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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, 05 December 13
PANAMAX : THE FIRM TENDENCY CONTINUES - FEARNRESEARCH
Handy
It has been an active week for the Supramax and Handysize segment. USG is almost boiling and charterers looking to cover their December stems ...
Wednesday, 04 December 13
INDONESIAN COAL EXPORTS VOLUME AND REVENUE IN OCTOBER MARCHED TOWARDS NORTH
COALspot.com: Indonesia, the world's 4th largest coal producer and the largest multi grade coal exporter shipped over $1.76* billion worth of ...
Wednesday, 04 December 13
WEST AUSTRALIA IRON ORE FIXTURES ALSO CONTINUING TO PROVIDE A STEADY FLOW OF BUSINESS FOR CAPES - INTERMODAL
The Dry Bulk market has reversed course this past week, bringing back some of the lost excitement of the past month, as all size segments climbed hi ...
Wednesday, 04 December 13
THE BUYERS' DEMAND IS CONTINUOUSLY BULLISH - KONSTANTINOS KONTOMICHIS
The very low rates that prevailed for the bigger part of 2013 seem to have prepared the ground for buying opportunities for shipping investors. The ...
Wednesday, 04 December 13
SGX AND CFA TO COLLABORATE TO DEVELOP DERIVATIVES MARKETS IN CHINA AND SINGAPORE
Singapore Exchange (SGX) and the China Futures Association (CFA) are cooperating in the development of derivatives markets in China and Singapore.
...
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- Rashtriya Ispat Nigam Limited - India
- Toyota Tsusho Corporation, Japan
- GVK Power & Infra Limited - India
- Malabar Cements Ltd - India
- Global Green Power PLC Corporation, Philippines
- Eastern Energy - Thailand
- Singapore Mercantile Exchange
- Bukit Asam (Persero) Tbk - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- The State Trading Corporation of India Ltd
- Mercator Lines Limited - India
- The University of Queensland
- Intertek Mineral Services - Indonesia
- Jaiprakash Power Ventures ltd
- CNBM International Corporation - China
- AsiaOL BioFuels Corp., Philippines
- Kartika Selabumi Mining - Indonesia
- Jindal Steel & Power Ltd - India
- Kobexindo Tractors - Indoneisa
- Baramulti Group, Indonesia
- Trasteel International SA, Italy
- Energy Development Corp, Philippines
- Semirara Mining and Power Corporation, Philippines
- Cigading International Bulk Terminal - Indonesia
- Formosa Plastics Group - Taiwan
- ASAPP Information Group - India
- Parliament of New Zealand
- Cement Manufacturers Association - India
- Planning Commission, India
- New Zealand Coal & Carbon
- Krishnapatnam Port Company Ltd. - India
- White Energy Company Limited
- Binh Thuan Hamico - Vietnam
- Riau Bara Harum - Indonesia
- Madhucon Powers Ltd - India
- Eastern Coal Council - USA
- Wood Mackenzie - Singapore
- Tata Chemicals Ltd - India
- London Commodity Brokers - England
- PTC India Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Indian Energy Exchange, India
- Jorong Barutama Greston.PT - Indonesia
- Heidelberg Cement - Germany
- Salva Resources Pvt Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Bulk Trading Sa - Switzerland
- Iligan Light & Power Inc, Philippines
- Kohat Cement Company Ltd. - Pakistan
- PowerSource Philippines DevCo
- Posco Energy - South Korea
- Carbofer General Trading SA - India
- Latin American Coal - Colombia
- India Bulls Power Limited - India
- Straits Asia Resources Limited - Singapore
- Africa Commodities Group - South Africa
- Gujarat Sidhee Cement - India
- Sinarmas Energy and Mining - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- International Coal Ventures Pvt Ltd - India
- Georgia Ports Authority, United States
- Bukit Baiduri Energy - Indonesia
- Ministry of Mines - Canada
- PetroVietnam Power Coal Import and Supply Company
- IHS Mccloskey Coal Group - USA
- IEA Clean Coal Centre - UK
- Karaikal Port Pvt Ltd - India
- Thai Mozambique Logistica
- Australian Coal Association
- Port Waratah Coal Services - Australia
- Bhushan Steel Limited - India
- Siam City Cement - Thailand
- Commonwealth Bank - Australia
- Petron Corporation, Philippines
- South Luzon Thermal Energy Corporation
- Siam City Cement PLC, Thailand
- Uttam Galva Steels Limited - India
- The Treasury - Australian Government
- Chettinad Cement Corporation Ltd - India
- Manunggal Multi Energi - Indonesia
- McConnell Dowell - Australia
- Sindya Power Generating Company Private Ltd
- PNOC Exploration Corporation - Philippines
- Antam Resourcindo - Indonesia
- Lanco Infratech Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Globalindo Alam Lestari - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Leighton Contractors Pty Ltd - Australia
