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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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Friday, 28 September 12
DRY BULK SECOND HAND VESSELS ON HIGH DEMAND - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
Despite the demise of the dry bulk market and the collapse of freight rates since the beginning of 2012, on the back of record breaking newbuilding ...
Thursday, 27 September 12
MINING RE-COMMENCES AT ORPHEUS' B2 EAST KALIMANTAN COAL PROJECT
- B2 project overburden removal completed and coal exposed
- Coal getting has commenced with target production of 30,000tpm
- Orpheus to re ...
Thursday, 27 September 12
HANDY: THE PACIFIC MARKET IS GETTING WEAKER WITH UPCOMING GOLDEN WEEK HOLIDAYS - FEARNLEYS AS
Handy
Yet another week with rates softening in all trades. Especially owners with ships open Continent struggle to find employment paying decent mo ...
Thursday, 27 September 12
DRY BULK MARKET LOSES STEAM - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The rise of the BDI (Baltic Dry Index), the dry bulk industry’s benchmark during the course of the previous week, proved to be short-lived, as ...
Wednesday, 26 September 12
NEWBUILDING ORDERING ACTIVITY REMAINS SUBDUED ON GLOBAL MARKET UNCERTAINTY - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
Newbuilding ordering activity has been on the down side during the past few weeks, a trend also noticeable during the course of the past few days, a ...
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- Timah Investasi Mineral - Indoneisa
- Standard Chartered Bank - UAE
- Minerals Council of Australia
- Merrill Lynch Commodities Europe
- Eastern Energy - Thailand
- Global Coal Blending Company Limited - Australia
- Billiton Holdings Pty Ltd - Australia
- GN Power Mariveles Coal Plant, Philippines
- Lanco Infratech Ltd - India
- Sarangani Energy Corporation, Philippines
- Deloitte Consulting - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Cigading International Bulk Terminal - Indonesia
- Altura Mining Limited, Indonesia
- San Jose City I Power Corp, Philippines
- Indian Oil Corporation Limited
- Directorate Of Revenue Intelligence - India
- International Coal Ventures Pvt Ltd - India
- Global Green Power PLC Corporation, Philippines
- Pendopo Energi Batubara - Indonesia
- Orica Australia Pty. Ltd.
- Kalimantan Lumbung Energi - Indonesia
- Iligan Light & Power Inc, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Bharathi Cement Corporation - India
- Indika Energy - Indonesia
- Posco Energy - South Korea
- New Zealand Coal & Carbon
- Bangladesh Power Developement Board
- Georgia Ports Authority, United States
- MS Steel International - UAE
- Simpson Spence & Young - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Vedanta Resources Plc - India
- Indonesian Coal Mining Association
- European Bulk Services B.V. - Netherlands
- The State Trading Corporation of India Ltd
- Barasentosa Lestari - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Metalloyd Limited - United Kingdom
- Ministry of Finance - Indonesia
- Sree Jayajothi Cements Limited - India
- India Bulls Power Limited - India
- Interocean Group of Companies - India
- Bukit Baiduri Energy - Indonesia
- Petron Corporation, Philippines
- The Treasury - Australian Government
- Anglo American - United Kingdom
- Jindal Steel & Power Ltd - India
- SMG Consultants - Indonesia
- Bhoruka Overseas - Indonesia
- Parliament of New Zealand
- Indogreen Group - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Meralco Power Generation, Philippines
- Vizag Seaport Private Limited - India
- Coastal Gujarat Power Limited - India
- London Commodity Brokers - England
- PTC India Limited - India
- Romanian Commodities Exchange
- Samtan Co., Ltd - South Korea
- SN Aboitiz Power Inc, Philippines
- Coalindo Energy - Indonesia
- Australian Commodity Traders Exchange
- Therma Luzon, Inc, Philippines
- Port Waratah Coal Services - Australia
- Bayan Resources Tbk. - Indonesia
- Power Finance Corporation Ltd., India
- Goldman Sachs - Singapore
- Tata Chemicals Ltd - India
- Ceylon Electricity Board - Sri Lanka
- AsiaOL BioFuels Corp., Philippines
- Semirara Mining Corp, Philippines
- Edison Trading Spa - Italy
- Neyveli Lignite Corporation Ltd, - India
- Toyota Tsusho Corporation, Japan
- Independent Power Producers Association of India
- Planning Commission, India
- LBH Netherlands Bv - Netherlands
- Ind-Barath Power Infra Limited - India
- Gujarat Sidhee Cement - India
- Karbindo Abesyapradhi - Indoneisa
- Aditya Birla Group - India
