKING BRIGHTER DESPITE SLOW START TO THE NEW YEAR - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
Despite the fact that the dry bulk market's benchmark, the BDI has been on a fall since the start of 2014, ending yesterday's session down to 1,87 ...
Wednesday, 08 January 14
AUSTRALIAN NEWCASTLE PORT'S WEEKLY COAL EXPORTS FALL
COALspot.com: In the week ended January 6, power plant and semi-soft coking coal shipments from the port of Newcastle in Queensland, totalled 3.27 m ...
Wednesday, 08 January 14
THE DRY BULK MARKET HAS LOST SOME OF ITS STEAM THESE PAST COUPLE OF DAYS: INTERMODAL
Chartering (Wet: Softer- / Dry: Softer- )
The Dry Bulk market has lost some of its steam these past couple of days although hires, espe ...
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- South Luzon Thermal Energy Corporation
- IHS Mccloskey Coal Group - USA
- Global Coal Blending Company Limited - Australia
- Orica Mining Services - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Orica Australia Pty. Ltd.
- OPG Power Generation Pvt Ltd - India
- GMR Energy Limited - India
- Bhatia International Limited - India
- Sindya Power Generating Company Private Ltd
- Standard Chartered Bank - UAE
- Parry Sugars Refinery, India
- Alfred C Toepfer International GmbH - Germany
- Australian Coal Association
- Mintek Dendrill Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Romanian Commodities Exchange
- International Coal Ventures Pvt Ltd - India
- CNBM International Corporation - China
- Planning Commission, India
- Aboitiz Power Corporation - Philippines
- The University of Queensland
- Price Waterhouse Coopers - Russia
- Bank of Tokyo Mitsubishi UFJ Ltd
- ASAPP Information Group - India
- Maheswari Brothers Coal Limited - India
- Salva Resources Pvt Ltd - India
- Vedanta Resources Plc - India
- Kideco Jaya Agung - Indonesia
- European Bulk Services B.V. - Netherlands
- Aditya Birla Group - India
- Gujarat Sidhee Cement - India
- Latin American Coal - Colombia
- Global Green Power PLC Corporation, Philippines
- Antam Resourcindo - Indonesia
- Commonwealth Bank - Australia
- Kohat Cement Company Ltd. - Pakistan
- Kobexindo Tractors - Indoneisa
- Trasteel International SA, Italy
- Kumho Petrochemical, South Korea
- Bangladesh Power Developement Board
- Malabar Cements Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Thiess Contractors Indonesia
- Singapore Mercantile Exchange
- Larsen & Toubro Limited - India
- Parliament of New Zealand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- TeaM Sual Corporation - Philippines
- Vizag Seaport Private Limited - India
- Marubeni Corporation - India
- Metalloyd Limited - United Kingdom
- Gujarat Mineral Development Corp Ltd - India
- Georgia Ports Authority, United States
- India Bulls Power Limited - India
- Renaissance Capital - South Africa
- PTC India Limited - India
- Indika Energy - Indonesia
- Interocean Group of Companies - India
- Riau Bara Harum - Indonesia
- LBH Netherlands Bv - Netherlands
- Deloitte Consulting - India
- Posco Energy - South Korea
- Coal and Oil Company - UAE
- Banpu Public Company Limited - Thailand
- SN Aboitiz Power Inc, Philippines
- Bhoruka Overseas - Indonesia
- Bayan Resources Tbk. - Indonesia
- Samtan Co., Ltd - South Korea
- Neyveli Lignite Corporation Ltd, - India
- London Commodity Brokers - England
- Grasim Industreis Ltd - India
- Tata Chemicals Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- San Jose City I Power Corp, Philippines
- Savvy Resources Ltd - HongKong
- Offshore Bulk Terminal Pte Ltd, Singapore
- Therma Luzon, Inc, Philippines
- White Energy Company Limited
- Mjunction Services Limited - India
- Bukit Makmur.PT - Indonesia
- PowerSource Philippines DevCo
- Central Java Power - Indonesia
- Holcim Trading Pte Ltd - Singapore
- AsiaOL BioFuels Corp., Philippines
- The Treasury - Australian Government
- Energy Link Ltd, New Zealand
- McConnell Dowell - Australia
- Chettinad Cement Corporation Ltd - India
- GAC Shipping (India) Pvt Ltd
- Siam City Cement PLC, Thailand
- Ind-Barath Power Infra Limited - India
- Africa Commodities Group - South Africa
- Petron Corporation, Philippines
- Baramulti Group, Indonesia
- Miang Besar Coal Terminal - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Kaltim Prima Coal - Indonesia
