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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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Sunday, 06 January 13
FREIGHT MARKET REMAINED FAIRLY STEADY - VISTAAR
WISH YOU ALL HAPPY NEW YEAR
COALspot.com - The freight market remained fairly steady in spite of Christmas / New Year Holidays. The BDI was almos ...
Saturday, 05 January 13
THE SHIPPING MARKET IN 2012 AND LOOKING FORWARD - BIMCO
Global Economy: Things will go up from here
The global economy continues to grow, albeit at a slower pace than previous years. The slower economic ...
Friday, 04 January 13
DRY BULK MARKET LOOKING FOR DIRECTION IN FIRST TRADING DAYS OF THE NEW YEAR - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The dry bulk market is actively looking for its footing at the start of the New Year, as charters have been scarce, as is usually the case during th ...
Thursday, 03 January 13
INDONESIAN SUB-BITUMINOUS COAL SWAPS CLOSED US$ 6.86 HIGHER FOR 2014 DELIVERY
COALspot.com - Swaps prices were changed positively for thermal coal for loading in the first quarter from Indonesia, according to SGX AsiaClear OTC ...
Thursday, 03 January 13
SUPRMAX FREIGHT RATE FROM RED SEA / INDIA IS AROUND MID TEENS - FEARNLEYS
Fearnleys in its weekly report said that, Indian market was very quiet in respect of export of iron ore. For Indo-India trip Supra rate was hovering ...
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- Larsen & Toubro Limited - India
- ASAPP Information Group - India
- Bukit Makmur.PT - Indonesia
- Bharathi Cement Corporation - India
- Mercuria Energy - Indonesia
- Altura Mining Limited, Indonesia
- Lanco Infratech Ltd - India
- Central Electricity Authority - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Siam City Cement PLC, Thailand
- Maharashtra Electricity Regulatory Commission - India
- Alfred C Toepfer International GmbH - Germany
- Baramulti Group, Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Salva Resources Pvt Ltd - India
- PNOC Exploration Corporation - Philippines
- Krishnapatnam Port Company Ltd. - India
- Cement Manufacturers Association - India
- Ministry of Mines - Canada
- Bhoruka Overseas - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Makarim & Taira - Indonesia
- Pendopo Energi Batubara - Indonesia
- Latin American Coal - Colombia
- Trasteel International SA, Italy
- Posco Energy - South Korea
- Billiton Holdings Pty Ltd - Australia
- Therma Luzon, Inc, Philippines
- Carbofer General Trading SA - India
- Tata Chemicals Ltd - India
- Vedanta Resources Plc - India
- Manunggal Multi Energi - Indonesia
- Australian Coal Association
- Kalimantan Lumbung Energi - Indonesia
- Intertek Mineral Services - Indonesia
- TeaM Sual Corporation - Philippines
- Eastern Coal Council - USA
- Kideco Jaya Agung - Indonesia
- Interocean Group of Companies - India
- Parry Sugars Refinery, India
- PowerSource Philippines DevCo
- Bulk Trading Sa - Switzerland
- Central Java Power - Indonesia
- Coal and Oil Company - UAE
- Medco Energi Mining Internasional
- India Bulls Power Limited - India
- Attock Cement Pakistan Limited
- Bangladesh Power Developement Board
- Thai Mozambique Logistica
- OPG Power Generation Pvt Ltd - India
- Thiess Contractors Indonesia
- Bhatia International Limited - India
- Mintek Dendrill Indonesia
- Global Coal Blending Company Limited - Australia
- Ceylon Electricity Board - Sri Lanka
- Binh Thuan Hamico - Vietnam
- Videocon Industries ltd - India
- Semirara Mining and Power Corporation, Philippines
- Oldendorff Carriers - Singapore
- Petrochimia International Co. Ltd.- Taiwan
- Minerals Council of Australia
- Holcim Trading Pte Ltd - Singapore
- Bukit Baiduri Energy - Indonesia
- Timah Investasi Mineral - Indoneisa
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Rio Tinto Coal - Australia
- Madhucon Powers Ltd - India
- Commonwealth Bank - Australia
- San Jose City I Power Corp, Philippines
- Orica Australia Pty. Ltd.
