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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, 13 December 11
CAPESIZES AND PANAMAXES LEAD DRY BULK MARKET HIGHER - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market inched closer to the 2,000 mark on Monday, with Panamaxes rebounding firmly and leading the gains. As a result, the industry&rsq ...
Monday, 12 December 11
DRY BULK MARKET LOOKING FOR BALANCE AS WE ENTER 2012 - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
During the past few months, freight rates for dry bulk carriers, especially Capesizes have increased significantly, providing ship owners with a muc ...
Sunday, 11 December 11
THE PANAMAX INDEX ENDED ON POSITIVE DIRECTION - VISTAAR
COALspot.com - The BDI and Cape index continued the upward trend this week also with BDI up by 3.00 pct closing at 1,922 points and Cape index up by ...
Saturday, 10 December 11
MAHAKAM RIVER RESUMES COAL TRANSPORTATION
COALspot.com - East Kalimantan local government has resumed limited coal barging through Mahakam River after two weeks of suspension following the c ...
Friday, 09 December 11
DRY BULK MARKET REBOUNDS ON HEALTHIER DEMAND OUTLOOK - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market edged forward yesterday, at the highest rate of the past couple of weeks, as a result of stonger iron ore demand, backed by lowe ...
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- Therma Luzon, Inc, Philippines
- Rashtriya Ispat Nigam Limited - India
- Ind-Barath Power Infra Limited - India
- Meralco Power Generation, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- CNBM International Corporation - China
- GVK Power & Infra Limited - India
- Orica Australia Pty. Ltd.
- Dalmia Cement Bharat India
- San Jose City I Power Corp, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Tata Chemicals Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Thiess Contractors Indonesia
- Sarangani Energy Corporation, Philippines
- Merrill Lynch Commodities Europe
- Karbindo Abesyapradhi - Indoneisa
- Parliament of New Zealand
- Riau Bara Harum - Indonesia
- Samtan Co., Ltd - South Korea
- Georgia Ports Authority, United States
- International Coal Ventures Pvt Ltd - India
- Malabar Cements Ltd - India
- Coastal Gujarat Power Limited - India
- Interocean Group of Companies - India
- ASAPP Information Group - India
- Mercator Lines Limited - India
- Carbofer General Trading SA - India
- Bukit Makmur.PT - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- TeaM Sual Corporation - Philippines
- Banpu Public Company Limited - Thailand
- Madhucon Powers Ltd - India
- Indogreen Group - Indonesia
- Bhushan Steel Limited - India
- SMG Consultants - Indonesia
- Price Waterhouse Coopers - Russia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Formosa Plastics Group - Taiwan
- Aboitiz Power Corporation - Philippines
- Commonwealth Bank - Australia
- Deloitte Consulting - India
- Kepco SPC Power Corporation, Philippines
- Metalloyd Limited - United Kingdom
- Pipit Mutiara Jaya. PT, Indonesia
- Romanian Commodities Exchange
- Kapuas Tunggal Persada - Indonesia
- Toyota Tsusho Corporation, Japan
- Marubeni Corporation - India
- London Commodity Brokers - England
- CIMB Investment Bank - Malaysia
- Vizag Seaport Private Limited - India
- Antam Resourcindo - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- IEA Clean Coal Centre - UK
- PTC India Limited - India
- Central Electricity Authority - India
- Iligan Light & Power Inc, Philippines
- Borneo Indobara - Indonesia
- European Bulk Services B.V. - Netherlands
- White Energy Company Limited
- Petrochimia International Co. Ltd.- Taiwan
- Edison Trading Spa - Italy
- ICICI Bank Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Krishnapatnam Port Company Ltd. - India
- Renaissance Capital - South Africa
- LBH Netherlands Bv - Netherlands
- Bank of Tokyo Mitsubishi UFJ Ltd
- McConnell Dowell - Australia
- Ambuja Cements Ltd - India
- Bhoruka Overseas - Indonesia
- Africa Commodities Group - South Africa
- Jaiprakash Power Ventures ltd
- Australian Commodity Traders Exchange
- Holcim Trading Pte Ltd - Singapore
- Thai Mozambique Logistica
- Power Finance Corporation Ltd., India
- Indika Energy - Indonesia
- Chettinad Cement Corporation Ltd - India
- Baramulti Group, Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Bharathi Cement Corporation - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Latin American Coal - Colombia
- Petron Corporation, Philippines
- Manunggal Multi Energi - Indonesia
- Global Business Power Corporation, Philippines
- Electricity Generating Authority of Thailand
