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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, 27 February 14
SHIPPING LOANS WORTH $5 BILLION HAVE CHANGED HANDS OVER THE PAST YEAR, AS FUNDS INVEST IN SHIPPING - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
Funds investing in shipping has been the "talk of the town" over the past couple of years, as institutional investors, private equity and ...
Thursday, 27 February 14
NEWCASTLE COAL EXPORTS SLIP 26.68 PERCENT WEEK ON WEEK
COALspot.com: In the week ended 24 February 2014, power plant and semi-soft coking coal shipments from the port of Newcastle in Queensland, total 2. ...
Wednesday, 26 February 14
SMALLER SIZE SEGMENTS HOLDING ON TO THEIR LEVELS; CAPES CORRECTING UPWARDS - INTERMODAL
Chartering (Wet: Stable- / Dry: Stable+)
The Dry Bulk market continued to improve this past week, on the back of rates for the smaller size s ...
Tuesday, 25 February 14
GBCE, A COAL UPGRADING TECHNOLOGY DEVELOPER, APPOINTS RICHARD BULMAN AS PROJECT DIRECTOR
Press Release: GB Clean Energy Ltd. (GBCE) announced today the appointment of Richard Bulman as Project Director. In this capacity Mr. Bulman ...
Tuesday, 25 February 14
ULTRAMAXES ARE THE 'WEAPON OF CHOICE' FOR DRY BULK SHIP OWNERS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
It's been a busy start in 2014, as the first month of the year was a rather active in terms of second hand vessel purchases and newbuilding orderin ...
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- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Price Waterhouse Coopers - Russia
- Planning Commission, India
- Central Electricity Authority - India
- Vijayanagar Sugar Pvt Ltd - India
- Sree Jayajothi Cements Limited - India
- Rashtriya Ispat Nigam Limited - India
- Simpson Spence & Young - Indonesia
- Wood Mackenzie - Singapore
- Larsen & Toubro Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Metalloyd Limited - United Kingdom
- IHS Mccloskey Coal Group - USA
- Aditya Birla Group - India
- ASAPP Information Group - India
- Sindya Power Generating Company Private Ltd
- Videocon Industries ltd - India
- IEA Clean Coal Centre - UK
- Singapore Mercantile Exchange
- Cement Manufacturers Association - India
- Mjunction Services Limited - India
- GVK Power & Infra Limited - India
- Tata Chemicals Ltd - India
- Edison Trading Spa - Italy
- Bhatia International Limited - India
- Kapuas Tunggal Persada - Indonesia
- Savvy Resources Ltd - HongKong
- Uttam Galva Steels Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Formosa Plastics Group - Taiwan
- TeaM Sual Corporation - Philippines
- New Zealand Coal & Carbon
- Coastal Gujarat Power Limited - India
- Ind-Barath Power Infra Limited - India
- GMR Energy Limited - India
- Ministry of Transport, Egypt
- Vizag Seaport Private Limited - India
- CNBM International Corporation - China
- LBH Netherlands Bv - Netherlands
- Electricity Authority, New Zealand
- Jindal Steel & Power Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Bhoruka Overseas - Indonesia
- Meralco Power Generation, Philippines
- Essar Steel Hazira Ltd - India
- Georgia Ports Authority, United States
- Romanian Commodities Exchange
- Independent Power Producers Association of India
- McConnell Dowell - Australia
- Straits Asia Resources Limited - Singapore
- San Jose City I Power Corp, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Kepco SPC Power Corporation, Philippines
- Indian Energy Exchange, India
- Medco Energi Mining Internasional
- Banpu Public Company Limited - Thailand
- Parry Sugars Refinery, India
- Tamil Nadu electricity Board
- Directorate General of MIneral and Coal - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Therma Luzon, Inc, Philippines
- Barasentosa Lestari - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- GN Power Mariveles Coal Plant, Philippines
- Timah Investasi Mineral - Indoneisa
- Orica Australia Pty. Ltd.
