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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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Tuesday, 19 March 13
SHIP PRICES COULD BE CLOSING IN TO REACH THEIR BOTTOM - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
One of the latest developments in shipping asset prices has been the reluctance from shipyards to further reduce their price expectations to higher ...
Sunday, 17 March 13
A WEAK WEEK FOR SUB-BIT INDONESIA COAL SWAPS
COALspot.com - Sub-Bit Indonesia coal swaps (FOB ) for average Q2’ 2013 delivery has lost 2.11 percent and CFR South China coal shipment ...
Sunday, 17 March 13
COAL FREIGHT RATES STEADY ON HIGHER DEMAND - CAPT. REDDY
COALspot.com - This freight market continued to remain firm in all segments.
The BDI was up by 5.81 pct closing at 892 points. Cape index was up ...
Friday, 15 March 13
CHEAP SHIP VALUATIONS DON'T NECESSARILY MEAN ATTRACTIVE SAYS VESSELS VALUE - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
With ship prices plunging by double-digits in the past few years, many ship owners are pondering their next moves in a market often described as att ...
Thursday, 14 March 13
SUPRAMAX : INDO - INDIA TRIP RATE IS AROUND $10,000; SOUTH CHINA $9500 - FEARNRESEARCH
Handy
Indian market is still quiet in respect of export of iron ore. WC India market has improved with a few stems out of the MEG, WC India opening ...
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- Jindal Steel & Power Ltd - India
- Romanian Commodities Exchange
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kepco SPC Power Corporation, Philippines
- Deloitte Consulting - India
- Energy Development Corp, Philippines
- Gujarat Sidhee Cement - India
- Riau Bara Harum - Indonesia
- TeaM Sual Corporation - Philippines
- South Luzon Thermal Energy Corporation
- Malabar Cements Ltd - India
- Oldendorff Carriers - Singapore
- Kalimantan Lumbung Energi - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Mercuria Energy - Indonesia
- Vedanta Resources Plc - India
- Gujarat Mineral Development Corp Ltd - India
- Ind-Barath Power Infra Limited - India
- SN Aboitiz Power Inc, Philippines
- Globalindo Alam Lestari - Indonesia
- London Commodity Brokers - England
- Kumho Petrochemical, South Korea
- Bank of Tokyo Mitsubishi UFJ Ltd
- Thiess Contractors Indonesia
- Gujarat Electricity Regulatory Commission - India
- Star Paper Mills Limited - India
- OPG Power Generation Pvt Ltd - India
- Salva Resources Pvt Ltd - India
- Simpson Spence & Young - Indonesia
- Sindya Power Generating Company Private Ltd
- PowerSource Philippines DevCo
- Chamber of Mines of South Africa
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Ministry of Finance - Indonesia
- Meenaskhi Energy Private Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Alfred C Toepfer International GmbH - Germany
- Timah Investasi Mineral - Indoneisa
- Wood Mackenzie - Singapore
- Savvy Resources Ltd - HongKong
- Directorate Of Revenue Intelligence - India
- Baramulti Group, Indonesia
- IHS Mccloskey Coal Group - USA
- Indogreen Group - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- New Zealand Coal & Carbon
- Marubeni Corporation - India
- Planning Commission, India
- Sical Logistics Limited - India
- Maheswari Brothers Coal Limited - India
- CNBM International Corporation - China
- Global Coal Blending Company Limited - Australia
- Kaltim Prima Coal - Indonesia
- Semirara Mining Corp, Philippines
- Miang Besar Coal Terminal - Indonesia
- Iligan Light & Power Inc, Philippines
- ASAPP Information Group - India
- Africa Commodities Group - South Africa
- Bukit Makmur.PT - Indonesia
- Cement Manufacturers Association - India
- Global Business Power Corporation, Philippines
- Goldman Sachs - Singapore
- Power Finance Corporation Ltd., India
- Barasentosa Lestari - Indonesia
- Agrawal Coal Company - India
- Indian Oil Corporation Limited
- Dalmia Cement Bharat India
- Formosa Plastics Group - Taiwan
- Aditya Birla Group - India
- Bhushan Steel Limited - India
- Tamil Nadu electricity Board
- Samtan Co., Ltd - South Korea
- Meralco Power Generation, Philippines
- Minerals Council of Australia
- Jorong Barutama Greston.PT - Indonesia
- VISA Power Limited - India
- Australian Commodity Traders Exchange
- Karbindo Abesyapradhi - Indoneisa
- Economic Council, Georgia
- Pendopo Energi Batubara - Indonesia
- PNOC Exploration Corporation - Philippines
- Billiton Holdings Pty Ltd - Australia
- Orica Australia Pty. Ltd.
