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