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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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Thursday, 04 October 12
CAPESIZE : IN SPITE OF THE HOLIDAYS IN CHINA, RATES ARE CLIMBING UP - FEARNLEYS AS
Handy
Atlantic market remains quiet due to lack of cargoes and more supply of ships. Rates from Continent to east Med were around USD 13k and Black ...
Wednesday, 03 October 12
BARCLAYS'S PRICE FORECAST FOR NEWCASTLE COAL HAS BEEN WRITTEN DOWN
“ The main story in the global coal markets has been the growth in supply, with all of the major exporters adding volumes into a market which ...
Sunday, 30 September 12
SUB-BIT INDONESIA COAL SWAPS: MIXED TREND
COALspot.com - Sub-Bit Indonesia coal swaps (FOB ) for November 2012 delivery lost 0.73 percent w-o-w but gained 0.41 percent d-o-d on Friday, 28 Se ...
Sunday, 30 September 12
INDONESIA HAS NO PLAN TO CAP COAL PRODUCTION
COALspot.com - “The current low coal prices were mainly due to a global oversupply condition, spurred by numerous mining exploitations in the ...
Sunday, 30 September 12
FREIGHT MARKET UNDER PRESSURE; OVERALL SENTIMENTS ARE STILL BEARISH
COALspot.com - The freight market seemed to have lost steam and all indices were down except for cape index.
The BDI was slightly down by 6 point ...
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- Asia Pacific Energy Resources Ventures Inc, Philippines
- Makarim & Taira - Indonesia
- Larsen & Toubro Limited - India
- Minerals Council of Australia
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- Energy Development Corp, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Sakthi Sugars Limited - India
- Eastern Coal Council - USA
- Bhatia International Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Indogreen Group - Indonesia
- Straits Asia Resources Limited - Singapore
- Karbindo Abesyapradhi - Indoneisa
- Iligan Light & Power Inc, Philippines
- Kaltim Prima Coal - Indonesia
- SMC Global Power, Philippines
- Mintek Dendrill Indonesia
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- Globalindo Alam Lestari - Indonesia
- ICICI Bank Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
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- Ministry of Transport, Egypt
- Coalindo Energy - Indonesia
- Chamber of Mines of South Africa
- Ministry of Finance - Indonesia
- MS Steel International - UAE
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- Siam City Cement - Thailand
- Meralco Power Generation, Philippines
- Coal and Oil Company - UAE
- Global Business Power Corporation, Philippines
- LBH Netherlands Bv - Netherlands
- McConnell Dowell - Australia
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- Agrawal Coal Company - India
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- Kepco SPC Power Corporation, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Parry Sugars Refinery, India
- Bhoruka Overseas - Indonesia
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- New Zealand Coal & Carbon
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- Interocean Group of Companies - India
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- Rio Tinto Coal - Australia
- Aditya Birla Group - India
- Miang Besar Coal Terminal - Indonesia
- Electricity Authority, New Zealand
- Power Finance Corporation Ltd., India
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- Indika Energy - Indonesia
- Karaikal Port Pvt Ltd - India
- TeaM Sual Corporation - Philippines
- The State Trading Corporation of India Ltd
- Merrill Lynch Commodities Europe
- Kumho Petrochemical, South Korea
- Indian Oil Corporation Limited
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- The University of Queensland
- Kartika Selabumi Mining - Indonesia
- India Bulls Power Limited - India
- Central Electricity Authority - India
- Billiton Holdings Pty Ltd - Australia
- Petrochimia International Co. Ltd.- Taiwan
- Port Waratah Coal Services - Australia
- PetroVietnam Power Coal Import and Supply Company
- Romanian Commodities Exchange
- CNBM International Corporation - China
- Eastern Energy - Thailand
- Borneo Indobara - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Salva Resources Pvt Ltd - India
- Jaiprakash Power Ventures ltd
- Georgia Ports Authority, United States
- Ceylon Electricity Board - Sri Lanka
- Toyota Tsusho Corporation, Japan
- Ambuja Cements Ltd - India
- Baramulti Group, Indonesia
- Therma Luzon, Inc, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Economic Council, Georgia
- Indian Energy Exchange, India
- Metalloyd Limited - United Kingdom
- Central Java Power - Indonesia
- Standard Chartered Bank - UAE
- Planning Commission, India
- Intertek Mineral Services - Indonesia
- Sarangani Energy Corporation, Philippines
- Tamil Nadu electricity Board
- Marubeni Corporation - India
- Sree Jayajothi Cements Limited - India
- Kapuas Tunggal Persada - Indonesia
- Malabar Cements Ltd - India
- Independent Power Producers Association of India
- Singapore Mercantile Exchange
- Semirara Mining Corp, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kobexindo Tractors - Indoneisa
- Jindal Steel & Power Ltd - India
- CIMB Investment Bank - Malaysia
- Ministry of Mines - Canada
- Sojitz Corporation - Japan
- Medco Energi Mining Internasional
- Videocon Industries ltd - India
- Bukit Baiduri Energy - Indonesia
- Antam Resourcindo - Indonesia
- Goldman Sachs - Singapore
- Bangladesh Power Developement Board
- Orica Australia Pty. Ltd.
