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