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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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Thursday, 29 December 11
NEW VESSELS DELIVERED ARE FLOODING THE OCEANS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
As expected 2011 has been the year that newbuilding deliveries peaked and kept "flooding" the market, thus supressing freight rates and er ...
Tuesday, 27 December 11
MINERS MAKE CASE FOR RESUMING CONTRACT NEGOTIATIONS - THE JAKARTA POST
The Jakarta Post reported that, problems with the renegotiation of mining contracts in the country are far from over, as agreements on several cruci ...
Tuesday, 27 December 11
COAL SHIPMENT OF TIANJIN PORT REACHED 6.72 MLN TONNES IN NOVEMBER - STEEL HOME / HELLENIC SHIPPING
Tianjin port shipped 6.72 million tonnes of coal in November, decreasing 600,000 tonnes versus 7.32 million tonnes in October, while up 21.09% or 1. ...
Tuesday, 27 December 11
NEW CLAUSE PUBLISHED FOR SLOW STEAMING - BIMCO
Many owners and operators faced with high bunker prices are considering implementing slow steaming regimes to save fuel and to assist with capacity ...
Monday, 26 December 11
NEW EXPORT TAX PLAN GREETED WITH PRAISE AND CRITICISM - THE JAKARTA POST
The Jakarta Post, one of the Indonesia's leading english news paper reported that, both praise and criticism showered the government’s plan t ...
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- Barasentosa Lestari - Indonesia
- Bharathi Cement Corporation - India
- Vizag Seaport Private Limited - India
- Sindya Power Generating Company Private Ltd
- Kapuas Tunggal Persada - Indonesia
- Xindia Steels Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Mercator Lines Limited - India
- TeaM Sual Corporation - Philippines
- Indian Energy Exchange, India
- Indogreen Group - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Wilmar Investment Holdings
- Carbofer General Trading SA - India
- Marubeni Corporation - India
- Kohat Cement Company Ltd. - Pakistan
- Star Paper Mills Limited - India
- Planning Commission, India
- Chettinad Cement Corporation Ltd - India
- Banpu Public Company Limited - Thailand
- San Jose City I Power Corp, Philippines
- Malabar Cements Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Cigading International Bulk Terminal - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Kaltim Prima Coal - Indonesia
- Parliament of New Zealand
- Jaiprakash Power Ventures ltd
- Thiess Contractors Indonesia
- Indika Energy - Indonesia
- Parry Sugars Refinery, India
- Timah Investasi Mineral - Indoneisa
- Metalloyd Limited - United Kingdom
- Energy Development Corp, Philippines
- VISA Power Limited - India
- Aditya Birla Group - India
- India Bulls Power Limited - India
- Gujarat Mineral Development Corp Ltd - India
- SMC Global Power, Philippines
- Commonwealth Bank - Australia
- Indonesian Coal Mining Association
- Alfred C Toepfer International GmbH - Germany
- Neyveli Lignite Corporation Ltd, - India
- Therma Luzon, Inc, Philippines
- PTC India Limited - India
- Bhushan Steel Limited - India
- Indo Tambangraya Megah - Indonesia
- Borneo Indobara - Indonesia
- Dalmia Cement Bharat India
- Interocean Group of Companies - India
- Kideco Jaya Agung - Indonesia
- Power Finance Corporation Ltd., India
- Salva Resources Pvt Ltd - India
- Indian Oil Corporation Limited
- Savvy Resources Ltd - HongKong
- Sakthi Sugars Limited - India
- Videocon Industries ltd - India
- PowerSource Philippines DevCo
- CIMB Investment Bank - Malaysia
- LBH Netherlands Bv - Netherlands
- Mercuria Energy - Indonesia
- Eastern Coal Council - USA
- Siam City Cement - Thailand
- Anglo American - United Kingdom
- Orica Mining Services - Indonesia
- Latin American Coal - Colombia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Economic Council, Georgia
- Standard Chartered Bank - UAE
- Aboitiz Power Corporation - Philippines
- Mjunction Services Limited - India
- Sical Logistics Limited - India
- Global Coal Blending Company Limited - Australia
- Krishnapatnam Port Company Ltd. - India
- IHS Mccloskey Coal Group - USA
- Bank of Tokyo Mitsubishi UFJ Ltd
- Tamil Nadu electricity Board
- Kepco SPC Power Corporation, Philippines
- Merrill Lynch Commodities Europe
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bulk Trading Sa - Switzerland
- Toyota Tsusho Corporation, Japan
- Coal and Oil Company - UAE
- Vedanta Resources Plc - India
- Pendopo Energi Batubara - Indonesia
- Formosa Plastics Group - Taiwan
- Tata Chemicals Ltd - India
- Straits Asia Resources Limited - Singapore
- Agrawal Coal Company - India
