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