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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, 10 October 13
SEVERAL PANAMAX FIXTURES FOR 1 YEAR TC HAVE BEEN REPORTED AROUND $13.5K/DAY - FEARNRESEARCH
Handy
The market is not much fancy as several holidays in the Far East last week. Tonnage side seems tight in SE Asia but there are many of them in ...
Wednesday, 09 October 13
PANAMAX: FIRM ; FIXING ACTIVITY INCREASED IN BOTH BASINS - INTERMODAL
This was another week of gains for the Dry Bulk market, albeit very modest ones compared to the previous ones. Charterers and owners struggled for t ...
Tuesday, 08 October 13
CHINA: INTENSE COMPETITION AMONG DOMESTIC COAL MINERS AS 2013 IMPORT DEMAND REMAINS STRONG - WOOD MACKENZIE
Prices will not fall under RMB500/t or risk supply availability to the coastal market
Despite China's lower economic growth, Wood Mackenzie says ...
Monday, 07 October 13
RICHARD BAY COAL TERMINAL SHIPPED 49.94 MMT OF COAL YTD
COALspot.com - Richards Bay Coal Terminal (RBCT), the world's single largest coal terminal has shipped 49,946,509 mt of coals YTD, according to por ...
Monday, 07 October 13
SOUTH AFRICA'S RBCT SHIPPED 7.94% MORE COAL IN SEPT' 13
COALspot.com - Richards Bay Coal Terminal (RBCT), the single largest coal export terminal in South Africa as well as in the world has shipped 7.94 p ...
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- Malabar Cements Ltd - India
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- Kepco SPC Power Corporation, Philippines
- Siam City Cement PLC, Thailand
- Larsen & Toubro Limited - India
- IEA Clean Coal Centre - UK
- OPG Power Generation Pvt Ltd - India
- PowerSource Philippines DevCo
- Borneo Indobara - Indonesia
- Electricity Generating Authority of Thailand
- VISA Power Limited - India
- Simpson Spence & Young - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Semirara Mining Corp, Philippines
- Bhatia International Limited - India
- Merrill Lynch Commodities Europe
- Mjunction Services Limited - India
- Ministry of Finance - Indonesia
- LBH Netherlands Bv - Netherlands
- Kobexindo Tractors - Indoneisa
- Sical Logistics Limited - India
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- Coastal Gujarat Power Limited - India
- Central Java Power - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Sakthi Sugars Limited - India
- Billiton Holdings Pty Ltd - Australia
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- Directorate Of Revenue Intelligence - India
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- Bangladesh Power Developement Board
- Planning Commission, India
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- Krishnapatnam Port Company Ltd. - India
- Kapuas Tunggal Persada - Indonesia
- Ministry of Mines - Canada
- Bayan Resources Tbk. - Indonesia
- Parliament of New Zealand
- PNOC Exploration Corporation - Philippines
- Goldman Sachs - Singapore
- Barasentosa Lestari - Indonesia
- Energy Development Corp, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Renaissance Capital - South Africa
- Minerals Council of Australia
- SMC Global Power, Philippines
- Romanian Commodities Exchange
- Bharathi Cement Corporation - India
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- Dong Bac Coal Mineral Investment Coporation - Vietnam
- GAC Shipping (India) Pvt Ltd
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- Cement Manufacturers Association - India
- Therma Luzon, Inc, Philippines
- Neyveli Lignite Corporation Ltd, - India
- CIMB Investment Bank - Malaysia
- Karbindo Abesyapradhi - Indoneisa
- Formosa Plastics Group - Taiwan
- Carbofer General Trading SA - India
- Wilmar Investment Holdings
- Indonesian Coal Mining Association
- Banpu Public Company Limited - Thailand
- IHS Mccloskey Coal Group - USA
- Straits Asia Resources Limited - Singapore
- Commonwealth Bank - Australia
- Power Finance Corporation Ltd., India
- Alfred C Toepfer International GmbH - Germany
- Altura Mining Limited, Indonesia
- Ambuja Cements Ltd - India
- Marubeni Corporation - India
- MS Steel International - UAE
- Jorong Barutama Greston.PT - Indonesia
- Xindia Steels Limited - India
- Madhucon Powers Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Toyota Tsusho Corporation, Japan
- Standard Chartered Bank - UAE
- The Treasury - Australian Government
- GMR Energy Limited - India
- Coal and Oil Company - UAE
- Bukit Asam (Persero) Tbk - Indonesia
- Riau Bara Harum - Indonesia
- White Energy Company Limited
