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