- TeaM Sual Corporation - Philippines
- Kumho Petrochemical, South Korea
- IEA Clean Coal Centre - UK
- CNBM International Corporation - China
- Formosa Plastics Group - Taiwan
- ICICI Bank Limited - India
- McConnell Dowell - Australia
- Thai Mozambique Logistica
- Medco Energi Mining Internasional
- Commonwealth Bank - Australia
- Alfred C Toepfer International GmbH - Germany
- Leighton Contractors Pty Ltd - Australia
- Larsen & Toubro Limited - India
- Gujarat Electricity Regulatory Commission - India
- Global Business Power Corporation, Philippines
- Sical Logistics Limited - India
- Bhatia International Limited - India
- Intertek Mineral Services - Indonesia
- Agrawal Coal Company - India
- VISA Power Limited - India
- Mjunction Services Limited - India
- ASAPP Information Group - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Latin American Coal - Colombia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Riau Bara Harum - Indonesia
- Antam Resourcindo - Indonesia
- Siam City Cement PLC, Thailand
- Globalindo Alam Lestari - Indonesia
- Eastern Coal Council - USA
- Ministry of Mines - Canada
- Manunggal Multi Energi - Indonesia
- Aboitiz Power Corporation - Philippines
- Wood Mackenzie - Singapore
- IHS Mccloskey Coal Group - USA
- Dalmia Cement Bharat India
- Mercuria Energy - Indonesia
- Ministry of Transport, Egypt
- Sakthi Sugars Limited - India
- Singapore Mercantile Exchange
- Renaissance Capital - South Africa
- Orica Mining Services - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Borneo Indobara - Indonesia
- Meenaskhi Energy Private Limited - India
- Kartika Selabumi Mining - Indonesia
- Madhucon Powers Ltd - India
- Electricity Generating Authority of Thailand
- CIMB Investment Bank - Malaysia
- Jaiprakash Power Ventures ltd
- Price Waterhouse Coopers - Russia
- Rashtriya Ispat Nigam Limited - India
- Bulk Trading Sa - Switzerland
- Uttam Galva Steels Limited - India
- Bukit Makmur.PT - Indonesia
- Carbofer General Trading SA - India
- Central Electricity Authority - India
- Wilmar Investment Holdings
- Mintek Dendrill Indonesia
- Kepco SPC Power Corporation, Philippines
- Krishnapatnam Port Company Ltd. - India
- Economic Council, Georgia
- Bhushan Steel Limited - India
- Holcim Trading Pte Ltd - Singapore
- Trasteel International SA, Italy
- Makarim & Taira - Indonesia
- Thiess Contractors Indonesia
- Baramulti Group, Indonesia
- Cement Manufacturers Association - India
- Binh Thuan Hamico - Vietnam
- White Energy Company Limited
- Sojitz Corporation - Japan
- Bahari Cakrawala Sebuku - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- GAC Shipping (India) Pvt Ltd
- Savvy Resources Ltd - HongKong
- GVK Power & Infra Limited - India
- The University of Queensland
- Star Paper Mills Limited - India
- Indo Tambangraya Megah - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Chamber of Mines of South Africa
- Ambuja Cements Ltd - India
- Energy Link Ltd, New Zealand
- Karaikal Port Pvt Ltd - India
- Videocon Industries ltd - India
- Siam City Cement - Thailand
- Bukit Asam (Persero) Tbk - Indonesia
- Indian Energy Exchange, India
- Malabar Cements Ltd - India
- Heidelberg Cement - Germany
- Sinarmas Energy and Mining - Indonesia
- Kaltim Prima Coal - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- GMR Energy Limited - India
- Kapuas Tunggal Persada - Indonesia
- SMC Global Power, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Xindia Steels Limited - India
- Australian Coal Association
- Chettinad Cement Corporation Ltd - India
- Electricity Authority, New Zealand
- Semirara Mining and Power Corporation, Philippines
- Banpu Public Company Limited - Thailand
- Central Java Power - Indonesia
- Oldendorff Carriers - Singapore
- Maheswari Brothers Coal Limited - India
- PowerSource Philippines DevCo
- Essar Steel Hazira Ltd - India
- Straits Asia Resources Limited - Singapore
- Attock Cement Pakistan Limited
- Parry Sugars Refinery, India
- Coal and Oil Company - UAE
- Rio Tinto Coal - Australia
- Marubeni Corporation - India
- Directorate General of MIneral and Coal - Indonesia
- Africa Commodities Group - South Africa
- Salva Resources Pvt Ltd - India
- Energy Development Corp, Philippines
- OPG Power Generation Pvt Ltd - India
- South Luzon Thermal Energy Corporation
- Tamil Nadu electricity Board
- Grasim Industreis Ltd - India
- Kideco Jaya Agung - Indonesia
- Sindya Power Generating Company Private Ltd
- Mercator Lines Limited - India
- PNOC Exploration Corporation - Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Kobexindo Tractors - Indoneisa
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