- Rio Tinto Coal - Australia
- Eastern Energy - Thailand
- Leighton Contractors Pty Ltd - Australia
- Sojitz Corporation - Japan
- Bukit Makmur.PT - Indonesia
- International Coal Ventures Pvt Ltd - India
- New Zealand Coal & Carbon
- Australian Commodity Traders Exchange
- TeaM Sual Corporation - Philippines
- Electricity Authority, New Zealand
- Posco Energy - South Korea
- Mintek Dendrill Indonesia
- Mercuria Energy - Indonesia
- Dalmia Cement Bharat India
- Medco Energi Mining Internasional
- Siam City Cement - Thailand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Oldendorff Carriers - Singapore
- SN Aboitiz Power Inc, Philippines
- Chamber of Mines of South Africa
- San Jose City I Power Corp, Philippines
- Indian Oil Corporation Limited
- Meenaskhi Energy Private Limited - India
- Heidelberg Cement - Germany
- Iligan Light & Power Inc, Philippines
- PTC India Limited - India
- Economic Council, Georgia
- Kideco Jaya Agung - Indonesia
- Videocon Industries ltd - India
- Bulk Trading Sa - Switzerland
- Makarim & Taira - Indonesia
- Trasteel International SA, Italy
- Gujarat Electricity Regulatory Commission - India
- Vizag Seaport Private Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Globalindo Alam Lestari - Indonesia
- Maheswari Brothers Coal Limited - India
- Bhoruka Overseas - Indonesia
- Gujarat Sidhee Cement - India
- Sarangani Energy Corporation, Philippines
- Sree Jayajothi Cements Limited - India
- ASAPP Information Group - India
- Africa Commodities Group - South Africa
- Aboitiz Power Corporation - Philippines
- Australian Coal Association
- Agrawal Coal Company - India
- Chettinad Cement Corporation Ltd - India
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- Orica Australia Pty. Ltd.
- Interocean Group of Companies - India
- Port Waratah Coal Services - Australia
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- Deloitte Consulting - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Energy Link Ltd, New Zealand
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Price Waterhouse Coopers - Russia
- Petrochimia International Co. Ltd.- Taiwan
- Singapore Mercantile Exchange
- Timah Investasi Mineral - Indoneisa
- Ministry of Transport, Egypt
- Ind-Barath Power Infra Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- ICICI Bank Limited - India
- Petron Corporation, Philippines
- Kaltim Prima Coal - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Edison Trading Spa - Italy
- Offshore Bulk Terminal Pte Ltd, Singapore
- European Bulk Services B.V. - Netherlands
- GN Power Mariveles Coal Plant, Philippines
- Karaikal Port Pvt Ltd - India
- Indo Tambangraya Megah - Indonesia
- Coalindo Energy - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Eastern Coal Council - USA
- Tata Chemicals Ltd - India
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- AsiaOL BioFuels Corp., Philippines
- Jindal Steel & Power Ltd - India
- India Bulls Power Limited - India
- London Commodity Brokers - England
- Bhushan Steel Limited - India
- Global Green Power PLC Corporation, Philippines
- Metalloyd Limited - United Kingdom
- South Luzon Thermal Energy Corporation
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- Kumho Petrochemical, South Korea
- Samtan Co., Ltd - South Korea
- Tamil Nadu electricity Board
- Meralco Power Generation, Philippines
- Wood Mackenzie - Singapore
- Semirara Mining and Power Corporation, Philippines
- The University of Queensland
- The State Trading Corporation of India Ltd
- Binh Thuan Hamico - Vietnam
- Holcim Trading Pte Ltd - Singapore
- Pendopo Energi Batubara - Indonesia
- Thiess Contractors Indonesia
- Attock Cement Pakistan Limited
- Independent Power Producers Association of India
- Uttam Galva Steels Limited - India
- Baramulti Group, Indonesia
- McConnell Dowell - Australia
- Indian Energy Exchange, India
- Miang Besar Coal Terminal - Indonesia
- Anglo American - United Kingdom
- Directorate General of MIneral and Coal - Indonesia
- SMG Consultants - Indonesia
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- Thai Mozambique Logistica
- PetroVietnam Power Coal Import and Supply Company
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- Georgia Ports Authority, United States
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- Central Electricity Authority - India
- Global Coal Blending Company Limited - Australia
- GVK Power & Infra Limited - India
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