- Indo Tambangraya Megah - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Kartika Selabumi Mining - Indonesia
- Mintek Dendrill Indonesia
- CIMB Investment Bank - Malaysia
- San Jose City I Power Corp, Philippines
- GVK Power & Infra Limited - India
- Holcim Trading Pte Ltd - Singapore
- Port Waratah Coal Services - Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Coalindo Energy - Indonesia
- Electricity Authority, New Zealand
- Krishnapatnam Port Company Ltd. - India
- The State Trading Corporation of India Ltd
- Kideco Jaya Agung - Indonesia
- Parry Sugars Refinery, India
- Asmin Koalindo Tuhup - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- McConnell Dowell - Australia
- Lanco Infratech Ltd - India
- Siam City Cement PLC, Thailand
- Kohat Cement Company Ltd. - Pakistan
- Sinarmas Energy and Mining - Indonesia
- Coastal Gujarat Power Limited - India
- Singapore Mercantile Exchange
- Tata Chemicals Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Sojitz Corporation - Japan
- Carbofer General Trading SA - India
- Altura Mining Limited, Indonesia
- Renaissance Capital - South Africa
- Vijayanagar Sugar Pvt Ltd - India
- Standard Chartered Bank - UAE
- Orica Mining Services - Indonesia
- SMC Global Power, Philippines
- Makarim & Taira - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Georgia Ports Authority, United States
- Mercator Lines Limited - India
- Medco Energi Mining Internasional
- GAC Shipping (India) Pvt Ltd
- Interocean Group of Companies - India
- PTC India Limited - India
- Bulk Trading Sa - Switzerland
- Madhucon Powers Ltd - India
- Essar Steel Hazira Ltd - India
- Toyota Tsusho Corporation, Japan
- White Energy Company Limited
- Australian Coal Association
- ICICI Bank Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Rio Tinto Coal - Australia
- LBH Netherlands Bv - Netherlands
- MS Steel International - UAE
- Sarangani Energy Corporation, Philippines
- Chettinad Cement Corporation Ltd - India
- Siam City Cement - Thailand
- Heidelberg Cement - Germany
- Bangladesh Power Developement Board
- Edison Trading Spa - Italy
- Indika Energy - Indonesia
- Vizag Seaport Private Limited - India
- Central Electricity Authority - India
- Ambuja Cements Ltd - India
- Trasteel International SA, Italy
- Cigading International Bulk Terminal - Indonesia
- Merrill Lynch Commodities Europe
- Electricity Generating Authority of Thailand
- Bharathi Cement Corporation - India
- Directorate General of MIneral and Coal - Indonesia
- Videocon Industries ltd - India
- Sree Jayajothi Cements Limited - India
- Bhoruka Overseas - Indonesia
- Eastern Coal Council - USA
- The University of Queensland
- Attock Cement Pakistan Limited
- Therma Luzon, Inc, Philippines
- GMR Energy Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Coal and Oil Company - UAE
- The Treasury - Australian Government
- Bukit Baiduri Energy - Indonesia
- Anglo American - United Kingdom
- Indonesian Coal Mining Association
- Bhatia International Limited - India
- Grasim Industreis Ltd - India
- Petron Corporation, Philippines
- IEA Clean Coal Centre - UK
- Xindia Steels Limited - India
- Ministry of Mines - Canada
- Wilmar Investment Holdings
- Ministry of Transport, Egypt
- Indian Energy Exchange, India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- PetroVietnam Power Coal Import and Supply Company
- Thai Mozambique Logistica
- Banpu Public Company Limited - Thailand
- Latin American Coal - Colombia
- Karaikal Port Pvt Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Central Java Power - Indonesia
- India Bulls Power Limited - India
- Energy Link Ltd, New Zealand
- Jaiprakash Power Ventures ltd
- Intertek Mineral Services - Indonesia
- Uttam Galva Steels Limited - India
- Kapuas Tunggal Persada - Indonesia
- Manunggal Multi Energi - Indonesia
- Posco Energy - South Korea
- Parliament of New Zealand
- European Bulk Services B.V. - Netherlands
- Borneo Indobara - Indonesia
- Aboitiz Power Corporation - Philippines
- Global Green Power PLC Corporation, Philippines
- Metalloyd Limited - United Kingdom
- Commonwealth Bank - Australia
- Kobexindo Tractors - Indoneisa
- Mjunction Services Limited - India
- Bayan Resources Tbk. - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Semirara Mining and Power Corporation, Philippines
- Independent Power Producers Association of India
- Eastern Energy - Thailand
- SMG Consultants - Indonesia
- Price Waterhouse Coopers - Russia
- Leighton Contractors Pty Ltd - Australia
- Sakthi Sugars Limited - India
- Binh Thuan Hamico - Vietnam
- Straits Asia Resources Limited - Singapore
- Larsen & Toubro Limited - India
- International Coal Ventures Pvt Ltd - India
- Antam Resourcindo - Indonesia
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