- Jindal Steel & Power Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- The University of Queensland
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Maharashtra Electricity Regulatory Commission - India
- Global Green Power PLC Corporation, Philippines
- SN Aboitiz Power Inc, Philippines
- Trasteel International SA, Italy
- Minerals Council of Australia
- Manunggal Multi Energi - Indonesia
- Siam City Cement PLC, Thailand
- Eastern Energy - Thailand
- New Zealand Coal & Carbon
- Edison Trading Spa - Italy
- IEA Clean Coal Centre - UK
- GAC Shipping (India) Pvt Ltd
- PetroVietnam Power Coal Import and Supply Company
- Heidelberg Cement - Germany
- Global Business Power Corporation, Philippines
- Sojitz Corporation - Japan
- Central Java Power - Indonesia
- CNBM International Corporation - China
- Oldendorff Carriers - Singapore
- Rio Tinto Coal - Australia
- Madhucon Powers Ltd - India
- Independent Power Producers Association of India
- Thai Mozambique Logistica
- Romanian Commodities Exchange
- Bukit Asam (Persero) Tbk - Indonesia
- Attock Cement Pakistan Limited
- Essar Steel Hazira Ltd - India
- Iligan Light & Power Inc, Philippines
- Meralco Power Generation, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Uttam Galva Steels Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Georgia Ports Authority, United States
- ICICI Bank Limited - India
- Wood Mackenzie - Singapore
- Ministry of Finance - Indonesia
- Bangladesh Power Developement Board
- Bukit Baiduri Energy - Indonesia
- Port Waratah Coal Services - Australia
- Binh Thuan Hamico - Vietnam
- Petron Corporation, Philippines
- Billiton Holdings Pty Ltd - Australia
- Maheswari Brothers Coal Limited - India
- The Treasury - Australian Government
- Baramulti Group, Indonesia
- Samtan Co., Ltd - South Korea
- Ind-Barath Power Infra Limited - India
- Antam Resourcindo - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Central Electricity Authority - India
- ASAPP Information Group - India
- Sarangani Energy Corporation, Philippines
- Bayan Resources Tbk. - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Pipit Mutiara Jaya. PT, Indonesia
- Australian Commodity Traders Exchange
- Kartika Selabumi Mining - Indonesia
- Ambuja Cements Ltd - India
- GMR Energy Limited - India
- Karaikal Port Pvt Ltd - India
- White Energy Company Limited
- Semirara Mining Corp, Philippines
- Semirara Mining and Power Corporation, Philippines
- PNOC Exploration Corporation - Philippines
- Simpson Spence & Young - Indonesia
- SMG Consultants - Indonesia
- Chamber of Mines of South Africa
- Ministry of Mines - Canada
- AsiaOL BioFuels Corp., Philippines
- Holcim Trading Pte Ltd - Singapore
- Intertek Mineral Services - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bhatia International Limited - India
- Africa Commodities Group - South Africa
- Ministry of Transport, Egypt
- Orica Australia Pty. Ltd.
- Posco Energy - South Korea
- Altura Mining Limited, Indonesia
- Electricity Generating Authority of Thailand
- Makarim & Taira - Indonesia
- Electricity Authority, New Zealand
- Globalindo Alam Lestari - Indonesia
- Directorate Of Revenue Intelligence - India
- Price Waterhouse Coopers - Russia
- Coastal Gujarat Power Limited - India
- European Bulk Services B.V. - Netherlands
- Sinarmas Energy and Mining - Indonesia
- Renaissance Capital - South Africa
- Cement Manufacturers Association - India
- GVK Power & Infra Limited - India
- Sree Jayajothi Cements Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Larsen & Toubro Limited - India
- Australian Coal Association
- Bahari Cakrawala Sebuku - Indonesia
- Kobexindo Tractors - Indoneisa
- Kumho Petrochemical, South Korea
- Directorate General of MIneral and Coal - Indonesia
- The State Trading Corporation of India Ltd
- London Commodity Brokers - England
- Singapore Mercantile Exchange
- Kalimantan Lumbung Energi - Indonesia
- OPG Power Generation Pvt Ltd - India
- Bukit Makmur.PT - Indonesia
- MS Steel International - UAE
- Energy Link Ltd, New Zealand
- McConnell Dowell - Australia
- Meenaskhi Energy Private Limited - India
- Bhoruka Overseas - Indonesia
- Coalindo Energy - Indonesia
- Deloitte Consulting - India
- South Luzon Thermal Energy Corporation
- Miang Besar Coal Terminal - Indonesia
- Goldman Sachs - Singapore
- Gujarat Sidhee Cement - India
- Leighton Contractors Pty Ltd - Australia
- International Coal Ventures Pvt Ltd - India
- Lanco Infratech Ltd - India
- Medco Energi Mining Internasional
- GN Power Mariveles Coal Plant, Philippines
- Mintek Dendrill Indonesia
- Grasim Industreis Ltd - India
- Riau Bara Harum - Indonesia
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