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