- Metalloyd Limited - United Kingdom
- Coal and Oil Company - UAE
- Central Electricity Authority - India
- Gujarat Electricity Regulatory Commission - India
- Neyveli Lignite Corporation Ltd, - India
- Anglo American - United Kingdom
- Electricity Generating Authority of Thailand
- Price Waterhouse Coopers - Russia
- Goldman Sachs - Singapore
- GAC Shipping (India) Pvt Ltd
- Kideco Jaya Agung - Indonesia
- Coastal Gujarat Power Limited - India
- Medco Energi Mining Internasional
- Sarangani Energy Corporation, Philippines
- Essar Steel Hazira Ltd - India
- Maheswari Brothers Coal Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Wilmar Investment Holdings
- OPG Power Generation Pvt Ltd - India
- GMR Energy Limited - India
- Pendopo Energi Batubara - Indonesia
- Makarim & Taira - Indonesia
- Indika Energy - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Ceylon Electricity Board - Sri Lanka
- Marubeni Corporation - India
- Vizag Seaport Private Limited - India
- Economic Council, Georgia
- Banpu Public Company Limited - Thailand
- Indonesian Coal Mining Association
- Romanian Commodities Exchange
- Agrawal Coal Company - India
- Sojitz Corporation - Japan
- Oldendorff Carriers - Singapore
- Coalindo Energy - Indonesia
- CIMB Investment Bank - Malaysia
- Larsen & Toubro Limited - India
- Kapuas Tunggal Persada - Indonesia
- Indogreen Group - Indonesia
- ICICI Bank Limited - India
- Power Finance Corporation Ltd., India
- TeaM Sual Corporation - Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Meralco Power Generation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Independent Power Producers Association of India
- LBH Netherlands Bv - Netherlands
- Renaissance Capital - South Africa
- Thiess Contractors Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Grasim Industreis Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Bangladesh Power Developement Board
- Mintek Dendrill Indonesia
- European Bulk Services B.V. - Netherlands
- Star Paper Mills Limited - India
- Bhatia International Limited - India
- Global Coal Blending Company Limited - Australia
- Standard Chartered Bank - UAE
- Ministry of Transport, Egypt
- SMG Consultants - Indonesia
- Bayan Resources Tbk. - Indonesia
- Xindia Steels Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Orica Australia Pty. Ltd.
- SN Aboitiz Power Inc, Philippines
- Aboitiz Power Corporation - Philippines
- Altura Mining Limited, Indonesia
- Kepco SPC Power Corporation, Philippines
- Edison Trading Spa - Italy
- Orica Mining Services - Indonesia
- MS Steel International - UAE
- Sakthi Sugars Limited - India
- Billiton Holdings Pty Ltd - Australia
- Videocon Industries ltd - India
- Deloitte Consulting - India
- Savvy Resources Ltd - HongKong
- Attock Cement Pakistan Limited
- Bharathi Cement Corporation - India
- Australian Commodity Traders Exchange
- Karbindo Abesyapradhi - Indoneisa
- Minerals Council of Australia
- Merrill Lynch Commodities Europe
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kaltim Prima Coal - Indonesia
- Global Business Power Corporation, Philippines
- Ind-Barath Power Infra Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Semirara Mining Corp, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Energy Link Ltd, New Zealand
- Borneo Indobara - Indonesia
- Therma Luzon, Inc, Philippines
- Holcim Trading Pte Ltd - Singapore
- Barasentosa Lestari - Indonesia
- Bhoruka Overseas - Indonesia
- Meenaskhi Energy Private Limited - India
- Rio Tinto Coal - Australia
- Ambuja Cements Ltd - India
- Mjunction Services Limited - India
- Samtan Co., Ltd - South Korea
- Kumho Petrochemical, South Korea
- Timah Investasi Mineral - Indoneisa
- Aditya Birla Group - India
- Sree Jayajothi Cements Limited - India
- Simpson Spence & Young - Indonesia
- SMC Global Power, Philippines
- Indo Tambangraya Megah - Indonesia
- Indian Oil Corporation Limited
- Alfred C Toepfer International GmbH - Germany
- Directorate Of Revenue Intelligence - India
- Dalmia Cement Bharat India
- Tamil Nadu electricity Board
- Electricity Authority, New Zealand
- Vedanta Resources Plc - India
- Chamber of Mines of South Africa
- Bukit Makmur.PT - Indonesia
- Ministry of Finance - Indonesia
- Interocean Group of Companies - India
- VISA Power Limited - India
- Sical Logistics Limited - India
- San Jose City I Power Corp, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Central Java Power - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Mercuria Energy - Indonesia
- Parry Sugars Refinery, India
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