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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, 09 December 12
LOW DEMAND PUSHES CHARTER RATES TOWARDS DOWN - VISTAAR
COALspot.com - The freight market has softened and BDI, The Baltic Dry Index, a measure of shipping costs for dry bulk goods, plunged below 10 ...
Friday, 07 December 12
A NEW PHASE FOR AUSTRALIAN RESOURCES - A FITCH STREET INTERVIEW
This week Matt Jamieson spoke with Andrew Colquhoun in Fitch's Asian sovereign rating team, and Vicky Melbourne, Fitch's commodity analyst based i ...
Friday, 07 December 12
SHIPPING INDUSTRY LOOKING ON YET ANOTHER TOUGH YEAR AS WE APPROACH 2013 - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
With shipping finance "on the ropes" as traditional lenders appear to be cutting their losses and tonnage oversupply still the most import ...
Thursday, 06 December 12
PANAMAX : THE POSITIVE VIBES IN THE ATLANTIC REMAINS - FEARNLEYS AS
Handy
The Atlantic market is still depressed with dearth of cargoes and more ships. The trips from Continent to Feast fixed around USD 12k. Trips f ...
Thursday, 06 December 12
STRONG CHINESE DEMAND FOR DRY BULK COMMODITIES EXPECTED FOR 2013 - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
A new analysis from BIMCO released yesterday suggests that 2013 is expected to be a stronger year in terms of China's "hunger" for commod ...
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- Essar Steel Hazira Ltd - India
- OPG Power Generation Pvt Ltd - India
- Planning Commission, India
- Mercator Lines Limited - India
- Bayan Resources Tbk. - Indonesia
- Kartika Selabumi Mining - Indonesia
- Indogreen Group - Indonesia
- Mercuria Energy - Indonesia
- Heidelberg Cement - Germany
- Leighton Contractors Pty Ltd - Australia
- PowerSource Philippines DevCo
- Tata Chemicals Ltd - India
- Medco Energi Mining Internasional
- International Coal Ventures Pvt Ltd - India
- GVK Power & Infra Limited - India
- Indian Oil Corporation Limited
- Straits Asia Resources Limited - Singapore
- Bhushan Steel Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Renaissance Capital - South Africa
- Australian Coal Association
- Merrill Lynch Commodities Europe
- Vedanta Resources Plc - India
- Jorong Barutama Greston.PT - Indonesia
- The University of Queensland
- Chettinad Cement Corporation Ltd - India
- Agrawal Coal Company - India
- White Energy Company Limited
- Central Electricity Authority - India
- Binh Thuan Hamico - Vietnam
- Cement Manufacturers Association - India
- Bulk Trading Sa - Switzerland
- Sinarmas Energy and Mining - Indonesia
- Aboitiz Power Corporation - Philippines
- Kideco Jaya Agung - Indonesia
- Central Java Power - Indonesia
- Bangladesh Power Developement Board
- Port Waratah Coal Services - Australia
- Posco Energy - South Korea
- Makarim & Taira - Indonesia
- Singapore Mercantile Exchange
- Marubeni Corporation - India
- SMG Consultants - Indonesia
- Independent Power Producers Association of India
- Sojitz Corporation - Japan
- Alfred C Toepfer International GmbH - Germany
- Aditya Birla Group - India
- Goldman Sachs - Singapore
- Energy Development Corp, Philippines
- Oldendorff Carriers - Singapore
- Rio Tinto Coal - Australia
- Simpson Spence & Young - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Kumho Petrochemical, South Korea
- Star Paper Mills Limited - India
- Semirara Mining and Power Corporation, Philippines
- Miang Besar Coal Terminal - Indonesia
- Coastal Gujarat Power Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- MS Steel International - UAE
- VISA Power Limited - India
- European Bulk Services B.V. - Netherlands
- Power Finance Corporation Ltd., India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- SMC Global Power, Philippines
- Semirara Mining Corp, Philippines
- Mjunction Services Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Baramulti Group, Indonesia
- Banpu Public Company Limited - Thailand
- Sical Logistics Limited - India
- GMR Energy Limited - India
- Videocon Industries ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Global Business Power Corporation, Philippines
- Iligan Light & Power Inc, Philippines
- Meralco Power Generation, Philippines
- Electricity Authority, New Zealand
- Larsen & Toubro Limited - India
- South Luzon Thermal Energy Corporation
- Parry Sugars Refinery, India
- Deloitte Consulting - India
- Sarangani Energy Corporation, Philippines
- Siam City Cement PLC, Thailand
- Cigading International Bulk Terminal - Indonesia
- Energy Link Ltd, New Zealand
- Standard Chartered Bank - UAE
- Sree Jayajothi Cements Limited - India
- Maheswari Brothers Coal Limited - India
- Sakthi Sugars Limited - India
- Eastern Coal Council - USA
- CNBM International Corporation - China
- Intertek Mineral Services - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Lanco Infratech Ltd - India
- Bukit Makmur.PT - Indonesia
- Indika Energy - Indonesia
- Price Waterhouse Coopers - Russia
- LBH Netherlands Bv - Netherlands
- Altura Mining Limited, Indonesia
- Vizag Seaport Private Limited - India
- Global Green Power PLC Corporation, Philippines
- Siam City Cement - Thailand
- Pipit Mutiara Jaya. PT, Indonesia
- Attock Cement Pakistan Limited
- Coal and Oil Company - UAE
- Bhoruka Overseas - Indonesia
- Petron Corporation, Philippines
- Kohat Cement Company Ltd. - Pakistan
- India Bulls Power Limited - India
- Kalimantan Lumbung Energi - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- GN Power Mariveles Coal Plant, Philippines
- Metalloyd Limited - United Kingdom
- CIMB Investment Bank - Malaysia
- SN Aboitiz Power Inc, Philippines
- Dalmia Cement Bharat India
- New Zealand Coal & Carbon
- Jindal Steel & Power Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Anglo American - United Kingdom
- Grasim Industreis Ltd - India
- Trasteel International SA, Italy
- Ministry of Transport, Egypt
- IHS Mccloskey Coal Group - USA
- Indonesian Coal Mining Association
- Orica Australia Pty. Ltd.