- Rashtriya Ispat Nigam Limited - India
- Savvy Resources Ltd - HongKong
- TNB Fuel Sdn Bhd - Malaysia
- Dalmia Cement Bharat India
- South Luzon Thermal Energy Corporation
- Directorate General of MIneral and Coal - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Price Waterhouse Coopers - Russia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Alfred C Toepfer International GmbH - Germany
- Bukit Asam (Persero) Tbk - Indonesia
- Sical Logistics Limited - India
- Aboitiz Power Corporation - Philippines
- White Energy Company Limited
- SN Aboitiz Power Inc, Philippines
- Renaissance Capital - South Africa
- Kohat Cement Company Ltd. - Pakistan
- Lanco Infratech Ltd - India
- Grasim Industreis Ltd - India
- Thiess Contractors Indonesia
- Oldendorff Carriers - Singapore
- Petron Corporation, Philippines
- Commonwealth Bank - Australia
- Kideco Jaya Agung - Indonesia
- Directorate Of Revenue Intelligence - India
- Leighton Contractors Pty Ltd - Australia
- Star Paper Mills Limited - India
- Semirara Mining and Power Corporation, Philippines
- Australian Commodity Traders Exchange
- Meenaskhi Energy Private Limited - India
- Parliament of New Zealand
- The Treasury - Australian Government
- OPG Power Generation Pvt Ltd - India
- Simpson Spence & Young - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Mjunction Services Limited - India
- Global Coal Blending Company Limited - Australia
- European Bulk Services B.V. - Netherlands
- SMG Consultants - Indonesia
- Indonesian Coal Mining Association
- PowerSource Philippines DevCo
- Banpu Public Company Limited - Thailand
- Tata Chemicals Ltd - India
- PNOC Exploration Corporation - Philippines
- Attock Cement Pakistan Limited
- Sinarmas Energy and Mining - Indonesia
- Electricity Generating Authority of Thailand
- Global Green Power PLC Corporation, Philippines
- Thai Mozambique Logistica
- Africa Commodities Group - South Africa
- Latin American Coal - Colombia
- Jorong Barutama Greston.PT - Indonesia
- Mercuria Energy - Indonesia
- Posco Energy - South Korea
- Trasteel International SA, Italy
- Formosa Plastics Group - Taiwan
- Manunggal Multi Energi - Indonesia
- Riau Bara Harum - Indonesia
- International Coal Ventures Pvt Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Heidelberg Cement - Germany
- Neyveli Lignite Corporation Ltd, - India
- IHS Mccloskey Coal Group - USA
- PTC India Limited - India
- San Jose City I Power Corp, Philippines
- Maheswari Brothers Coal Limited - India
- Deloitte Consulting - India
- Edison Trading Spa - Italy
- GAC Shipping (India) Pvt Ltd
- Siam City Cement PLC, Thailand
- AsiaOL BioFuels Corp., Philippines
- Maharashtra Electricity Regulatory Commission - India
- Mercator Lines Limited - India
- Anglo American - United Kingdom
- Orica Mining Services - Indonesia
- Wilmar Investment Holdings
- Australian Coal Association
- IEA Clean Coal Centre - UK
- Energy Link Ltd, New Zealand
- Bulk Trading Sa - Switzerland
- VISA Power Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Bayan Resources Tbk. - Indonesia
- Cement Manufacturers Association - India
- London Commodity Brokers - England
- Carbofer General Trading SA - India
- Altura Mining Limited, Indonesia
- Ind-Barath Power Infra Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bharathi Cement Corporation - India
- GMR Energy Limited - India
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- Gujarat Sidhee Cement - India
- Samtan Co., Ltd - South Korea
- GVK Power & Infra Limited - India
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- Krishnapatnam Port Company Ltd. - India
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