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