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