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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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Saturday, 27 July 13
INDONESIA TO INDIA SUPRAMAX FREIGHT RATES ARE EXPECTED TO REMAIN STEADY - CAPT.REDDY
COALspot.com : The freight market seemed to soften this week with BDI , Cape and Panamax indices dropped average 5 percent on week.
The BDI was d ...
Thursday, 25 July 13
CAPESIZE : PACIFIC AND ATLANTIC RATES ARE HOLDING STEADY - FEARNLEYS AS
Handy
The Far East market remains quiet even if some Indo coal trip orders were fed in the market at early this week. Prompt ships passing Singapor ...
Thursday, 25 July 13
SUMMER LULL CHIPPING AWAY RECENT GAINS IN DRY BULK FREIGHT RATES - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
In what seems to be establishing as a permanent trend, at least for the time being, the dry bulk market kept on retreating yesterday, even if this r ...
Tuesday, 23 July 13
NEWCASTLE'S COAL EXPORTS CLIMB 17.82% ON WEEK, PORT'S DATA SHOWS
COALspot.com: Newcastle port in Australia has loaded 3,369,865 tons of coal for the week ended 0700 hours 22 July 2013, Newcastle Port Corp. s ...
Monday, 22 July 13
DRY BULK MARKET DIFFICULT TO MAINTAIN POSITIVE DRIVE CLAIMS SHIPBROKER - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market has seen a significant recovery in recent weeks, leading most ship classes to earnings above their operating expenses, thus brin ...
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- Electricity Authority, New Zealand
- Merrill Lynch Commodities Europe
- GAC Shipping (India) Pvt Ltd
- Meenaskhi Energy Private Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- CIMB Investment Bank - Malaysia
- Tata Chemicals Ltd - India
- Gujarat Sidhee Cement - India
- Australian Coal Association
- Attock Cement Pakistan Limited
- Kohat Cement Company Ltd. - Pakistan
- Bangladesh Power Developement Board
- Central Java Power - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Chamber of Mines of South Africa
- Kartika Selabumi Mining - Indonesia
- Directorate Of Revenue Intelligence - India
- Cigading International Bulk Terminal - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Antam Resourcindo - Indonesia
- Bharathi Cement Corporation - India
- Gujarat Mineral Development Corp Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Borneo Indobara - Indonesia
- Indo Tambangraya Megah - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Mintek Dendrill Indonesia
- Mercuria Energy - Indonesia
- Siam City Cement - Thailand
- Bhushan Steel Limited - India
- Siam City Cement PLC, Thailand
- Bahari Cakrawala Sebuku - Indonesia
- GMR Energy Limited - India
- Interocean Group of Companies - India
- Star Paper Mills Limited - India
- Central Electricity Authority - India
- Coal and Oil Company - UAE
- Romanian Commodities Exchange
- Wilmar Investment Holdings
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- GN Power Mariveles Coal Plant, Philippines
- Planning Commission, India
- Meralco Power Generation, Philippines
- Intertek Mineral Services - Indonesia
- Makarim & Taira - Indonesia
- Ind-Barath Power Infra Limited - India
- Global Green Power PLC Corporation, Philippines
- Kaltim Prima Coal - Indonesia
- Banpu Public Company Limited - Thailand
- Marubeni Corporation - India
- Heidelberg Cement - Germany
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bulk Trading Sa - Switzerland
- Simpson Spence & Young - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Orica Australia Pty. Ltd.
