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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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Saturday, 01 September 12
PANAMAX FREIGHT RATES UNDER PRESSURE FROM LOW DEMAND - VISTAAR
COALspot.com - This week the freight market was weak with mixed results.
The BDI was down by 1.95 pct closing at 703 points, however there was so ...
Friday, 31 August 12
ADVERSE SHIPPING MARKET CONDITIONS SHORTENS LIFE SPAN OF VESSELS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The adverse conditions which have been put in place in the world's freight markets, means that ship owners are forced to scrap vessels of a much yo ...
Thursday, 30 August 12
INDO-INDIA, LARGE ECO SUPRA NOW FIXED AT USD 7K FOR DELIVERY SINGAPORE - FEARNLEYS AS
Handy
The Supra market continued its negative trend with little fresh business entering the market. Continent positions fixed around USD 4k for tri ...
Thursday, 30 August 12
DRY BULK MARKET STILL LOOKING OUT FOR BETTER DAYS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
With things in China moving slowly this week, as a result of holidays, it’s no surprise that the latest positive trend in the dry bulk market ...
Wednesday, 29 August 12
COLOMBIA'S MINING BOOM: PART TWO - JOSEPH KIRSCHKE
One of the most prominent casualties of Canada's entry into the Colombian mining sector has been a priest named Jose Reynal-Restrepo. Last Septembe ...
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- Power Finance Corporation Ltd., India
- Indian Energy Exchange, India
- Semirara Mining and Power Corporation, Philippines
- AsiaOL BioFuels Corp., Philippines
- Siam City Cement PLC, Thailand
- Makarim & Taira - Indonesia
- Agrawal Coal Company - India
- Metalloyd Limited - United Kingdom
- Chettinad Cement Corporation Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Riau Bara Harum - Indonesia
- Indian Oil Corporation Limited
- Dalmia Cement Bharat India
- Kepco SPC Power Corporation, Philippines
- Kobexindo Tractors - Indoneisa
- Sarangani Energy Corporation, Philippines
- Altura Mining Limited, Indonesia
- Semirara Mining Corp, Philippines
- OPG Power Generation Pvt Ltd - India
- SMC Global Power, Philippines
- Banpu Public Company Limited - Thailand
- PTC India Limited - India
- Standard Chartered Bank - UAE
- Petrochimia International Co. Ltd.- Taiwan
- Bhatia International Limited - India
- ASAPP Information Group - India
- Asmin Koalindo Tuhup - Indonesia
- Sojitz Corporation - Japan
- Simpson Spence & Young - Indonesia
- Coal and Oil Company - UAE
- Australian Coal Association
- The State Trading Corporation of India Ltd
- Bhoruka Overseas - Indonesia
- Aboitiz Power Corporation - Philippines
- Star Paper Mills Limited - India
- Holcim Trading Pte Ltd - Singapore
- Orica Mining Services - Indonesia
- Kumho Petrochemical, South Korea
- VISA Power Limited - India
- Coastal Gujarat Power Limited - India
- Goldman Sachs - Singapore
- Australian Commodity Traders Exchange
- Medco Energi Mining Internasional
- GVK Power & Infra Limited - India
- Globalindo Alam Lestari - Indonesia
- Commonwealth Bank - Australia
- PetroVietnam Power Coal Import and Supply Company
- Bangladesh Power Developement Board
- Indo Tambangraya Megah - Indonesia
- Energy Development Corp, Philippines
- Baramulti Group, Indonesia
- New Zealand Coal & Carbon
- Planning Commission, India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Offshore Bulk Terminal Pte Ltd, Singapore
- European Bulk Services B.V. - Netherlands
- Merrill Lynch Commodities Europe
- Siam City Cement - Thailand
- Meenaskhi Energy Private Limited - India
- Economic Council, Georgia
- Samtan Co., Ltd - South Korea
- Bayan Resources Tbk. - Indonesia
- The Treasury - Australian Government
- IHS Mccloskey Coal Group - USA
- Mercator Lines Limited - India
- Bhushan Steel Limited - India
- TeaM Sual Corporation - Philippines
- Aditya Birla Group - India
- Parliament of New Zealand
- Borneo Indobara - Indonesia
- Formosa Plastics Group - Taiwan
- Savvy Resources Ltd - HongKong
- Trasteel International SA, Italy
- Latin American Coal - Colombia
- Barasentosa Lestari - Indonesia
- Cement Manufacturers Association - India
- Interocean Group of Companies - India
- Gujarat Sidhee Cement - India
- Heidelberg Cement - Germany
- Neyveli Lignite Corporation Ltd, - India
- PNOC Exploration Corporation - Philippines
- Malabar Cements Ltd - India
- International Coal Ventures Pvt Ltd - India
- Sical Logistics Limited - India
- Ministry of Mines - Canada
- Carbofer General Trading SA - India
- Ministry of Transport, Egypt
- Manunggal Multi Energi - Indonesia
- Orica Australia Pty. Ltd.
