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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, 29 December 11
NEW VESSELS DELIVERED ARE FLOODING THE OCEANS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
As expected 2011 has been the year that newbuilding deliveries peaked and kept "flooding" the market, thus supressing freight rates and er ...
Tuesday, 27 December 11
MINERS MAKE CASE FOR RESUMING CONTRACT NEGOTIATIONS - THE JAKARTA POST
The Jakarta Post reported that, problems with the renegotiation of mining contracts in the country are far from over, as agreements on several cruci ...
Tuesday, 27 December 11
COAL SHIPMENT OF TIANJIN PORT REACHED 6.72 MLN TONNES IN NOVEMBER - STEEL HOME / HELLENIC SHIPPING
Tianjin port shipped 6.72 million tonnes of coal in November, decreasing 600,000 tonnes versus 7.32 million tonnes in October, while up 21.09% or 1. ...
Tuesday, 27 December 11
NEW CLAUSE PUBLISHED FOR SLOW STEAMING - BIMCO
Many owners and operators faced with high bunker prices are considering implementing slow steaming regimes to save fuel and to assist with capacity ...
Monday, 26 December 11
NEW EXPORT TAX PLAN GREETED WITH PRAISE AND CRITICISM - THE JAKARTA POST
The Jakarta Post, one of the Indonesia's leading english news paper reported that, both praise and criticism showered the government’s plan t ...
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- Tata Chemicals Ltd - India
- Electricity Authority, New Zealand
- Savvy Resources Ltd - HongKong
- Cement Manufacturers Association - India
- TeaM Sual Corporation - Philippines
- Bangladesh Power Developement Board
- Barasentosa Lestari - Indonesia
- Karaikal Port Pvt Ltd - India
- SMC Global Power, Philippines
- LBH Netherlands Bv - Netherlands
- Bukit Asam (Persero) Tbk - Indonesia
- Kideco Jaya Agung - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Bharathi Cement Corporation - India
- Global Green Power PLC Corporation, Philippines
- Makarim & Taira - Indonesia
- Riau Bara Harum - Indonesia
- Videocon Industries ltd - India
- Kohat Cement Company Ltd. - Pakistan
- GVK Power & Infra Limited - India
- Antam Resourcindo - Indonesia
- Coastal Gujarat Power Limited - India
- Coal and Oil Company - UAE
- Sindya Power Generating Company Private Ltd
- Tamil Nadu electricity Board
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Chamber of Mines of South Africa
- Aboitiz Power Corporation - Philippines
- CNBM International Corporation - China
- Renaissance Capital - South Africa
- Holcim Trading Pte Ltd - Singapore
- PNOC Exploration Corporation - Philippines
- Independent Power Producers Association of India
- Indika Energy - Indonesia
- Energy Development Corp, Philippines
- Australian Coal Association
- Global Coal Blending Company Limited - Australia
- Deloitte Consulting - India
- Sical Logistics Limited - India
- Indogreen Group - Indonesia
- Singapore Mercantile Exchange
- Attock Cement Pakistan Limited
- New Zealand Coal & Carbon
- Bhoruka Overseas - Indonesia
- Carbofer General Trading SA - India
- Global Business Power Corporation, Philippines
- Goldman Sachs - Singapore
- MS Steel International - UAE
- Directorate Of Revenue Intelligence - India
- Edison Trading Spa - Italy
- Merrill Lynch Commodities Europe
- IHS Mccloskey Coal Group - USA
- ICICI Bank Limited - India
- Samtan Co., Ltd - South Korea
- Maheswari Brothers Coal Limited - India
- Meenaskhi Energy Private Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- European Bulk Services B.V. - Netherlands
- Kepco SPC Power Corporation, Philippines
- Xindia Steels Limited - India
- Ind-Barath Power Infra Limited - India
- Sojitz Corporation - Japan
- Aditya Birla Group - India
- Ceylon Electricity Board - Sri Lanka
- Parliament of New Zealand
- London Commodity Brokers - England
- Wood Mackenzie - Singapore
- Jaiprakash Power Ventures ltd
- GN Power Mariveles Coal Plant, Philippines
- VISA Power Limited - India
- Oldendorff Carriers - Singapore
- Vedanta Resources Plc - India
- Mercator Lines Limited - India
- Bayan Resources Tbk. - Indonesia
- GAC Shipping (India) Pvt Ltd
- Ministry of Transport, Egypt
- The University of Queensland
- Indo Tambangraya Megah - Indonesia
- Energy Link Ltd, New Zealand
- TNB Fuel Sdn Bhd - Malaysia
- Africa Commodities Group - South Africa
- Kumho Petrochemical, South Korea
- Vijayanagar Sugar Pvt Ltd - India
- Kartika Selabumi Mining - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Posco Energy - South Korea
- Meralco Power Generation, Philippines
- Gujarat Electricity Regulatory Commission - India
