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