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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, 29 November 11
DRY BULK MARKET BEGINS WEEK ON HIGHER NOTE - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
Contrary to what had been the case during the past few weeks, this one began on a high note for the dry bulk market, with the Capesize sector pullin ...
Monday, 28 November 11
CITING CONTRACTS, MINING FIRMS ARE NOT PAYING ROYALTIES UNDER LAW - THE JAKARTA POST
The Jakarta Post reported that, when the 2009 Law on Minerals and Coal was endorsed, hopes that Indonesia could maximize its revenue from the minera ...
Monday, 28 November 11
NEW ENVIRONMENTAL MARINE REGULATIONS TO IMPACT SHIPPING IN 2012 - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
August of next year will see some major changes for marine navigation. It’s when the North American ECA will come into force, introducing a 1% ...
Sunday, 27 November 11
INDIA'S KPCL TO IMPORT 50 MMT OF COAL FOR 10 YEARS
COALspot.com - Karnataka Power Corporation Limited (KPCL) will buy 5 million metric tonnes of coal annually for 10 years starting from 2015.
In a ...
Saturday, 26 November 11
INDIAN PORTS ARE BECOME COAL STOCKPILES..!!
COALspot.com - The Indian coal stocks and power tariff situation is the hot topic among the world coal producers as well as Indian coal importers.&n ...
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- Global Green Power PLC Corporation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Bukit Makmur.PT - Indonesia
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- Electricity Authority, New Zealand
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- Deloitte Consulting - India
- Pipit Mutiara Jaya. PT, Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Sinarmas Energy and Mining - Indonesia
- Bayan Resources Tbk. - Indonesia
- Ind-Barath Power Infra Limited - India
- Coal and Oil Company - UAE
- Vedanta Resources Plc - India
- Medco Energi Mining Internasional
- Africa Commodities Group - South Africa
- The Treasury - Australian Government
- Kideco Jaya Agung - Indonesia
- Coalindo Energy - Indonesia
- Edison Trading Spa - Italy
- Bulk Trading Sa - Switzerland
- VISA Power Limited - India
- Billiton Holdings Pty Ltd - Australia
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- Toyota Tsusho Corporation, Japan
- TeaM Sual Corporation - Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Bharathi Cement Corporation - India
- Rio Tinto Coal - Australia
- Oldendorff Carriers - Singapore
- Gujarat Mineral Development Corp Ltd - India
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- Indika Energy - Indonesia
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- Trasteel International SA, Italy
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- Makarim & Taira - Indonesia
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- Chamber of Mines of South Africa
- Singapore Mercantile Exchange
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- Maheswari Brothers Coal Limited - India
- Karaikal Port Pvt Ltd - India
- Uttam Galva Steels Limited - India
- Renaissance Capital - South Africa
- India Bulls Power Limited - India
- MS Steel International - UAE
- Dr Ramakrishna Prasad Power Pvt Ltd - India
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- CIMB Investment Bank - Malaysia
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- Central Electricity Authority - India
- GN Power Mariveles Coal Plant, Philippines
- Coastal Gujarat Power Limited - India
- Global Business Power Corporation, Philippines
- Malabar Cements Ltd - India
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- Georgia Ports Authority, United States
- GAC Shipping (India) Pvt Ltd
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- Standard Chartered Bank - UAE
- Jindal Steel & Power Ltd - India
- Larsen & Toubro Limited - India
- Alfred C Toepfer International GmbH - Germany
- Energy Development Corp, Philippines
- Sojitz Corporation - Japan
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Iligan Light & Power Inc, Philippines
- Economic Council, Georgia
- Ambuja Cements Ltd - India
- Minerals Council of Australia
- Videocon Industries ltd - India
- Bukit Baiduri Energy - Indonesia
- McConnell Dowell - Australia
