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