- Jaiprakash Power Ventures ltd
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kobexindo Tractors - Indoneisa
- Wilmar Investment Holdings
- Africa Commodities Group - South Africa
- Xindia Steels Limited - India
- Formosa Plastics Group - Taiwan
- ASAPP Information Group - India
- Minerals Council of Australia
- Gujarat Sidhee Cement - India
- Eastern Energy - Thailand
- PTC India Limited - India
- Globalindo Alam Lestari - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Georgia Ports Authority, United States
- Parliament of New Zealand
- Directorate General of MIneral and Coal - Indonesia
- Pendopo Energi Batubara - Indonesia
- Wood Mackenzie - Singapore
- Commonwealth Bank - Australia
- Thiess Contractors Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- TeaM Sual Corporation - Philippines
- Barasentosa Lestari - Indonesia
- Manunggal Multi Energi - Indonesia
- Directorate Of Revenue Intelligence - India
- Bukit Baiduri Energy - Indonesia
- Electricity Generating Authority of Thailand
- ICICI Bank Limited - India
- San Jose City I Power Corp, Philippines
- AsiaOL BioFuels Corp., Philippines
- Edison Trading Spa - Italy
- Madhucon Powers Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Ministry of Mines - Canada
- Kapuas Tunggal Persada - Indonesia
- Meenaskhi Energy Private Limited - India
- Thai Mozambique Logistica
- The State Trading Corporation of India Ltd
- Malabar Cements Ltd - India
- Riau Bara Harum - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bhatia International Limited - India
- Uttam Galva Steels Limited - India
- Coalindo Energy - Indonesia
- Salva Resources Pvt Ltd - India
- Australian Commodity Traders Exchange
- Interocean Group of Companies - India
- Rashtriya Ispat Nigam Limited - India
- Ministry of Finance - Indonesia
- Carbofer General Trading SA - India
- GAC Shipping (India) Pvt Ltd
- Indian Energy Exchange, India
- PNOC Exploration Corporation - Philippines
- Tamil Nadu electricity Board
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Indo Tambangraya Megah - Indonesia
- Kaltim Prima Coal - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- The Treasury - Australian Government
- Bank of Tokyo Mitsubishi UFJ Ltd
- IEA Clean Coal Centre - UK
- Global Coal Blending Company Limited - Australia
- Toyota Tsusho Corporation, Japan
- Orica Mining Services - Indonesia
- Timah Investasi Mineral - Indoneisa
- Ambuja Cements Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Samtan Co., Ltd - South Korea
- Maharashtra Electricity Regulatory Commission - India
- Karaikal Port Pvt Ltd - India
- Kepco SPC Power Corporation, Philippines
- Latin American Coal - Colombia
- Antam Resourcindo - Indonesia
- Romanian Commodities Exchange
- Borneo Indobara - Indonesia
- Ceylon Electricity Board - Sri Lanka
- McConnell Dowell - Australia
- Neyveli Lignite Corporation Ltd, - India
- Therma Luzon, Inc, Philippines
- Mintek Dendrill Indonesia
- Ind-Barath Power Infra Limited - India
- Savvy Resources Ltd - HongKong
- Sindya Power Generating Company Private Ltd
- Petrochimia International Co. Ltd.- Taiwan
- Bharathi Cement Corporation - India
- London Commodity Brokers - England
- Economic Council, Georgia
- Chamber of Mines of South Africa
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