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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, 16 October 12
DRY BULK FREIGHT RATES COULD IMPROVE ON CHINESE STIMULUS AND WINTER CARGO DEMAND SAYS BIMCO - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
BIMCO has given out its forecast for the next six weeks, in terms of freight rates for dry bulk carriers. According to them, Capesize TC Average rat ...
Monday, 15 October 12
IT'S STRICTLY COME CHARTERING - CLARKSON RESEARCH SERVICES
The charter market is a bit of a dance between ship owner and charterer: one leader, one follower; one step, two steps, turn... The dance is symbiot ...
Sunday, 14 October 12
SUB-BIT INDONESIA COAL AND CFR SOUTH CHINA COAL SWAPS: SOFT
COALspot.com - Sub-Bit Indonesia coal swaps (FOB ) for December 2012 delivery lost 0.329 percent w- w but gained 0.248 percent d-d on Friday, 12 Oct ...
Sunday, 14 October 12
SUPRAMAX FREIGHT STEADY: PANAMAX FREIGHTS FIRM - VISTAAR
COALspot.com - The shipping market saw some hectic activity in the Cape and panamax sector and quite a lot of fixtures reported.
The BDI was up b ...
Friday, 12 October 12
HOW REAL IS THE THREAT OF PIRACY? - BIMCO
The threat of modern piracy remains serious, regardless of its seasonal variations and the fact that it is chiefly confined to the Indian Ocean, Gul ...
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- Bhoruka Overseas - Indonesia
- Karaikal Port Pvt Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- The State Trading Corporation of India Ltd
- Kaltim Prima Coal - Indonesia
- Power Finance Corporation Ltd., India
- International Coal Ventures Pvt Ltd - India
- Ministry of Transport, Egypt
- Bhatia International Limited - India
- Billiton Holdings Pty Ltd - Australia
- Goldman Sachs - Singapore
- Formosa Plastics Group - Taiwan
- Baramulti Group, Indonesia
- Directorate Of Revenue Intelligence - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- SN Aboitiz Power Inc, Philippines
- Aditya Birla Group - India
- Sinarmas Energy and Mining - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Bukit Asam (Persero) Tbk - Indonesia
- Larsen & Toubro Limited - India
- Indika Energy - Indonesia
- Global Green Power PLC Corporation, Philippines
- Malabar Cements Ltd - India
- Meralco Power Generation, Philippines
- Ceylon Electricity Board - Sri Lanka
- Ministry of Mines - Canada
- Wilmar Investment Holdings
- Mjunction Services Limited - India
- Bukit Baiduri Energy - Indonesia
- GMR Energy Limited - India
- Mintek Dendrill Indonesia
- TeaM Sual Corporation - Philippines
- Port Waratah Coal Services - Australia
- Petron Corporation, Philippines
- Anglo American - United Kingdom
- Jindal Steel & Power Ltd - India
- Borneo Indobara - Indonesia
- Trasteel International SA, Italy
- Posco Energy - South Korea
- Savvy Resources Ltd - HongKong
- Madhucon Powers Ltd - India
- Romanian Commodities Exchange
- Indogreen Group - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- New Zealand Coal & Carbon
- Lanco Infratech Ltd - India
- SMG Consultants - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Neyveli Lignite Corporation Ltd, - India
- Maharashtra Electricity Regulatory Commission - India
- Globalindo Alam Lestari - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Maheswari Brothers Coal Limited - India
- AsiaOL BioFuels Corp., Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Star Paper Mills Limited - India
- Uttam Galva Steels Limited - India
- PNOC Exploration Corporation - Philippines
- VISA Power Limited - India
- ICICI Bank Limited - India
- MS Steel International - UAE
- IHS Mccloskey Coal Group - USA
- Coalindo Energy - Indonesia
- Sarangani Energy Corporation, Philippines
- Orica Mining Services - Indonesia
- Interocean Group of Companies - India
- Deloitte Consulting - India
- Bulk Trading Sa - Switzerland
- Vedanta Resources Plc - India
- Carbofer General Trading SA - India
- Pendopo Energi Batubara - Indonesia
- The Treasury - Australian Government
- Latin American Coal - Colombia
- Timah Investasi Mineral - Indoneisa
- OPG Power Generation Pvt Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Bharathi Cement Corporation - India
- Singapore Mercantile Exchange
- Essar Steel Hazira Ltd - India
- Eastern Energy - Thailand
- Merrill Lynch Commodities Europe
- Barasentosa Lestari - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Dalmia Cement Bharat India
- Sical Logistics Limited - India
- Global Business Power Corporation, Philippines
- Cement Manufacturers Association - India
