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