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