- Global Business Power Corporation, Philippines
- Karaikal Port Pvt Ltd - India
- Meenaskhi Energy Private Limited - India
- Coalindo Energy - Indonesia
- Electricity Authority, New Zealand
- Pendopo Energi Batubara - Indonesia
- Bukit Baiduri Energy - Indonesia
- Meralco Power Generation, Philippines
- Coastal Gujarat Power Limited - India
- Sojitz Corporation - Japan
- Goldman Sachs - Singapore
- VISA Power Limited - India
- Globalindo Alam Lestari - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Eastern Energy - Thailand
- Siam City Cement - Thailand
- Chamber of Mines of South Africa
- Simpson Spence & Young - Indonesia
- Bhushan Steel Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Attock Cement Pakistan Limited
- Directorate Of Revenue Intelligence - India
- Medco Energi Mining Internasional
- Wilmar Investment Holdings
- Xindia Steels Limited - India
- Sakthi Sugars Limited - India
- Power Finance Corporation Ltd., India
- PNOC Exploration Corporation - Philippines
- Maharashtra Electricity Regulatory Commission - India
- Cigading International Bulk Terminal - Indonesia
- Lanco Infratech Ltd - India
- Ambuja Cements Ltd - India
- Anglo American - United Kingdom
- Intertek Mineral Services - Indonesia
- MS Steel International - UAE
- Rashtriya Ispat Nigam Limited - India
- Heidelberg Cement - Germany
- Iligan Light & Power Inc, Philippines
- Sical Logistics Limited - India
- Indian Oil Corporation Limited
- CIMB Investment Bank - Malaysia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bharathi Cement Corporation - India
- Indogreen Group - Indonesia
- Tamil Nadu electricity Board
- Bahari Cakrawala Sebuku - Indonesia
- Australian Commodity Traders Exchange
- Rio Tinto Coal - Australia
- Barasentosa Lestari - Indonesia
- Madhucon Powers Ltd - India
- Indonesian Coal Mining Association
- Mercator Lines Limited - India
- Semirara Mining Corp, Philippines
- Timah Investasi Mineral - Indoneisa
- Central Electricity Authority - India
- Formosa Plastics Group - Taiwan
- Independent Power Producers Association of India
- Minerals Council of Australia
- Oldendorff Carriers - Singapore
- Energy Development Corp, Philippines
- Manunggal Multi Energi - Indonesia
- Merrill Lynch Commodities Europe
- Ministry of Transport, Egypt
- Mercuria Energy - Indonesia
- Altura Mining Limited, Indonesia
- Port Waratah Coal Services - Australia
- Sree Jayajothi Cements Limited - India
- Videocon Industries ltd - India
- The State Trading Corporation of India Ltd
- Economic Council, Georgia
- Carbofer General Trading SA - India
- Agrawal Coal Company - India
- New Zealand Coal & Carbon
- Kalimantan Lumbung Energi - Indonesia
- Indo Tambangraya Megah - Indonesia
- IEA Clean Coal Centre - UK
- Star Paper Mills Limited - India
- Sarangani Energy Corporation, Philippines
- Thai Mozambique Logistica
- SMG Consultants - Indonesia
- Essar Steel Hazira Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kepco SPC Power Corporation, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Leighton Contractors Pty Ltd - Australia
- Edison Trading Spa - Italy
- Jindal Steel & Power Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Bulk Trading Sa - Switzerland
- ICICI Bank Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Borneo Indobara - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Dalmia Cement Bharat India
- TNB Fuel Sdn Bhd - Malaysia
- Straits Asia Resources Limited - Singapore
- Ministry of Mines - Canada
- Binh Thuan Hamico - Vietnam
- Makarim & Taira - Indonesia
- Kartika Selabumi Mining - Indonesia
- Eastern Coal Council - USA
- Billiton Holdings Pty Ltd - Australia
- GVK Power & Infra Limited - India
- Toyota Tsusho Corporation, Japan
- Directorate General of MIneral and Coal - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Jaiprakash Power Ventures ltd
- SMC Global Power, Philippines
- Indian Energy Exchange, India
- Uttam Galva Steels Limited - India
- Wood Mackenzie - Singapore
- Cement Manufacturers Association - India
- Electricity Generating Authority of Thailand
- GN Power Mariveles Coal Plant, Philippines
- Kapuas Tunggal Persada - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Ministry of Finance - Indonesia
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