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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, 27 February 14
SHIPPING LOANS WORTH $5 BILLION HAVE CHANGED HANDS OVER THE PAST YEAR, AS FUNDS INVEST IN SHIPPING - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
Funds investing in shipping has been the "talk of the town" over the past couple of years, as institutional investors, private equity and ...
Thursday, 27 February 14
NEWCASTLE COAL EXPORTS SLIP 26.68 PERCENT WEEK ON WEEK
COALspot.com: In the week ended 24 February 2014, power plant and semi-soft coking coal shipments from the port of Newcastle in Queensland, total 2. ...
Wednesday, 26 February 14
SMALLER SIZE SEGMENTS HOLDING ON TO THEIR LEVELS; CAPES CORRECTING UPWARDS - INTERMODAL
Chartering (Wet: Stable- / Dry: Stable+)
The Dry Bulk market continued to improve this past week, on the back of rates for the smaller size s ...
Tuesday, 25 February 14
GBCE, A COAL UPGRADING TECHNOLOGY DEVELOPER, APPOINTS RICHARD BULMAN AS PROJECT DIRECTOR
Press Release: GB Clean Energy Ltd. (GBCE) announced today the appointment of Richard Bulman as Project Director. In this capacity Mr. Bulman ...
Tuesday, 25 February 14
ULTRAMAXES ARE THE 'WEAPON OF CHOICE' FOR DRY BULK SHIP OWNERS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
It's been a busy start in 2014, as the first month of the year was a rather active in terms of second hand vessel purchases and newbuilding orderin ...
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- Metalloyd Limited - United Kingdom
- Therma Luzon, Inc, Philippines
- Australian Commodity Traders Exchange
- Port Waratah Coal Services - Australia
- McConnell Dowell - Australia
- GMR Energy Limited - India
- Jindal Steel & Power Ltd - India
- Cement Manufacturers Association - India
- Global Business Power Corporation, Philippines
- Singapore Mercantile Exchange
- Tamil Nadu electricity Board
- Globalindo Alam Lestari - Indonesia
- Ministry of Transport, Egypt
- Indian Energy Exchange, India
- Sinarmas Energy and Mining - Indonesia
- Posco Energy - South Korea
- ASAPP Information Group - India
- Directorate Of Revenue Intelligence - India
- Rashtriya Ispat Nigam Limited - India
- Iligan Light & Power Inc, Philippines
- Leighton Contractors Pty Ltd - Australia
- Kapuas Tunggal Persada - Indonesia
- Bhatia International Limited - India
- New Zealand Coal & Carbon
- Bukit Makmur.PT - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Renaissance Capital - South Africa
- Intertek Mineral Services - Indonesia
- Coalindo Energy - Indonesia
- Sree Jayajothi Cements Limited - India
- Ambuja Cements Ltd - India
- SMC Global Power, Philippines
- GVK Power & Infra Limited - India
- The Treasury - Australian Government
- Holcim Trading Pte Ltd - Singapore
- Gujarat Electricity Regulatory Commission - India
- Karaikal Port Pvt Ltd - India
- Coal and Oil Company - UAE
- Wood Mackenzie - Singapore
- Indogreen Group - Indonesia
- Videocon Industries ltd - India
- Dalmia Cement Bharat India
- Anglo American - United Kingdom
- Indonesian Coal Mining Association
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Indo Tambangraya Megah - Indonesia
- Orica Australia Pty. Ltd.
- Altura Mining Limited, Indonesia
- Ceylon Electricity Board - Sri Lanka
- Salva Resources Pvt Ltd - India
- Siam City Cement PLC, Thailand
- Power Finance Corporation Ltd., India
- The University of Queensland
- Latin American Coal - Colombia
- Uttam Galva Steels Limited - India
- Mercuria Energy - Indonesia
- Minerals Council of Australia
- Maheswari Brothers Coal Limited - India
- Formosa Plastics Group - Taiwan
- Sakthi Sugars Limited - India
- Kideco Jaya Agung - Indonesia
- Romanian Commodities Exchange
- Petron Corporation, Philippines
- LBH Netherlands Bv - Netherlands
- Aditya Birla Group - India
- Meralco Power Generation, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Bayan Resources Tbk. - Indonesia
- Gujarat Sidhee Cement - India
- Commonwealth Bank - Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- CIMB Investment Bank - Malaysia
- PTC India Limited - India
- Indian Oil Corporation Limited
- Georgia Ports Authority, United States
- Semirara Mining and Power Corporation, Philippines
- Cigading International Bulk Terminal - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- International Coal Ventures Pvt Ltd - India
- Madhucon Powers Ltd - India
- Savvy Resources Ltd - HongKong
- Kaltim Prima Coal - Indonesia
- PowerSource Philippines DevCo
- Global Coal Blending Company Limited - Australia
- Parliament of New Zealand
- Oldendorff Carriers - Singapore
- Timah Investasi Mineral - Indoneisa
- AsiaOL BioFuels Corp., Philippines
