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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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Wednesday, 11 January 12
NEWBUILDING ORDERS DECLINE, AS SHIP OWNERS REALIZE OVERSUPPLY WILL "KILL" THEM - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
With 2012 now underway, it will be rather interesting to see how ship owners will play the "newbuilding ordering" card to their favor, as ...
Tuesday, 10 January 12
THE 4TH DEEPWATER ASIA CONGRESS 2012 WILL KICK OFF ON MAY 23 - 25
Press release - Based on the past three years’ success, SZ & W Group is excited to announce the 4th Deepwater Asia Congress will be held o ...
Monday, 09 January 12
2012: WHAT WILL IT BRING FOR THE DRY BULK MARKET? - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
A further increase in dry bulk demand could be the remedy for most of the industry's oversupply issues, together of course with the high level of s ...
Sunday, 08 January 12
ICICI OUTLOOK ON INDIAN POWER, MINING,CEMENT, AND SHIPPING SECTORS PERFORMANCE IN 2012
Broking firm, ICICIdirect (India) has come out with report on sectors outlook for 2012. IRIS has collated key highlights for each sector from ...
Sunday, 08 January 12
SUPRAMAX DELIVERY SOUTH CHINA FOR TRIPS VIA INDONESIA WERE REPORTED AROUND $ 7000 PER DAY - VISTAAR
Wish You a Very Happy and Prosperous New year 2012.
COALspot.com - The last report by us was on 16th Dec 2011 and because of holidays this would ...
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- Africa Commodities Group - South Africa
- Trasteel International SA, Italy
- Mjunction Services Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Energy Development Corp, Philippines
- Gujarat Electricity Regulatory Commission - India
- Gujarat Mineral Development Corp Ltd - India
- PowerSource Philippines DevCo
- TeaM Sual Corporation - Philippines
- Toyota Tsusho Corporation, Japan
- Sree Jayajothi Cements Limited - India
- Rio Tinto Coal - Australia
- Oldendorff Carriers - Singapore
- Indika Energy - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Indian Energy Exchange, India
- International Coal Ventures Pvt Ltd - India
- Eastern Coal Council - USA
- Videocon Industries ltd - India
- Parliament of New Zealand
- Krishnapatnam Port Company Ltd. - India
- Dalmia Cement Bharat India
- GMR Energy Limited - India
- SN Aboitiz Power Inc, Philippines
- Interocean Group of Companies - India
- South Luzon Thermal Energy Corporation
- Orica Australia Pty. Ltd.
- Planning Commission, India
- Lanco Infratech Ltd - India
- Eastern Energy - Thailand
- Kohat Cement Company Ltd. - Pakistan
- MS Steel International - UAE
- Deloitte Consulting - India
- CIMB Investment Bank - Malaysia
- Larsen & Toubro Limited - India
- Sakthi Sugars Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- White Energy Company Limited
- The Treasury - Australian Government
- Salva Resources Pvt Ltd - India
- Barasentosa Lestari - Indonesia
- Wood Mackenzie - Singapore
- Kalimantan Lumbung Energi - Indonesia
- Savvy Resources Ltd - HongKong
- Goldman Sachs - Singapore
- Central Java Power - Indonesia
- Tamil Nadu electricity Board
- Asmin Koalindo Tuhup - Indonesia
- Ind-Barath Power Infra Limited - India
- Kideco Jaya Agung - Indonesia
- Australian Commodity Traders Exchange
- Kaltim Prima Coal - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- PetroVietnam Power Coal Import and Supply Company
- PTC India Limited - India
- Maheswari Brothers Coal Limited - India
- Indogreen Group - Indonesia
- Chamber of Mines of South Africa
- Price Waterhouse Coopers - Russia
- Sojitz Corporation - Japan
- Iligan Light & Power Inc, Philippines
- Manunggal Multi Energi - Indonesia
- CNBM International Corporation - China
- Kepco SPC Power Corporation, Philippines
- McConnell Dowell - Australia
- Electricity Generating Authority of Thailand
- Vedanta Resources Plc - India
- Karbindo Abesyapradhi - Indoneisa
- Semirara Mining and Power Corporation, Philippines
- Coalindo Energy - Indonesia
- Antam Resourcindo - Indonesia
- IEA Clean Coal Centre - UK
- Borneo Indobara - Indonesia
- Chettinad Cement Corporation Ltd - India
- GVK Power & Infra Limited - India
- Alfred C Toepfer International GmbH - Germany
- Indonesian Coal Mining Association
- ICICI Bank Limited - India
- Edison Trading Spa - Italy
- Bukit Asam (Persero) Tbk - Indonesia
- Global Green Power PLC Corporation, Philippines
- Formosa Plastics Group - Taiwan
- Indo Tambangraya Megah - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- PNOC Exploration Corporation - Philippines
- Gujarat Sidhee Cement - India
- Star Paper Mills Limited - India
- Cigading International Bulk Terminal - Indonesia