- PTC India Limited - India
- ASAPP Information Group - India
- McConnell Dowell - Australia
- Port Waratah Coal Services - Australia
- Borneo Indobara - Indonesia
- Commonwealth Bank - Australia
- Altura Mining Limited, Indonesia
- Binh Thuan Hamico - Vietnam
- Madhucon Powers Ltd - India
- Economic Council, Georgia
- Vizag Seaport Private Limited - India
- Petron Corporation, Philippines
- Indian Oil Corporation Limited
- Grasim Industreis Ltd - India
- Baramulti Group, Indonesia
- Bhatia International Limited - India
- South Luzon Thermal Energy Corporation
- Cigading International Bulk Terminal - Indonesia
- Bukit Makmur.PT - Indonesia
- Central Electricity Authority - India
- Heidelberg Cement - Germany
- Kapuas Tunggal Persada - Indonesia
- Australian Commodity Traders Exchange
- Standard Chartered Bank - UAE
- Formosa Plastics Group - Taiwan
- Malabar Cements Ltd - India
- Georgia Ports Authority, United States
- Kalimantan Lumbung Energi - Indonesia
- Uttam Galva Steels Limited - India
- Salva Resources Pvt Ltd - India
- Iligan Light & Power Inc, Philippines
- Essar Steel Hazira Ltd - India
- Parry Sugars Refinery, India
- Trasteel International SA, Italy
- Eastern Coal Council - USA
- AsiaOL BioFuels Corp., Philippines
- Dalmia Cement Bharat India
- The State Trading Corporation of India Ltd
- Timah Investasi Mineral - Indoneisa
- Anglo American - United Kingdom
- Jindal Steel & Power Ltd - India
- Medco Energi Mining Internasional
- Coalindo Energy - Indonesia
- Manunggal Multi Energi - Indonesia
- Sree Jayajothi Cements Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Latin American Coal - Colombia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- SMG Consultants - Indonesia
- Toyota Tsusho Corporation, Japan
- Simpson Spence & Young - Indonesia
- Globalindo Alam Lestari - Indonesia
- India Bulls Power Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Krishnapatnam Port Company Ltd. - India
- Mjunction Services Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Petrochimia International Co. Ltd.- Taiwan
- Star Paper Mills Limited - India
- Miang Besar Coal Terminal - Indonesia
- The Treasury - Australian Government
- Ambuja Cements Ltd - India
- Bhushan Steel Limited - India
- San Jose City I Power Corp, Philippines
- Thai Mozambique Logistica
- Mintek Dendrill Indonesia
- Interocean Group of Companies - India
- Lanco Infratech Ltd - India
- Pendopo Energi Batubara - Indonesia
- IEA Clean Coal Centre - UK
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Price Waterhouse Coopers - Russia
- Jorong Barutama Greston.PT - Indonesia
- PowerSource Philippines DevCo
- Romanian Commodities Exchange
- Minerals Council of Australia
- Semirara Mining and Power Corporation, Philippines
- Metalloyd Limited - United Kingdom
- GMR Energy Limited - India
- Electricity Generating Authority of Thailand
- Siam City Cement - Thailand
- Sarangani Energy Corporation, Philippines
- Eastern Energy - Thailand
- SN Aboitiz Power Inc, Philippines
- International Coal Ventures Pvt Ltd - India
- Gujarat Sidhee Cement - India
- Sinarmas Energy and Mining - Indonesia
- Planning Commission, India
- Bukit Baiduri Energy - Indonesia
- Kaltim Prima Coal - Indonesia
- Indonesian Coal Mining Association
- Wilmar Investment Holdings
- Billiton Holdings Pty Ltd - Australia
- Chettinad Cement Corporation Ltd - India
- Kobexindo Tractors - Indoneisa
- Larsen & Toubro Limited - India
- Mercuria Energy - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Thiess Contractors Indonesia
- Ministry of Finance - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Orica Mining Services - Indonesia
- Ministry of Mines - Canada
- Central Java Power - Indonesia
- White Energy Company Limited
- Intertek Mineral Services - Indonesia
- Semirara Mining Corp, Philippines
- Alfred C Toepfer International GmbH - Germany
- Rio Tinto Coal - Australia
- Maharashtra Electricity Regulatory Commission - India
- Orica Australia Pty. Ltd.
- Marubeni Corporation - India
- Neyveli Lignite Corporation Ltd, - India
- CIMB Investment Bank - Malaysia
- Bulk Trading Sa - Switzerland
- Banpu Public Company Limited - Thailand
- Therma Luzon, Inc, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Agrawal Coal Company - India
- Siam City Cement PLC, Thailand
- Indian Energy Exchange, India
- Straits Asia Resources Limited - Singapore
- OPG Power Generation Pvt Ltd - India
- Sakthi Sugars Limited - India
- Power Finance Corporation Ltd., India
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