- GAC Shipping (India) Pvt Ltd
- Directorate General of MIneral and Coal - Indonesia
- Directorate Of Revenue Intelligence - India
- Global Green Power PLC Corporation, Philippines
- Bangladesh Power Developement Board
- Trasteel International SA, Italy
- Meenaskhi Energy Private Limited - India
- Billiton Holdings Pty Ltd - Australia
- Straits Asia Resources Limited - Singapore
- Semirara Mining Corp, Philippines
- Salva Resources Pvt Ltd - India
- Indian Energy Exchange, India
- Maheswari Brothers Coal Limited - India
- Bhatia International Limited - India
- South Luzon Thermal Energy Corporation
- Xindia Steels Limited - India
- Rio Tinto Coal - Australia
- SMC Global Power, Philippines
- Kumho Petrochemical, South Korea
- Bayan Resources Tbk. - Indonesia
- Siam City Cement PLC, Thailand
- Electricity Authority, New Zealand
- Kobexindo Tractors - Indoneisa
- Chamber of Mines of South Africa
- Binh Thuan Hamico - Vietnam
- Attock Cement Pakistan Limited
- Karaikal Port Pvt Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Gujarat Mineral Development Corp Ltd - India
- Simpson Spence & Young - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Standard Chartered Bank - UAE
- Medco Energi Mining Internasional
- Mjunction Services Limited - India
- Singapore Mercantile Exchange
- PowerSource Philippines DevCo
- Bulk Trading Sa - Switzerland
- Savvy Resources Ltd - HongKong
- Barasentosa Lestari - Indonesia
- Bukit Baiduri Energy - Indonesia
- Ministry of Finance - Indonesia
- Globalindo Alam Lestari - Indonesia
- Anglo American - United Kingdom
- Leighton Contractors Pty Ltd - Australia
- India Bulls Power Limited - India
- Larsen & Toubro Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Planning Commission, India
- Global Coal Blending Company Limited - Australia
- Independent Power Producers Association of India
- PNOC Exploration Corporation - Philippines
- Timah Investasi Mineral - Indoneisa
- Gujarat Sidhee Cement - India
- OPG Power Generation Pvt Ltd - India
- Parry Sugars Refinery, India
- Agrawal Coal Company - India
- SN Aboitiz Power Inc, Philippines
- Cigading International Bulk Terminal - Indonesia
- Goldman Sachs - Singapore
- GMR Energy Limited - India
- The Treasury - Australian Government
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Miang Besar Coal Terminal - Indonesia
- Intertek Mineral Services - Indonesia
- Eastern Energy - Thailand
- Vedanta Resources Plc - India
- Cement Manufacturers Association - India
- Coal and Oil Company - UAE
- AsiaOL BioFuels Corp., Philippines
- Makarim & Taira - Indonesia
- Jindal Steel & Power Ltd - India
- The University of Queensland
- Grasim Industreis Ltd - India
- Heidelberg Cement - Germany
- Vijayanagar Sugar Pvt Ltd - India
- Energy Development Corp, Philippines
- Ceylon Electricity Board - Sri Lanka
- Eastern Coal Council - USA
- Gujarat Electricity Regulatory Commission - India
- Kideco Jaya Agung - Indonesia
- Indo Tambangraya Megah - Indonesia
- Oldendorff Carriers - Singapore
- Kartika Selabumi Mining - Indonesia
- Wood Mackenzie - Singapore
- Semirara Mining and Power Corporation, Philippines
- Ministry of Mines - Canada
- Indian Oil Corporation Limited
- Bukit Asam (Persero) Tbk - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Videocon Industries ltd - India
- IHS Mccloskey Coal Group - USA
- Sindya Power Generating Company Private Ltd
- Port Waratah Coal Services - Australia
- Star Paper Mills Limited - India
- Sakthi Sugars Limited - India
- Kaltim Prima Coal - Indonesia
- Pendopo Energi Batubara - Indonesia
- New Zealand Coal & Carbon
- Essar Steel Hazira Ltd - India
- Posco Energy - South Korea
- Mercuria Energy - Indonesia
- Altura Mining Limited, Indonesia
- Uttam Galva Steels Limited - India
- The State Trading Corporation of India Ltd
- Neyveli Lignite Corporation Ltd, - India
- Orica Mining Services - Indonesia
- Indonesian Coal Mining Association
- Sical Logistics Limited - India
- Ministry of Transport, Egypt
- Australian Coal Association
- Economic Council, Georgia
- MS Steel International - UAE
- Sinarmas Energy and Mining - Indonesia
- Sree Jayajothi Cements Limited - India
- VISA Power Limited - India
- Energy Link Ltd, New Zealand
- Lanco Infratech Ltd - India
- Central Java Power - Indonesia
- Tamil Nadu electricity Board
- Wilmar Investment Holdings
- Siam City Cement - Thailand
- Coalindo Energy - Indonesia
- Aditya Birla Group - India
- Mintek Dendrill Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Sojitz Corporation - Japan
- Minerals Council of Australia
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