- Maheswari Brothers Coal Limited - India
- Eastern Coal Council - USA
- Goldman Sachs - Singapore
- Gujarat Sidhee Cement - India
- Australian Commodity Traders Exchange
- Baramulti Group, Indonesia
- Electricity Generating Authority of Thailand
- Sarangani Energy Corporation, Philippines
- Sakthi Sugars Limited - India
- Altura Mining Limited, Indonesia
- Power Finance Corporation Ltd., India
- Petron Corporation, Philippines
- Grasim Industreis Ltd - India
- Dalmia Cement Bharat India
- SMC Global Power, Philippines
- Jaiprakash Power Ventures ltd
- Semirara Mining Corp, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Directorate Of Revenue Intelligence - India
- SMG Consultants - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Pendopo Energi Batubara - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- International Coal Ventures Pvt Ltd - India
- Meenaskhi Energy Private Limited - India
- Miang Besar Coal Terminal - Indonesia
- Kideco Jaya Agung - Indonesia
- PowerSource Philippines DevCo
- Thiess Contractors Indonesia
- Bukit Baiduri Energy - Indonesia
- Bharathi Cement Corporation - India
- Binh Thuan Hamico - Vietnam
- OPG Power Generation Pvt Ltd - India
- SN Aboitiz Power Inc, Philippines
- Deloitte Consulting - India
- Mercator Lines Limited - India
- Alfred C Toepfer International GmbH - Germany
- Indian Oil Corporation Limited
- PetroVietnam Power Coal Import and Supply Company
- Bukit Asam (Persero) Tbk - Indonesia
- Vedanta Resources Plc - India
- Australian Coal Association
- Central Java Power - Indonesia
- Bukit Makmur.PT - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Makarim & Taira - Indonesia
- The University of Queensland
- Trasteel International SA, Italy
- PTC India Limited - India
- Samtan Co., Ltd - South Korea
- Agrawal Coal Company - India
- Kaltim Prima Coal - Indonesia
- Ambuja Cements Ltd - India
- Kobexindo Tractors - Indoneisa
- Standard Chartered Bank - UAE
- Coalindo Energy - Indonesia
- Latin American Coal - Colombia
- Semirara Mining and Power Corporation, Philippines
- Parliament of New Zealand
- Chettinad Cement Corporation Ltd - India
- Bangladesh Power Developement Board
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Interocean Group of Companies - India
- South Luzon Thermal Energy Corporation
- Minerals Council of Australia
- Mercuria Energy - Indonesia
- Indonesian Coal Mining Association
- GAC Shipping (India) Pvt Ltd
- Bank of Tokyo Mitsubishi UFJ Ltd
- Merrill Lynch Commodities Europe
- Iligan Light & Power Inc, Philippines
- Carbofer General Trading SA - India
- Siam City Cement PLC, Thailand
- Bahari Cakrawala Sebuku - Indonesia
- Lanco Infratech Ltd - India
- Thai Mozambique Logistica
- Malabar Cements Ltd - India
- Energy Development Corp, Philippines
- Madhucon Powers Ltd - India
- India Bulls Power Limited - India
- Attock Cement Pakistan Limited
- Wilmar Investment Holdings
- Globalindo Alam Lestari - Indonesia
- ICICI Bank Limited - India
- CIMB Investment Bank - Malaysia
- Indo Tambangraya Megah - Indonesia
- Bayan Resources Tbk. - Indonesia
- PNOC Exploration Corporation - Philippines
- Energy Link Ltd, New Zealand
- Bhushan Steel Limited - India
- Heidelberg Cement - Germany
- Riau Bara Harum - Indonesia
- Global Business Power Corporation, Philippines
- Africa Commodities Group - South Africa
- Petrochimia International Co. Ltd.- Taiwan
- Indogreen Group - Indonesia
- Antam Resourcindo - Indonesia
- Marubeni Corporation - India
- Rio Tinto Coal - Australia
- Orica Mining Services - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- European Bulk Services B.V. - Netherlands
- Bulk Trading Sa - Switzerland
- Neyveli Lignite Corporation Ltd, - India
- Eastern Energy - Thailand
- Economic Council, Georgia
- Ministry of Mines - Canada
- Gujarat Electricity Regulatory Commission - India
- Siam City Cement - Thailand
- Global Coal Blending Company Limited - Australia
- Port Waratah Coal Services - Australia
- Aboitiz Power Corporation - Philippines
- Maharashtra Electricity Regulatory Commission - India
- Mintek Dendrill Indonesia
- Kohat Cement Company Ltd. - Pakistan
- AsiaOL BioFuels Corp., Philippines
- Ministry of Finance - Indonesia
- Chamber of Mines of South Africa
- Global Green Power PLC Corporation, Philippines
- Xindia Steels Limited - India
- VISA Power Limited - India
- MS Steel International - UAE
- Gujarat Mineral Development Corp Ltd - India
- Karaikal Port Pvt Ltd - India
- Sical Logistics Limited - India
- White Energy Company Limited
- Manunggal Multi Energi - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Leighton Contractors Pty Ltd - Australia
- Indika Energy - Indonesia
- Posco Energy - South Korea
- Krishnapatnam Port Company Ltd. - India
- Salva Resources Pvt Ltd - India
- Borneo Indobara - Indonesia
- London Commodity Brokers - England
- Sojitz Corporation - Japan
- Toyota Tsusho Corporation, Japan
- Ceylon Electricity Board - Sri Lanka
- Coal and Oil Company - UAE
- Anglo American - United Kingdom
- Intertek Mineral Services - Indonesia
- The State Trading Corporation of India Ltd
- Renaissance Capital - South Africa
- Kumho Petrochemical, South Korea
- The Treasury - Australian Government
- Star Paper Mills Limited - India
- Commonwealth Bank - Australia
- Oldendorff Carriers - Singapore
- Kartika Selabumi Mining - Indonesia
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