- Petron Corporation, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Vizag Seaport Private Limited - India
- Jindal Steel & Power Ltd - India
- Uttam Galva Steels Limited - India
- Ceylon Electricity Board - Sri Lanka
- Salva Resources Pvt Ltd - India
- Straits Asia Resources Limited - Singapore
- Anglo American - United Kingdom
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- South Luzon Thermal Energy Corporation
- Price Waterhouse Coopers - Russia
- Ambuja Cements Ltd - India
- IEA Clean Coal Centre - UK
- White Energy Company Limited
- Wood Mackenzie - Singapore
- Indonesian Coal Mining Association
- Gujarat Mineral Development Corp Ltd - India
- PowerSource Philippines DevCo
- Madhucon Powers Ltd - India
- Timah Investasi Mineral - Indoneisa
- Rashtriya Ispat Nigam Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- London Commodity Brokers - England
- Tata Chemicals Ltd - India
- SMG Consultants - Indonesia
- GAC Shipping (India) Pvt Ltd
- Bukit Baiduri Energy - Indonesia
- Ministry of Finance - Indonesia
- Renaissance Capital - South Africa
- Meralco Power Generation, Philippines
- Georgia Ports Authority, United States
- Krishnapatnam Port Company Ltd. - India
- SN Aboitiz Power Inc, Philippines
- Tamil Nadu electricity Board
- San Jose City I Power Corp, Philippines
- Central Java Power - Indonesia
- Pendopo Energi Batubara - Indonesia
- LBH Netherlands Bv - Netherlands
- Africa Commodities Group - South Africa
- Cigading International Bulk Terminal - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Xindia Steels Limited - India
- Central Electricity Authority - India
- Lanco Infratech Ltd - India
- Vedanta Resources Plc - India
- Deloitte Consulting - India
- Intertek Mineral Services - Indonesia
- MS Steel International - UAE
- Global Coal Blending Company Limited - Australia
- GMR Energy Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Alfred C Toepfer International GmbH - Germany
- Global Business Power Corporation, Philippines
- Coalindo Energy - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Edison Trading Spa - Italy
- Mintek Dendrill Indonesia
- Therma Luzon, Inc, Philippines
- Thai Mozambique Logistica
- Larsen & Toubro Limited - India
- Toyota Tsusho Corporation, Japan
- Minerals Council of Australia
- Oldendorff Carriers - Singapore
- Port Waratah Coal Services - Australia
- Parry Sugars Refinery, India
- Attock Cement Pakistan Limited
- Chamber of Mines of South Africa
- India Bulls Power Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Bahari Cakrawala Sebuku - Indonesia
- Indika Energy - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Indogreen Group - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Energy Link Ltd, New Zealand
- Rio Tinto Coal - Australia
- Thiess Contractors Indonesia
- Jaiprakash Power Ventures ltd
- Kaltim Prima Coal - Indonesia
- Essar Steel Hazira Ltd - India
- Bulk Trading Sa - Switzerland
- Global Green Power PLC Corporation, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Videocon Industries ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Sinarmas Energy and Mining - Indonesia
- Mercuria Energy - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Bharathi Cement Corporation - India
- Independent Power Producers Association of India
- CIMB Investment Bank - Malaysia
- The University of Queensland
- Kideco Jaya Agung - Indonesia
- Electricity Generating Authority of Thailand
- Sree Jayajothi Cements Limited - India
- Sindya Power Generating Company Private Ltd
- Pipit Mutiara Jaya. PT, Indonesia
- Leighton Contractors Pty Ltd - Australia
- Kartika Selabumi Mining - Indonesia
- Directorate Of Revenue Intelligence - India
- Binh Thuan Hamico - Vietnam
- Directorate General of MIneral and Coal - Indonesia
- Gujarat Electricity Regulatory Commission - India
- GN Power Mariveles Coal Plant, Philippines
- Sakthi Sugars Limited - India
- Ind-Barath Power Infra Limited - India
- Marubeni Corporation - India
- Eastern Energy - Thailand
- Bukit Makmur.PT - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bukit Asam (Persero) Tbk - Indonesia
- Antam Resourcindo - Indonesia
- Singapore Mercantile Exchange
- McConnell Dowell - Australia
- Maheswari Brothers Coal Limited - India
- Iligan Light & Power Inc, Philippines
- Karaikal Port Pvt Ltd - India
- Eastern Coal Council - USA
- Mjunction Services Limited - India
- Romanian Commodities Exchange
- Electricity Authority, New Zealand
- Posco Energy - South Korea
- Grasim Industreis Ltd - India
- CNBM International Corporation - China
- Wilmar Investment Holdings
- ICICI Bank Limited - India
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