- Ceylon Electricity Board - Sri Lanka
- San Jose City I Power Corp, Philippines
- Ministry of Transport, Egypt
- Mercator Lines Limited - India
- Power Finance Corporation Ltd., India
- SN Aboitiz Power Inc, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Global Coal Blending Company Limited - Australia
- Thiess Contractors Indonesia
- PTC India Limited - India
- International Coal Ventures Pvt Ltd - India
- Ministry of Mines - Canada
- Wood Mackenzie - Singapore
- Anglo American - United Kingdom
- Straits Asia Resources Limited - Singapore
- Salva Resources Pvt Ltd - India
- Meenaskhi Energy Private Limited - India
- Price Waterhouse Coopers - Russia
- Banpu Public Company Limited - Thailand
- GVK Power & Infra Limited - India
- CNBM International Corporation - China
- Ministry of Finance - Indonesia
- Mintek Dendrill Indonesia
- Parry Sugars Refinery, India
- Tata Chemicals Ltd - India
- Therma Luzon, Inc, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Rashtriya Ispat Nigam Limited - India
- Indian Energy Exchange, India
- Metalloyd Limited - United Kingdom
- Sakthi Sugars Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Attock Cement Pakistan Limited
- Savvy Resources Ltd - HongKong
- LBH Netherlands Bv - Netherlands
- Karbindo Abesyapradhi - Indoneisa
- Eastern Energy - Thailand
- Planning Commission, India
- Sree Jayajothi Cements Limited - India
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- Riau Bara Harum - Indonesia
- Kaltim Prima Coal - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Borneo Indobara - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Semirara Mining Corp, Philippines
- GMR Energy Limited - India
- Indian Oil Corporation Limited
- SMC Global Power, Philippines
- Sindya Power Generating Company Private Ltd
- IHS Mccloskey Coal Group - USA
- Bhoruka Overseas - Indonesia
- Petron Corporation, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- PowerSource Philippines DevCo
- Indonesian Coal Mining Association
- Binh Thuan Hamico - Vietnam
- Directorate General of MIneral and Coal - Indonesia
- Marubeni Corporation - India
- ICICI Bank Limited - India
- Independent Power Producers Association of India
- Energy Link Ltd, New Zealand
- Gujarat Sidhee Cement - India
- IEA Clean Coal Centre - UK
- Indogreen Group - Indonesia
- Posco Energy - South Korea
- Barasentosa Lestari - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Simpson Spence & Young - Indonesia
- Merrill Lynch Commodities Europe
- Bhushan Steel Limited - India
- Star Paper Mills Limited - India
- Kobexindo Tractors - Indoneisa
- Xindia Steels Limited - India
- Parliament of New Zealand
- Tamil Nadu electricity Board
- Manunggal Multi Energi - Indonesia
- Dalmia Cement Bharat India
- European Bulk Services B.V. - Netherlands
- New Zealand Coal & Carbon
- Kumho Petrochemical, South Korea
- Sarangani Energy Corporation, Philippines
- Interocean Group of Companies - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- The State Trading Corporation of India Ltd
- Offshore Bulk Terminal Pte Ltd, Singapore
- Altura Mining Limited, Indonesia
- Samtan Co., Ltd - South Korea
- Australian Coal Association
- Goldman Sachs - Singapore
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Orica Australia Pty. Ltd.
- Directorate Of Revenue Intelligence - India
- Bhatia International Limited - India
- Formosa Plastics Group - Taiwan
- Bank of Tokyo Mitsubishi UFJ Ltd
- AsiaOL BioFuels Corp., Philippines
- Orica Mining Services - Indonesia
- Commonwealth Bank - Australia
- Indo Tambangraya Megah - Indonesia
- OPG Power Generation Pvt Ltd - India
- Siam City Cement PLC, Thailand
- Semirara Mining and Power Corporation, Philippines
- Holcim Trading Pte Ltd - Singapore
- The University of Queensland
- London Commodity Brokers - England
- Electricity Generating Authority of Thailand
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- Romanian Commodities Exchange
- SMG Consultants - Indonesia
- Sical Logistics Limited - India
- Thai Mozambique Logistica
- White Energy Company Limited
- Meralco Power Generation, Philippines
- Kepco SPC Power Corporation, Philippines
- Eastern Coal Council - USA
- Gujarat Electricity Regulatory Commission - India
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