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