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