- Ambuja Cements Ltd - India
- Aboitiz Power Corporation - Philippines
- India Bulls Power Limited - India
- San Jose City I Power Corp, Philippines
- Kepco SPC Power Corporation, Philippines
- PowerSource Philippines DevCo
- Georgia Ports Authority, United States
- Vijayanagar Sugar Pvt Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Altura Mining Limited, Indonesia
- Economic Council, Georgia
- Kobexindo Tractors - Indoneisa
- The University of Queensland
- IEA Clean Coal Centre - UK
- Pipit Mutiara Jaya. PT, Indonesia
- Bukit Makmur.PT - Indonesia
- Energy Development Corp, Philippines
- South Luzon Thermal Energy Corporation
- Deloitte Consulting - India
- Aditya Birla Group - India
- Carbofer General Trading SA - India
- TNB Fuel Sdn Bhd - Malaysia
- Posco Energy - South Korea
- Global Business Power Corporation, Philippines
- London Commodity Brokers - England
- Holcim Trading Pte Ltd - Singapore
- Malabar Cements Ltd - India
- Formosa Plastics Group - Taiwan
- Bhoruka Overseas - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Standard Chartered Bank - UAE
- Wood Mackenzie - Singapore
- Independent Power Producers Association of India
- VISA Power Limited - India
- Timah Investasi Mineral - Indoneisa
- Jindal Steel & Power Ltd - India
- Jaiprakash Power Ventures ltd
- Globalindo Alam Lestari - Indonesia
- SN Aboitiz Power Inc, Philippines
- Eastern Coal Council - USA
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kideco Jaya Agung - Indonesia
- PTC India Limited - India
- Savvy Resources Ltd - HongKong
- Oldendorff Carriers - Singapore
- SMG Consultants - Indonesia
- Medco Energi Mining Internasional
- Petron Corporation, Philippines
- Anglo American - United Kingdom
- European Bulk Services B.V. - Netherlands
- Cement Manufacturers Association - India
- Australian Commodity Traders Exchange
- Singapore Mercantile Exchange
- Kumho Petrochemical, South Korea
- Karaikal Port Pvt Ltd - India
- Larsen & Toubro Limited - India
- Price Waterhouse Coopers - Russia
- Mercator Lines Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Barasentosa Lestari - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Indian Oil Corporation Limited
- Orica Mining Services - Indonesia
- Sical Logistics Limited - India
- Rio Tinto Coal - Australia
- Bhatia International Limited - India
- Pendopo Energi Batubara - Indonesia
- Sojitz Corporation - Japan
- Bukit Baiduri Energy - Indonesia
- AsiaOL BioFuels Corp., Philippines
- McConnell Dowell - Australia
- Electricity Generating Authority of Thailand
- Lanco Infratech Ltd - India
- Straits Asia Resources Limited - Singapore
- Parry Sugars Refinery, India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Agrawal Coal Company - India
- Sindya Power Generating Company Private Ltd
- Asmin Koalindo Tuhup - Indonesia
- Toyota Tsusho Corporation, Japan
- Goldman Sachs - Singapore
- Sakthi Sugars Limited - India
- CNBM International Corporation - China
- SMC Global Power, Philippines
- ASAPP Information Group - India
- Iligan Light & Power Inc, Philippines
- The State Trading Corporation of India Ltd
- Indian Energy Exchange, India
- Commonwealth Bank - Australia
- Neyveli Lignite Corporation Ltd, - India
- Dalmia Cement Bharat India
- GVK Power & Infra Limited - India
- Port Waratah Coal Services - Australia
- Edison Trading Spa - Italy
- Ministry of Mines - Canada
- LBH Netherlands Bv - Netherlands
- Baramulti Group, Indonesia
- Indogreen Group - Indonesia
- Trasteel International SA, Italy
- Salva Resources Pvt Ltd - India
- Tamil Nadu electricity Board
- Karbindo Abesyapradhi - Indoneisa
- Essar Steel Hazira Ltd - India
- OPG Power Generation Pvt Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Uttam Galva Steels Limited - India
- International Coal Ventures Pvt Ltd - India
- Parliament of New Zealand
- Manunggal Multi Energi - Indonesia
- TeaM Sual Corporation - Philippines
- New Zealand Coal & Carbon
- Ministry of Finance - Indonesia
- MS Steel International - UAE
- Krishnapatnam Port Company Ltd. - India
- Samtan Co., Ltd - South Korea
- Chettinad Cement Corporation Ltd - India
- Minerals Council of Australia
- Grasim Industreis Ltd - India
- Sree Jayajothi Cements Limited - India
- Coastal Gujarat Power Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- The Treasury - Australian Government
- Coalindo Energy - Indonesia
- Maheswari Brothers Coal Limited - India
- Ministry of Transport, Egypt
- Maharashtra Electricity Regulatory Commission - India
- Vedanta Resources Plc - India
- Thai Mozambique Logistica
- Directorate General of MIneral and Coal - Indonesia
- White Energy Company Limited
- Sinarmas Energy and Mining - Indonesia
- Thiess Contractors Indonesia
- Metalloyd Limited - United Kingdom
- Miang Besar Coal Terminal - Indonesia
- IHS Mccloskey Coal Group - USA
- Xindia Steels Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Leighton Contractors Pty Ltd - Australia
- ICICI Bank Limited - India
- Indika Energy - Indonesia
- Bayan Resources Tbk. - Indonesia
- Africa Commodities Group - South Africa
- Rashtriya Ispat Nigam Limited - India
- Riau Bara Harum - Indonesia
- Vizag Seaport Private Limited - India
- PetroVietnam Power Coal Import and Supply Company
- PNOC Exploration Corporation - Philippines
- Sarangani Energy Corporation, Philippines
- Semirara Mining Corp, Philippines
- Power Finance Corporation Ltd., India
- Indonesian Coal Mining Association
- Binh Thuan Hamico - Vietnam
- Global Coal Blending Company Limited - Australia
- Eastern Energy - Thailand
- Latin American Coal - Colombia
- Energy Link Ltd, New Zealand
- Renaissance Capital - South Africa
- Videocon Industries ltd - India
- Madhucon Powers Ltd - India
- Mjunction Services Limited - India
- Therma Luzon, Inc, Philippines
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