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