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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, 07 November 13
THE ENERGY INDUSTRY'S RISING WATER CHALLENGE - WOOD MACKENZIE
Water poses a variety of business risks for the energy industry, and could play an influential role in shaping the future energy supply mix, accordi ...
Thursday, 07 November 13
HANDY : INDO/CHINA ROUNDS ARE SEEING BIDS AT AROUND $16K
Handy
In the Atlantic we have seen more activity this week with several fixtures being concluded at firm rates. USG/Feast been reported at 30k and ...
Wednesday, 06 November 13
THE BIGGER SIZE SEGMENTS LOST GROUND WHILE SUPRAS AND HANDIES HELD ON TO THEIR GAINS - INTERMODAL
Chartering (Wet: Stable+ / Dry: Stable- )
A mirror image of the week prior for the Dry Bulk market, as once more the bigger size segments los ...
Wednesday, 06 November 13
WILL NEW ORDERS DRIVE THE MARKET DOWN AGAIN ONCE DELIVERIES COMMENCE
"While there are many concerns on whether the new orders will drive the market down again once deliveries commence, the second half of 2013 has ...
Tuesday, 05 November 13
AUSTRALIA'S NEWCASTLE PORT SEES DROP IN COAL EXPORTS W-W
COALspot.com: In the week ended November 4, Power plant and semi-soft coking coal shipments from the port of Newcastle in Queensland, totaled 2.77 m ...
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- Mercator Lines Limited - India
- Singapore Mercantile Exchange
- Ceylon Electricity Board - Sri Lanka
- Rio Tinto Coal - Australia
- Vizag Seaport Private Limited - India
- Iligan Light & Power Inc, Philippines
- Ministry of Transport, Egypt
- Globalindo Alam Lestari - Indonesia
- Tata Chemicals Ltd - India
- Parry Sugars Refinery, India
- Mercuria Energy - Indonesia
- Goldman Sachs - Singapore
- Directorate Of Revenue Intelligence - India
- London Commodity Brokers - England
- Lanco Infratech Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Timah Investasi Mineral - Indoneisa
- Edison Trading Spa - Italy
- Gujarat Electricity Regulatory Commission - India
- Karaikal Port Pvt Ltd - India
- Anglo American - United Kingdom
- Pipit Mutiara Jaya. PT, Indonesia
- The Treasury - Australian Government
- PNOC Exploration Corporation - Philippines
- Renaissance Capital - South Africa
- Kepco SPC Power Corporation, Philippines
- Coal and Oil Company - UAE
- Bukit Makmur.PT - Indonesia
- Jaiprakash Power Ventures ltd
- India Bulls Power Limited - India
- Heidelberg Cement - Germany
- GMR Energy Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Chettinad Cement Corporation Ltd - India
- Wood Mackenzie - Singapore
- Jindal Steel & Power Ltd - India
- Sarangani Energy Corporation, Philippines
- Indika Energy - Indonesia
- Indian Energy Exchange, India
- Mjunction Services Limited - India
- Sojitz Corporation - Japan
- Merrill Lynch Commodities Europe
- Eastern Coal Council - USA
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Savvy Resources Ltd - HongKong
- Central Electricity Authority - India
- Manunggal Multi Energi - Indonesia
- CNBM International Corporation - China
- Alfred C Toepfer International GmbH - Germany
- GAC Shipping (India) Pvt Ltd
- SMG Consultants - Indonesia
- The University of Queensland
- Maharashtra Electricity Regulatory Commission - India
- Riau Bara Harum - Indonesia
- Thiess Contractors Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Xindia Steels Limited - India
- Aditya Birla Group - India
- Kartika Selabumi Mining - Indonesia
- International Coal Ventures Pvt Ltd - India
- Petron Corporation, Philippines
- ICICI Bank Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Minerals Council of Australia
- Energy Development Corp, Philippines
- PowerSource Philippines DevCo
- Star Paper Mills Limited - India
- Therma Luzon, Inc, Philippines
- Simpson Spence & Young - Indonesia
- Latin American Coal - Colombia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Global Business Power Corporation, Philippines
- Intertek Mineral Services - Indonesia
- San Jose City I Power Corp, Philippines
- Metalloyd Limited - United Kingdom
- Kumho Petrochemical, South Korea
- SMC Global Power, Philippines
- MS Steel International - UAE
- Bharathi Cement Corporation - India
- Samtan Co., Ltd - South Korea
- The State Trading Corporation of India Ltd
- Carbofer General Trading SA - India
- Ministry of Mines - Canada
- Agrawal Coal Company - India
- Trasteel International SA, Italy
- Kaltim Prima Coal - Indonesia
- South Luzon Thermal Energy Corporation
