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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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Tuesday, 15 May 12
POTENTIAL BOOM OF CHINAS COAL IMPORTS COULD PROVIDE FURTHER SUPPORT TO DRY BULK MARKET - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market has been moving sideways during the past week with the industry’s benchmark, the Baltic Dry Index (BDI) losing 0.53% on th ...
Saturday, 12 May 12
THE SHIPPING MARKET IS UNLIKELY TO SEE A REBOUND ANYTIME SOON - VISTAAR SINGAPORE
COALspot.com - The BDI softened this week and it was down by 1.64 pct closing at 1,138 points.
The cape index was up by 2.41 pct closing at 1,61 ...
Friday, 11 May 12
POLITICAL CHANGES COULD LEAD TO TEMPORARY HALT IN SHIPPING INVESTMENTS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The potential of changes of political leadership in many of the world’s leading economies could very well lead to significant shifts in the di ...
Thursday, 10 May 12
DRY BULK ERRATIC ON LACK OF DIRECTION - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market has kept up its erratic behavior as it went down again during yesterday’s session, on a lack of direct guidance in terms o ...
Wednesday, 09 May 12
COAL INDIA SIGNS FSAS WITH 13 POWER UNITS SO FAR - PTI
Press Trust of India has reported that, coal India has so far entered into fuel supply pacts with 13 power units, including Reliance Power's Rosa P ...
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- Agrawal Coal Company - India
- Rio Tinto Coal - Australia
- Savvy Resources Ltd - HongKong
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Vijayanagar Sugar Pvt Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Tamil Nadu electricity Board
- ICICI Bank Limited - India
- Borneo Indobara - Indonesia
- Kepco SPC Power Corporation, Philippines
- Posco Energy - South Korea
- Bukit Makmur.PT - Indonesia
- Salva Resources Pvt Ltd - India
- Singapore Mercantile Exchange
- Grasim Industreis Ltd - India
- Toyota Tsusho Corporation, Japan
- CIMB Investment Bank - Malaysia
- IHS Mccloskey Coal Group - USA
- Mjunction Services Limited - India
- CNBM International Corporation - China
- Chamber of Mines of South Africa
- Romanian Commodities Exchange
- Essar Steel Hazira Ltd - India
- Meralco Power Generation, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Kumho Petrochemical, South Korea
- Mintek Dendrill Indonesia
- Videocon Industries ltd - India
- Binh Thuan Hamico - Vietnam
- Kapuas Tunggal Persada - Indonesia
- Iligan Light & Power Inc, Philippines
- PNOC Exploration Corporation - Philippines
- Rashtriya Ispat Nigam Limited - India
- Karaikal Port Pvt Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- GVK Power & Infra Limited - India
- Pendopo Energi Batubara - Indonesia
- Vizag Seaport Private Limited - India
- Marubeni Corporation - India
- Krishnapatnam Port Company Ltd. - India
- Global Green Power PLC Corporation, Philippines
- Energy Development Corp, Philippines
- Commonwealth Bank - Australia
- Vedanta Resources Plc - India
- Gujarat Mineral Development Corp Ltd - India
- Indogreen Group - Indonesia
- Chettinad Cement Corporation Ltd - India
- Indonesian Coal Mining Association
- Port Waratah Coal Services - Australia
- Globalindo Alam Lestari - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Tata Chemicals Ltd - India
- Kartika Selabumi Mining - Indonesia
- Coastal Gujarat Power Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Attock Cement Pakistan Limited
- Jaiprakash Power Ventures ltd
- Petrochimia International Co. Ltd.- Taiwan
- Australian Coal Association
- Minerals Council of Australia
- Bharathi Cement Corporation - India
- Antam Resourcindo - Indonesia
- Bhushan Steel Limited - India
- Kobexindo Tractors - Indoneisa
- Bukit Baiduri Energy - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Carbofer General Trading SA - India
- Maheswari Brothers Coal Limited - India
- New Zealand Coal & Carbon
- Karbindo Abesyapradhi - Indoneisa
- Jorong Barutama Greston.PT - Indonesia
- Goldman Sachs - Singapore
- Star Paper Mills Limited - India
- Altura Mining Limited, Indonesia
- Australian Commodity Traders Exchange
- Ceylon Electricity Board - Sri Lanka
- Independent Power Producers Association of India
- Simpson Spence & Young - Indonesia
- Siam City Cement - Thailand
- Trasteel International SA, Italy
- Ind-Barath Power Infra Limited - India
- Miang Besar Coal Terminal - Indonesia
- Bayan Resources Tbk. - Indonesia
- Samtan Co., Ltd - South Korea
- Baramulti Group, Indonesia