- Aboitiz Power Corporation - Philippines
- PowerSource Philippines DevCo
- The University of Queensland
- Ambuja Cements Ltd - India
- Banpu Public Company Limited - Thailand
- Agrawal Coal Company - India
- Directorate General of MIneral and Coal - Indonesia
- Energy Link Ltd, New Zealand
- Indonesian Coal Mining Association
- Straits Asia Resources Limited - Singapore
- Jaiprakash Power Ventures ltd
- Metalloyd Limited - United Kingdom
- Bank of Tokyo Mitsubishi UFJ Ltd
- Mercator Lines Limited - India
- Simpson Spence & Young - Indonesia
- Parliament of New Zealand
- Commonwealth Bank - Australia
- Edison Trading Spa - Italy
- Therma Luzon, Inc, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Bukit Makmur.PT - Indonesia
- Kobexindo Tractors - Indoneisa
- South Luzon Thermal Energy Corporation
- Planning Commission, India
- Indian Oil Corporation Limited
- Sakthi Sugars Limited - India
- Grasim Industreis Ltd - India
- Chamber of Mines of South Africa
- Mercuria Energy - Indonesia
- India Bulls Power Limited - India
- CIMB Investment Bank - Malaysia
- Pipit Mutiara Jaya. PT, Indonesia
- San Jose City I Power Corp, Philippines
- Rio Tinto Coal - Australia
- Medco Energi Mining Internasional
- Toyota Tsusho Corporation, Japan
- Sindya Power Generating Company Private Ltd
- Xindia Steels Limited - India
- GAC Shipping (India) Pvt Ltd
- Australian Commodity Traders Exchange
- Semirara Mining and Power Corporation, Philippines
- Parry Sugars Refinery, India
- Alfred C Toepfer International GmbH - Germany
- Bangladesh Power Developement Board
- Central Java Power - Indonesia
- Altura Mining Limited, Indonesia
- Standard Chartered Bank - UAE
- London Commodity Brokers - England
- Sojitz Corporation - Japan
- Marubeni Corporation - India
- Independent Power Producers Association of India
- McConnell Dowell - Australia
- Thiess Contractors Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Bayan Resources Tbk. - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Intertek Mineral Services - Indonesia
- Central Electricity Authority - India
- Manunggal Multi Energi - Indonesia
- CNBM International Corporation - China
- Tata Chemicals Ltd - India
- Coal and Oil Company - UAE
- Renaissance Capital - South Africa
- Heidelberg Cement - Germany
- Georgia Ports Authority, United States
- Tamil Nadu electricity Board
- Iligan Light & Power Inc, Philippines
- Riau Bara Harum - Indonesia
- Semirara Mining Corp, Philippines
- Wood Mackenzie - Singapore
- Kohat Cement Company Ltd. - Pakistan
- Electricity Generating Authority of Thailand
- Makarim & Taira - Indonesia
- Gujarat Sidhee Cement - India
- SMC Global Power, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Karbindo Abesyapradhi - Indoneisa
- European Bulk Services B.V. - Netherlands
- Coastal Gujarat Power Limited - India
- Eastern Coal Council - USA
- Meenaskhi Energy Private Limited - India
- LBH Netherlands Bv - Netherlands
- Leighton Contractors Pty Ltd - Australia
- Antam Resourcindo - Indonesia
- Salva Resources Pvt Ltd - India
- Minerals Council of Australia
- PTC India Limited - India
- Price Waterhouse Coopers - Russia
- Indian Energy Exchange, India
- Cigading International Bulk Terminal - Indonesia
- Videocon Industries ltd - India
- Siam City Cement - Thailand
- Vizag Seaport Private Limited - India
- Global Coal Blending Company Limited - Australia
- Orica Australia Pty. Ltd.
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Indo Tambangraya Megah - Indonesia
- Ministry of Finance - Indonesia
- IEA Clean Coal Centre - UK
- Kalimantan Lumbung Energi - Indonesia
- Kumho Petrochemical, South Korea
- Ind-Barath Power Infra Limited - India
- ASAPP Information Group - India
- Bhushan Steel Limited - India
- Chettinad Cement Corporation Ltd - India
- Samtan Co., Ltd - South Korea
- Energy Development Corp, Philippines
- Rashtriya Ispat Nigam Limited - India
- GVK Power & Infra Limited - India
- Thai Mozambique Logistica
- Sree Jayajothi Cements Limited - India
- White Energy Company Limited
- Africa Commodities Group - South Africa
- Australian Coal Association
- Offshore Bulk Terminal Pte Ltd, Singapore
- Electricity Authority, New Zealand
- Kideco Jaya Agung - Indonesia
- Kepco SPC Power Corporation, Philippines
- Attock Cement Pakistan Limited
- Siam City Cement PLC, Thailand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kartika Selabumi Mining - Indonesia
- Binh Thuan Hamico - Vietnam
- Oldendorff Carriers - Singapore
- Economic Council, Georgia
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