- Kepco SPC Power Corporation, Philippines
- Heidelberg Cement - Germany
- Barasentosa Lestari - Indonesia
- Borneo Indobara - Indonesia
- Economic Council, Georgia
- Kohat Cement Company Ltd. - Pakistan
- PetroVietnam Power Coal Import and Supply Company
- London Commodity Brokers - England
- GAC Shipping (India) Pvt Ltd
- Antam Resourcindo - Indonesia
- Ministry of Mines - Canada
- Price Waterhouse Coopers - Russia
- Karbindo Abesyapradhi - Indoneisa
- Petrochimia International Co. Ltd.- Taiwan
- Kobexindo Tractors - Indoneisa
- TeaM Sual Corporation - Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Xindia Steels Limited - India
- Vizag Seaport Private Limited - India
- Planning Commission, India
- MS Steel International - UAE
- CNBM International Corporation - China
- Krishnapatnam Port Company Ltd. - India
- Trasteel International SA, Italy
- Lanco Infratech Ltd - India
- Global Green Power PLC Corporation, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Kumho Petrochemical, South Korea
- Coastal Gujarat Power Limited - India
- Siam City Cement - Thailand
- Binh Thuan Hamico - Vietnam
- Agrawal Coal Company - India
- ICICI Bank Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Central Electricity Authority - India
- South Luzon Thermal Energy Corporation
- Vedanta Resources Plc - India
- SN Aboitiz Power Inc, Philippines
- Bhoruka Overseas - Indonesia
- Bukit Baiduri Energy - Indonesia
- Tata Chemicals Ltd - India
- Energy Development Corp, Philippines
- IHS Mccloskey Coal Group - USA
- Directorate General of MIneral and Coal - Indonesia
- Toyota Tsusho Corporation, Japan
- Carbofer General Trading SA - India
- Vijayanagar Sugar Pvt Ltd - India
- IEA Clean Coal Centre - UK
- Medco Energi Mining Internasional
- Bank of Tokyo Mitsubishi UFJ Ltd
- Aboitiz Power Corporation - Philippines
- Eastern Energy - Thailand
- Energy Link Ltd, New Zealand
- Samtan Co., Ltd - South Korea
- White Energy Company Limited
- Mintek Dendrill Indonesia
- Alfred C Toepfer International GmbH - Germany
- Bulk Trading Sa - Switzerland
- Interocean Group of Companies - India
- Australian Coal Association
- Sindya Power Generating Company Private Ltd
- TNB Fuel Sdn Bhd - Malaysia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Rio Tinto Coal - Australia
- Baramulti Group, Indonesia
- Indika Energy - Indonesia
- Merrill Lynch Commodities Europe
- SMG Consultants - Indonesia
- Bhushan Steel Limited - India
- Meenaskhi Energy Private Limited - India
- Wilmar Investment Holdings
- Attock Cement Pakistan Limited
- Chamber of Mines of South Africa
- Standard Chartered Bank - UAE
- Grasim Industreis Ltd - India
- Straits Asia Resources Limited - Singapore
- Marubeni Corporation - India
- Eastern Coal Council - USA
- Larsen & Toubro Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- India Bulls Power Limited - India
- Jaiprakash Power Ventures ltd
- Thiess Contractors Indonesia
- Riau Bara Harum - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Malabar Cements Ltd - India
- Star Paper Mills Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Pendopo Energi Batubara - Indonesia
- Central Java Power - Indonesia
- Chettinad Cement Corporation Ltd - India
- Ministry of Finance - Indonesia
- Mercator Lines Limited - India
- The State Trading Corporation of India Ltd
- Mjunction Services Limited - India
- PNOC Exploration Corporation - Philippines
- Africa Commodities Group - South Africa
- Sarangani Energy Corporation, Philippines
- OPG Power Generation Pvt Ltd - India
- Simpson Spence & Young - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Sical Logistics Limited - India
- Bharathi Cement Corporation - India
- Electricity Authority, New Zealand
- Gujarat Mineral Development Corp Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Makarim & Taira - Indonesia
- Ind-Barath Power Infra Limited - India
- Billiton Holdings Pty Ltd - Australia
- Orica Mining Services - Indonesia
- Independent Power Producers Association of India
- Deloitte Consulting - India
- Goldman Sachs - Singapore
- GN Power Mariveles Coal Plant, Philippines
- Parry Sugars Refinery, India
- European Bulk Services B.V. - Netherlands
- Manunggal Multi Energi - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Thai Mozambique Logistica
- Semirara Mining Corp, Philippines
- Banpu Public Company Limited - Thailand
- San Jose City I Power Corp, Philippines
- Kartika Selabumi Mining - Indonesia
- Bangladesh Power Developement Board
- VISA Power Limited - India
- Essar Steel Hazira Ltd - India
- Sojitz Corporation - Japan
- Electricity Generating Authority of Thailand
- Edison Trading Spa - Italy
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