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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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Friday, 28 September 12
DRY BULK SECOND HAND VESSELS ON HIGH DEMAND - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
Despite the demise of the dry bulk market and the collapse of freight rates since the beginning of 2012, on the back of record breaking newbuilding ...
Thursday, 27 September 12
MINING RE-COMMENCES AT ORPHEUS' B2 EAST KALIMANTAN COAL PROJECT
- B2 project overburden removal completed and coal exposed
- Coal getting has commenced with target production of 30,000tpm
- Orpheus to re ...
Thursday, 27 September 12
HANDY: THE PACIFIC MARKET IS GETTING WEAKER WITH UPCOMING GOLDEN WEEK HOLIDAYS - FEARNLEYS AS
Handy
Yet another week with rates softening in all trades. Especially owners with ships open Continent struggle to find employment paying decent mo ...
Thursday, 27 September 12
DRY BULK MARKET LOSES STEAM - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The rise of the BDI (Baltic Dry Index), the dry bulk industry’s benchmark during the course of the previous week, proved to be short-lived, as ...
Wednesday, 26 September 12
NEWBUILDING ORDERING ACTIVITY REMAINS SUBDUED ON GLOBAL MARKET UNCERTAINTY - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
Newbuilding ordering activity has been on the down side during the past few weeks, a trend also noticeable during the course of the past few days, a ...
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- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Aditya Birla Group - India
- Kepco SPC Power Corporation, Philippines
- PTC India Limited - India
- Bhushan Steel Limited - India
- Central Electricity Authority - India
- Anglo American - United Kingdom
- The University of Queensland
- Siam City Cement PLC, Thailand
- Sojitz Corporation - Japan
- GAC Shipping (India) Pvt Ltd
- Cement Manufacturers Association - India
- Maheswari Brothers Coal Limited - India
- Bulk Trading Sa - Switzerland
- Goldman Sachs - Singapore
- Global Coal Blending Company Limited - Australia
- Thiess Contractors Indonesia
- Altura Mining Limited, Indonesia
- Meenaskhi Energy Private Limited - India
- Kaltim Prima Coal - Indonesia
- PowerSource Philippines DevCo
- Bangladesh Power Developement Board
- Globalindo Alam Lestari - Indonesia
- Tata Chemicals Ltd - India
- GVK Power & Infra Limited - India
- Timah Investasi Mineral - Indoneisa
- Directorate General of MIneral and Coal - Indonesia
- MS Steel International - UAE
- Bhatia International Limited - India
- Riau Bara Harum - Indonesia
- Banpu Public Company Limited - Thailand
- Bukit Asam (Persero) Tbk - Indonesia
- Wilmar Investment Holdings
- Indo Tambangraya Megah - Indonesia
- Larsen & Toubro Limited - India
- International Coal Ventures Pvt Ltd - India
- Videocon Industries ltd - India
- Indika Energy - Indonesia
- Latin American Coal - Colombia
- Kohat Cement Company Ltd. - Pakistan
- Borneo Indobara - Indonesia
- Port Waratah Coal Services - Australia
- Ceylon Electricity Board - Sri Lanka
- Medco Energi Mining Internasional
- Formosa Plastics Group - Taiwan
- McConnell Dowell - Australia
- Electricity Generating Authority of Thailand
- Iligan Light & Power Inc, Philippines
- Orica Australia Pty. Ltd.
- Asmin Koalindo Tuhup - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Thai Mozambique Logistica
- Electricity Authority, New Zealand
- Pendopo Energi Batubara - Indonesia
- Cigading International Bulk Terminal - Indonesia
- SMG Consultants - Indonesia
- Karaikal Port Pvt Ltd - India
- Semirara Mining and Power Corporation, Philippines
- ASAPP Information Group - India
- Xindia Steels Limited - India
- Gujarat Electricity Regulatory Commission - India
- Bayan Resources Tbk. - Indonesia
- Star Paper Mills Limited - India
- Petron Corporation, Philippines
- Semirara Mining Corp, Philippines
- Singapore Mercantile Exchange
- Holcim Trading Pte Ltd - Singapore
- Sree Jayajothi Cements Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Commonwealth Bank - Australia
- Petrochimia International Co. Ltd.- Taiwan
- Trasteel International SA, Italy
- Lanco Infratech Ltd - India
- Bhoruka Overseas - Indonesia
- Leighton Contractors Pty Ltd - Australia
- GMR Energy Limited - India
- Bukit Baiduri Energy - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kideco Jaya Agung - Indonesia
- Indian Oil Corporation Limited
- Billiton Holdings Pty Ltd - Australia
- TeaM Sual Corporation - Philippines
- Metalloyd Limited - United Kingdom
- Gujarat Mineral Development Corp Ltd - India
- Mjunction Services Limited - India