- White Energy Company Limited
- Alfred C Toepfer International GmbH - Germany
- Straits Asia Resources Limited - Singapore
- Billiton Holdings Pty Ltd - Australia
- Indian Energy Exchange, India
- PTC India Limited - India
- Central Java Power - Indonesia
- Eastern Energy - Thailand
- Kaltim Prima Coal - Indonesia
- Metalloyd Limited - United Kingdom
- Offshore Bulk Terminal Pte Ltd, Singapore
- Thai Mozambique Logistica
- Kideco Jaya Agung - Indonesia
- Global Business Power Corporation, Philippines
- Dalmia Cement Bharat India
- MS Steel International - UAE
- The University of Queensland
- Makarim & Taira - Indonesia
- Petron Corporation, Philippines
- IEA Clean Coal Centre - UK
- LBH Netherlands Bv - Netherlands
- Cement Manufacturers Association - India
- Bhatia International Limited - India
- Georgia Ports Authority, United States
- TNB Fuel Sdn Bhd - Malaysia
- Riau Bara Harum - Indonesia
- Orica Mining Services - Indonesia
- Directorate Of Revenue Intelligence - India
- Mercator Lines Limited - India
- Malabar Cements Ltd - India
- The State Trading Corporation of India Ltd
- International Coal Ventures Pvt Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Lanco Infratech Ltd - India
- Renaissance Capital - South Africa
- GMR Energy Limited - India
- Wood Mackenzie - Singapore
- Wilmar Investment Holdings
- Heidelberg Cement - Germany
- European Bulk Services B.V. - Netherlands
- Ambuja Cements Ltd - India
- Uttam Galva Steels Limited - India
- TeaM Sual Corporation - Philippines
- Deloitte Consulting - India
- Maharashtra Electricity Regulatory Commission - India
- Larsen & Toubro Limited - India
- PowerSource Philippines DevCo
- Formosa Plastics Group - Taiwan
- Leighton Contractors Pty Ltd - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Mercuria Energy - Indonesia
- Siam City Cement PLC, Thailand
- Ministry of Finance - Indonesia
- Merrill Lynch Commodities Europe
- SMC Global Power, Philippines
- Global Coal Blending Company Limited - Australia
- OPG Power Generation Pvt Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Central Electricity Authority - India
- Parry Sugars Refinery, India
- Medco Energi Mining Internasional
- Xindia Steels Limited - India
- Sical Logistics Limited - India
- Gujarat Electricity Regulatory Commission - India
- Edison Trading Spa - Italy
- Orica Australia Pty. Ltd.
- London Commodity Brokers - England
- The Treasury - Australian Government
- Sinarmas Energy and Mining - Indonesia
- Meenaskhi Energy Private Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Indian Oil Corporation Limited
- San Jose City I Power Corp, Philippines
- Standard Chartered Bank - UAE
- Banpu Public Company Limited - Thailand
- Anglo American - United Kingdom
- Bhoruka Overseas - Indonesia
- Interocean Group of Companies - India
- SN Aboitiz Power Inc, Philippines
- Latin American Coal - Colombia
- Africa Commodities Group - South Africa
- Energy Link Ltd, New Zealand
- Aboitiz Power Corporation - Philippines
- SMG Consultants - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Power Finance Corporation Ltd., India
- Ministry of Transport, Egypt
- Coal and Oil Company - UAE
- Planning Commission, India
- Sree Jayajothi Cements Limited - India
- Price Waterhouse Coopers - Russia
- Sojitz Corporation - Japan
- Bangladesh Power Developement Board
- Holcim Trading Pte Ltd - Singapore
- Ministry of Mines - Canada
- Indo Tambangraya Megah - Indonesia
- Bulk Trading Sa - Switzerland
- Timah Investasi Mineral - Indoneisa
- South Luzon Thermal Energy Corporation
- Eastern Coal Council - USA
- Coalindo Energy - Indonesia
- ASAPP Information Group - India
- Parliament of New Zealand
- VISA Power Limited - India
- Manunggal Multi Energi - Indonesia
- GAC Shipping (India) Pvt Ltd
- Economic Council, Georgia
- Madhucon Powers Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Sindya Power Generating Company Private Ltd
- Thiess Contractors Indonesia
- Indika Energy - Indonesia
- Sakthi Sugars Limited - India
- Gujarat Sidhee Cement - India
- Semirara Mining and Power Corporation, Philippines
- Oldendorff Carriers - Singapore
- Electricity Authority, New Zealand
- Barasentosa Lestari - Indonesia
- Semirara Mining Corp, Philippines
- Electricity Generating Authority of Thailand
- India Bulls Power Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Therma Luzon, Inc, Philippines
- Sarangani Energy Corporation, Philippines
- Aditya Birla Group - India
- Intertek Mineral Services - Indonesia
- McConnell Dowell - Australia
- Jindal Steel & Power Ltd - India
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