- Banpu Public Company Limited - Thailand
- Economic Council, Georgia
- Posco Energy - South Korea
- Rashtriya Ispat Nigam Limited - India
- Sree Jayajothi Cements Limited - India
- Toyota Tsusho Corporation, Japan
- Bangladesh Power Developement Board
- Ambuja Cements Ltd - India
- Eastern Energy - Thailand
- Central Java Power - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Dalmia Cement Bharat India
- TNB Fuel Sdn Bhd - Malaysia
- Indonesian Coal Mining Association
- Energy Link Ltd, New Zealand
- Deloitte Consulting - India
- PetroVietnam Power Coal Import and Supply Company
- Romanian Commodities Exchange
- Oldendorff Carriers - Singapore
- Makarim & Taira - Indonesia
- Siam City Cement PLC, Thailand
- Uttam Galva Steels Limited - India
- Orica Mining Services - Indonesia
- Electricity Authority, New Zealand
- Madhucon Powers Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Formosa Plastics Group - Taiwan
- Australian Coal Association
- Planning Commission, India
- Coastal Gujarat Power Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Cement Manufacturers Association - India
- Electricity Generating Authority of Thailand
- New Zealand Coal & Carbon
- Bhushan Steel Limited - India
- TeaM Sual Corporation - Philippines
- Bulk Trading Sa - Switzerland
- IEA Clean Coal Centre - UK
- Australian Commodity Traders Exchange
- Power Finance Corporation Ltd., India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Siam City Cement - Thailand
- Wilmar Investment Holdings
- Petrochimia International Co. Ltd.- Taiwan
- Cigading International Bulk Terminal - Indonesia
- Altura Mining Limited, Indonesia
- SN Aboitiz Power Inc, Philippines
- PTC India Limited - India
- Meralco Power Generation, Philippines
- Marubeni Corporation - India
- Tamil Nadu electricity Board
- GVK Power & Infra Limited - India
- Indogreen Group - Indonesia
- Port Waratah Coal Services - Australia
- Barasentosa Lestari - Indonesia
- ASAPP Information Group - India
- Indian Oil Corporation Limited
- Asmin Koalindo Tuhup - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Global Coal Blending Company Limited - Australia
- Commonwealth Bank - Australia
- Kideco Jaya Agung - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Neyveli Lignite Corporation Ltd, - India
- Gujarat Sidhee Cement - India
- CIMB Investment Bank - Malaysia
- Attock Cement Pakistan Limited
- Thai Mozambique Logistica
- Baramulti Group, Indonesia
- European Bulk Services B.V. - Netherlands
- Grasim Industreis Ltd - India
- Orica Australia Pty. Ltd.
- Billiton Holdings Pty Ltd - Australia
- Aboitiz Power Corporation - Philippines
- Ind-Barath Power Infra Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Chamber of Mines of South Africa
- Georgia Ports Authority, United States
- Bhoruka Overseas - Indonesia
- White Energy Company Limited
- Bhatia International Limited - India
- Larsen & Toubro Limited - India
- Sindya Power Generating Company Private Ltd
- Sakthi Sugars Limited - India
- Essar Steel Hazira Ltd - India
- Sical Logistics Limited - India
- Malabar Cements Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Bukit Baiduri Energy - Indonesia
- Bayan Resources Tbk. - Indonesia
- Straits Asia Resources Limited - Singapore
- Africa Commodities Group - South Africa
- Mintek Dendrill Indonesia
- LBH Netherlands Bv - Netherlands
- Pendopo Energi Batubara - Indonesia
- OPG Power Generation Pvt Ltd - India
- Antam Resourcindo - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Semirara Mining Corp, Philippines
- AsiaOL BioFuels Corp., Philippines
- Semirara Mining and Power Corporation, Philippines
- IHS Mccloskey Coal Group - USA
- Independent Power Producers Association of India
- Price Waterhouse Coopers - Russia
- Holcim Trading Pte Ltd - Singapore
- Vedanta Resources Plc - India
- Coalindo Energy - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Meenaskhi Energy Private Limited - India
- Ministry of Finance - Indonesia
- Salva Resources Pvt Ltd - India
- Global Green Power PLC Corporation, Philippines
- Parliament of New Zealand
- Videocon Industries ltd - India
- Standard Chartered Bank - UAE
- Interocean Group of Companies - India
- Maheswari Brothers Coal Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Indo Tambangraya Megah - Indonesia
- Binh Thuan Hamico - Vietnam
- VISA Power Limited - India
- McConnell Dowell - Australia
- Kobexindo Tractors - Indoneisa
- Borneo Indobara - Indonesia
- Medco Energi Mining Internasional
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