- Independent Power Producers Association of India
- Aditya Birla Group - India
- Essar Steel Hazira Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Indian Oil Corporation Limited
- Sarangani Energy Corporation, Philippines
- LBH Netherlands Bv - Netherlands
- Meenaskhi Energy Private Limited - India
- Uttam Galva Steels Limited - India
- Ministry of Transport, Egypt
- Intertek Mineral Services - Indonesia
- Makarim & Taira - Indonesia
- OPG Power Generation Pvt Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Kartika Selabumi Mining - Indonesia
- Parry Sugars Refinery, India
- Mercator Lines Limited - India
- India Bulls Power Limited - India
- Merrill Lynch Commodities Europe
- Bahari Cakrawala Sebuku - Indonesia
- Siam City Cement PLC, Thailand
- Altura Mining Limited, Indonesia
- Bukit Makmur.PT - Indonesia
- Ambuja Cements Ltd - India
- Bulk Trading Sa - Switzerland
- Kobexindo Tractors - Indoneisa
- Orica Mining Services - Indonesia
- Straits Asia Resources Limited - Singapore
- Georgia Ports Authority, United States
- Ministry of Mines - Canada
- Cement Manufacturers Association - India
- Bhatia International Limited - India
- Minerals Council of Australia
- Malabar Cements Ltd - India
- Electricity Authority, New Zealand
- Therma Luzon, Inc, Philippines
- Australian Coal Association
- Power Finance Corporation Ltd., India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Pendopo Energi Batubara - Indonesia
- Attock Cement Pakistan Limited
- The State Trading Corporation of India Ltd
- San Jose City I Power Corp, Philippines
- Mercuria Energy - Indonesia
- London Commodity Brokers - England
- Jorong Barutama Greston.PT - Indonesia
- Petron Corporation, Philippines
- Sindya Power Generating Company Private Ltd
- VISA Power Limited - India
- Globalindo Alam Lestari - Indonesia
- European Bulk Services B.V. - Netherlands
- Petrochimia International Co. Ltd.- Taiwan
- GN Power Mariveles Coal Plant, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Renaissance Capital - South Africa
- Billiton Holdings Pty Ltd - Australia
- Karaikal Port Pvt Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sical Logistics Limited - India
- The University of Queensland
- Bharathi Cement Corporation - India
- Kapuas Tunggal Persada - Indonesia
- Samtan Co., Ltd - South Korea
- Ministry of Finance - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Miang Besar Coal Terminal - Indonesia
- Energy Link Ltd, New Zealand
- Port Waratah Coal Services - Australia
- Bayan Resources Tbk. - Indonesia
- Latin American Coal - Colombia
- Agrawal Coal Company - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bhoruka Overseas - Indonesia
- Posco Energy - South Korea
- Thiess Contractors Indonesia
- Binh Thuan Hamico - Vietnam
- Banpu Public Company Limited - Thailand
- SMC Global Power, Philippines
- New Zealand Coal & Carbon
- Vijayanagar Sugar Pvt Ltd - India
- Vizag Seaport Private Limited - India
- Tata Chemicals Ltd - India
- Coal and Oil Company - UAE
- Directorate Of Revenue Intelligence - India
- Carbofer General Trading SA - India
- Anglo American - United Kingdom
- Singapore Mercantile Exchange
- ASAPP Information Group - India
- Global Coal Blending Company Limited - Australia
- Jaiprakash Power Ventures ltd
- Leighton Contractors Pty Ltd - Australia
- Bangladesh Power Developement Board
- GAC Shipping (India) Pvt Ltd
- Siam City Cement - Thailand
- Riau Bara Harum - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Baramulti Group, Indonesia
- Global Business Power Corporation, Philippines
- SMG Consultants - Indonesia
- Kumho Petrochemical, South Korea
- Rashtriya Ispat Nigam Limited - India
- Standard Chartered Bank - UAE
- Mintek Dendrill Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Wilmar Investment Holdings
- Madhucon Powers Ltd - India
- IHS Mccloskey Coal Group - USA
- Timah Investasi Mineral - Indoneisa
- Heidelberg Cement - Germany
- Aboitiz Power Corporation - Philippines
- Holcim Trading Pte Ltd - Singapore
- Semirara Mining Corp, Philippines
- Jindal Steel & Power Ltd - India
- Economic Council, Georgia
- Xindia Steels Limited - India
- Bukit Baiduri Energy - Indonesia
- Grasim Industreis Ltd - India
- Medco Energi Mining Internasional
- Thai Mozambique Logistica
- Bhushan Steel Limited - India
- Meralco Power Generation, Philippines
- Simpson Spence & Young - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Coastal Gujarat Power Limited - India
- Romanian Commodities Exchange
- Marubeni Corporation - India
- Metalloyd Limited - United Kingdom
- Central Electricity Authority - India
- Commonwealth Bank - Australia
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