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