- Vizag Seaport Private Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- GN Power Mariveles Coal Plant, Philippines
- SN Aboitiz Power Inc, Philippines
- Carbofer General Trading SA - India
- Wood Mackenzie - Singapore
- Jindal Steel & Power Ltd - India
- Romanian Commodities Exchange
- VISA Power Limited - India
- Therma Luzon, Inc, Philippines
- Ministry of Finance - Indonesia
- Eastern Energy - Thailand
- Toyota Tsusho Corporation, Japan
- Makarim & Taira - Indonesia
- PNOC Exploration Corporation - Philippines
- Global Business Power Corporation, Philippines
- Parry Sugars Refinery, India
- The State Trading Corporation of India Ltd
- India Bulls Power Limited - India
- Chettinad Cement Corporation Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Samtan Co., Ltd - South Korea
- Edison Trading Spa - Italy
- Ministry of Transport, Egypt
- Energy Link Ltd, New Zealand
- Sinarmas Energy and Mining - Indonesia
- Bharathi Cement Corporation - India
- Economic Council, Georgia
- The Treasury - Australian Government
- Indonesian Coal Mining Association
- Standard Chartered Bank - UAE
- Mercator Lines Limited - India
- San Jose City I Power Corp, Philippines
- Ambuja Cements Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Kapuas Tunggal Persada - Indonesia
- Georgia Ports Authority, United States
- Coal and Oil Company - UAE
- Kumho Petrochemical, South Korea
- Gujarat Sidhee Cement - India
- IEA Clean Coal Centre - UK
- Ministry of Mines - Canada
- London Commodity Brokers - England
- Essar Steel Hazira Ltd - India
- Australian Commodity Traders Exchange
- Renaissance Capital - South Africa
- Chamber of Mines of South Africa
- Dalmia Cement Bharat India
- New Zealand Coal & Carbon
- Manunggal Multi Energi - Indonesia
- Merrill Lynch Commodities Europe
- SMC Global Power, Philippines
- Kalimantan Lumbung Energi - Indonesia
- CNBM International Corporation - China
- Bukit Makmur.PT - Indonesia
- Global Green Power PLC Corporation, Philippines
- Attock Cement Pakistan Limited
- Miang Besar Coal Terminal - Indonesia
- Uttam Galva Steels Limited - India
- Meralco Power Generation, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Oldendorff Carriers - Singapore
- Interocean Group of Companies - India
- Salva Resources Pvt Ltd - India
- Heidelberg Cement - Germany
- Kobexindo Tractors - Indoneisa
- Jaiprakash Power Ventures ltd
- Deloitte Consulting - India
- Karbindo Abesyapradhi - Indoneisa
- Sindya Power Generating Company Private Ltd
- Krishnapatnam Port Company Ltd. - India
- Grasim Industreis Ltd - India
- Binh Thuan Hamico - Vietnam
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Price Waterhouse Coopers - Russia
- Simpson Spence & Young - Indonesia
- Coastal Gujarat Power Limited - India
- Siam City Cement - Thailand
- Sakthi Sugars Limited - India
- Barasentosa Lestari - Indonesia
- Marubeni Corporation - India
- Parliament of New Zealand
- Agrawal Coal Company - India
- Kartika Selabumi Mining - Indonesia
- Posco Energy - South Korea
- Africa Commodities Group - South Africa
- Jorong Barutama Greston.PT - Indonesia
- Indogreen Group - Indonesia
- Sical Logistics Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Malabar Cements Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Mercuria Energy - Indonesia
- Coalindo Energy - Indonesia
- Indian Energy Exchange, India
- Vedanta Resources Plc - India
- Antam Resourcindo - Indonesia
- Tamil Nadu electricity Board
- Straits Asia Resources Limited - Singapore
- Intertek Mineral Services - Indonesia
- Eastern Coal Council - USA
- OPG Power Generation Pvt Ltd - India
- South Luzon Thermal Energy Corporation
- ICICI Bank Limited - India
- Mintek Dendrill Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Ind-Barath Power Infra Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Australian Coal Association
- Savvy Resources Ltd - HongKong
- Minerals Council of Australia
- White Energy Company Limited
- Rio Tinto Coal - Australia
- Central Java Power - Indonesia
- Madhucon Powers Ltd - India
- Independent Power Producers Association of India
- Baramulti Group, Indonesia
- Orica Mining Services - Indonesia
- Power Finance Corporation Ltd., India
- CIMB Investment Bank - Malaysia
- Aboitiz Power Corporation - Philippines
- Sarangani Energy Corporation, Philippines
- European Bulk Services B.V. - Netherlands
- AsiaOL BioFuels Corp., Philippines
- IHS Mccloskey Coal Group - USA
- Directorate Of Revenue Intelligence - India
- LBH Netherlands Bv - Netherlands
- Planning Commission, India
- Maharashtra Electricity Regulatory Commission - India
- Bahari Cakrawala Sebuku - Indonesia
- Energy Development Corp, Philippines
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