- Tamil Nadu electricity Board
- Parliament of New Zealand
- Sindya Power Generating Company Private Ltd
- Vijayanagar Sugar Pvt Ltd - India
- Rashtriya Ispat Nigam Limited - India
- The Treasury - Australian Government
- Chettinad Cement Corporation Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Mjunction Services Limited - India
- Jindal Steel & Power Ltd - India
- PTC India Limited - India
- Semirara Mining Corp, Philippines
- Grasim Industreis Ltd - India
- Iligan Light & Power Inc, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kobexindo Tractors - Indoneisa
- Indika Energy - Indonesia
- Energy Development Corp, Philippines
- Miang Besar Coal Terminal - Indonesia
- Gujarat Sidhee Cement - India
- SN Aboitiz Power Inc, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Siam City Cement - Thailand
- Marubeni Corporation - India
- Indogreen Group - Indonesia
- Goldman Sachs - Singapore
- Sakthi Sugars Limited - India
- Samtan Co., Ltd - South Korea
- Merrill Lynch Commodities Europe
- Agrawal Coal Company - India
- Xindia Steels Limited - India
- Sarangani Energy Corporation, Philippines
- Borneo Indobara - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- South Luzon Thermal Energy Corporation
- IEA Clean Coal Centre - UK
- CNBM International Corporation - China
- Cigading International Bulk Terminal - Indonesia
- Indian Energy Exchange, India
- Gujarat Mineral Development Corp Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Mercator Lines Limited - India
- Planning Commission, India
- Antam Resourcindo - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Gujarat Electricity Regulatory Commission - India
- McConnell Dowell - Australia
- SMG Consultants - Indonesia
- Electricity Authority, New Zealand
- Orica Mining Services - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- IHS Mccloskey Coal Group - USA
- The University of Queensland
- Independent Power Producers Association of India
- Ind-Barath Power Infra Limited - India
- Aboitiz Power Corporation - Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Power Finance Corporation Ltd., India
- Sical Logistics Limited - India
- CIMB Investment Bank - Malaysia
- Dalmia Cement Bharat India
- Barasentosa Lestari - Indonesia
- Petron Corporation, Philippines
- Global Business Power Corporation, Philippines
- GMR Energy Limited - India
- Kaltim Prima Coal - Indonesia
- Wood Mackenzie - Singapore
- Coalindo Energy - Indonesia
- Simpson Spence & Young - Indonesia
- Metalloyd Limited - United Kingdom
- Bayan Resources Tbk. - Indonesia
- Sree Jayajothi Cements Limited - India
- New Zealand Coal & Carbon
- Aditya Birla Group - India
- Kepco SPC Power Corporation, Philippines
- Edison Trading Spa - Italy
- Romanian Commodities Exchange
- Toyota Tsusho Corporation, Japan
- Bhushan Steel Limited - India
- Karaikal Port Pvt Ltd - India
- Indonesian Coal Mining Association
- Vizag Seaport Private Limited - India
- Kapuas Tunggal Persada - Indonesia
- Sojitz Corporation - Japan
- Georgia Ports Authority, United States
- Leighton Contractors Pty Ltd - Australia
- Star Paper Mills Limited - India
- Directorate Of Revenue Intelligence - India
- Ministry of Finance - Indonesia
- Ambuja Cements Ltd - India
- MS Steel International - UAE
- Wilmar Investment Holdings
- Chamber of Mines of South Africa
- GAC Shipping (India) Pvt Ltd
- Straits Asia Resources Limited - Singapore
- Indo Tambangraya Megah - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Banpu Public Company Limited - Thailand
- Jorong Barutama Greston.PT - Indonesia
- Uttam Galva Steels Limited - India
- Meralco Power Generation, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Australian Commodity Traders Exchange
- Port Waratah Coal Services - Australia
- Deloitte Consulting - India
- Globalindo Alam Lestari - Indonesia
- SMC Global Power, Philippines
- GVK Power & Infra Limited - India
- Eastern Energy - Thailand
- AsiaOL BioFuels Corp., Philippines
- Heidelberg Cement - Germany
- Riau Bara Harum - Indonesia
- International Coal Ventures Pvt Ltd - India
- Savvy Resources Ltd - HongKong
- London Commodity Brokers - England
- Ministry of Transport, Egypt
- Maheswari Brothers Coal Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Formosa Plastics Group - Taiwan
- Malabar Cements Ltd - India
- European Bulk Services B.V. - Netherlands
- VISA Power Limited - India
- Coastal Gujarat Power Limited - India
- Africa Commodities Group - South Africa
- Indian Oil Corporation Limited
- Global Green Power PLC Corporation, Philippines
- Singapore Mercantile Exchange
- Kartika Selabumi Mining - Indonesia
- The State Trading Corporation of India Ltd
- Jaiprakash Power Ventures ltd
- LBH Netherlands Bv - Netherlands
- White Energy Company Limited
- Economic Council, Georgia
- Kumho Petrochemical, South Korea
- Electricity Generating Authority of Thailand
- Energy Link Ltd, New Zealand
- Price Waterhouse Coopers - Russia
- ICICI Bank Limited - India
- Standard Chartered Bank - UAE
- Anglo American - United Kingdom
- Renaissance Capital - South Africa
- Essar Steel Hazira Ltd - India
- Meenaskhi Energy Private Limited - India
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