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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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Tuesday, 13 December 11
CAPESIZES AND PANAMAXES LEAD DRY BULK MARKET HIGHER - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market inched closer to the 2,000 mark on Monday, with Panamaxes rebounding firmly and leading the gains. As a result, the industry&rsq ...
Monday, 12 December 11
DRY BULK MARKET LOOKING FOR BALANCE AS WE ENTER 2012 - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
During the past few months, freight rates for dry bulk carriers, especially Capesizes have increased significantly, providing ship owners with a muc ...
Sunday, 11 December 11
THE PANAMAX INDEX ENDED ON POSITIVE DIRECTION - VISTAAR
COALspot.com - The BDI and Cape index continued the upward trend this week also with BDI up by 3.00 pct closing at 1,922 points and Cape index up by ...
Saturday, 10 December 11
MAHAKAM RIVER RESUMES COAL TRANSPORTATION
COALspot.com - East Kalimantan local government has resumed limited coal barging through Mahakam River after two weeks of suspension following the c ...
Friday, 09 December 11
DRY BULK MARKET REBOUNDS ON HEALTHIER DEMAND OUTLOOK - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market edged forward yesterday, at the highest rate of the past couple of weeks, as a result of stonger iron ore demand, backed by lowe ...
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- Kideco Jaya Agung - Indonesia
- Energy Link Ltd, New Zealand
- Orica Mining Services - Indonesia
- Banpu Public Company Limited - Thailand
- Uttam Galva Steels Limited - India
- Rio Tinto Coal - Australia
- Mjunction Services Limited - India
- Gujarat Electricity Regulatory Commission - India
- Jaiprakash Power Ventures ltd
- SN Aboitiz Power Inc, Philippines
- White Energy Company Limited
- Semirara Mining Corp, Philippines
- Alfred C Toepfer International GmbH - Germany
- Indian Energy Exchange, India
- Planning Commission, India
- Intertek Mineral Services - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Parry Sugars Refinery, India
- Eastern Coal Council - USA
- Orica Australia Pty. Ltd.
- Heidelberg Cement - Germany
- Energy Development Corp, Philippines
- Indo Tambangraya Megah - Indonesia
- Barasentosa Lestari - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Global Coal Blending Company Limited - Australia
- Australian Coal Association
- Sojitz Corporation - Japan
- MS Steel International - UAE
- Electricity Generating Authority of Thailand
- Krishnapatnam Port Company Ltd. - India
- Tamil Nadu electricity Board
- Sree Jayajothi Cements Limited - India
- Makarim & Taira - Indonesia
- Formosa Plastics Group - Taiwan
- TeaM Sual Corporation - Philippines
- Bukit Makmur.PT - Indonesia
- Ministry of Mines - Canada
- Altura Mining Limited, Indonesia
- Price Waterhouse Coopers - Russia
- IEA Clean Coal Centre - UK
- Toyota Tsusho Corporation, Japan
- Metalloyd Limited - United Kingdom
- Dalmia Cement Bharat India
- Gujarat Sidhee Cement - India
- PTC India Limited - India
- Holcim Trading Pte Ltd - Singapore
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Latin American Coal - Colombia
- Romanian Commodities Exchange
- Kumho Petrochemical, South Korea
- Ministry of Transport, Egypt
- Meralco Power Generation, Philippines
- Agrawal Coal Company - India
- GAC Shipping (India) Pvt Ltd
- Global Business Power Corporation, Philippines
- PNOC Exploration Corporation - Philippines
- Kobexindo Tractors - Indoneisa
- Directorate Of Revenue Intelligence - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Coalindo Energy - Indonesia
- Parliament of New Zealand
- AsiaOL BioFuels Corp., Philippines
- Mercator Lines Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Siam City Cement PLC, Thailand
- Mintek Dendrill Indonesia
- GMR Energy Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Borneo Indobara - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Savvy Resources Ltd - HongKong
- Carbofer General Trading SA - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Electricity Authority, New Zealand
- PowerSource Philippines DevCo
- Standard Chartered Bank - UAE
- Chamber of Mines of South Africa
- Pipit Mutiara Jaya. PT, Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Cement Manufacturers Association - India
- Siam City Cement - Thailand
- Bharathi Cement Corporation - India
- Vizag Seaport Private Limited - India
- Sarangani Energy Corporation, Philippines
- Bangladesh Power Developement Board
- Bulk Trading Sa - Switzerland
- SMG Consultants - Indonesia
- Central Java Power - Indonesia
- Indonesian Coal Mining Association
- Salva Resources Pvt Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Petron Corporation, Philippines
- Edison Trading Spa - Italy
- Thiess Contractors Indonesia
- Sakthi Sugars Limited - India
- Riau Bara Harum - Indonesia
- Larsen & Toubro Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- London Commodity Brokers - England
- Asmin Koalindo Tuhup - Indonesia
- Coal and Oil Company - UAE
- Central Electricity Authority - India
- GN Power Mariveles Coal Plant, Philippines
- Kapuas Tunggal Persada - Indonesia
- Singapore Mercantile Exchange
- Ambuja Cements Ltd - India
- Marubeni Corporation - India
- Economic Council, Georgia
- Star Paper Mills Limited - India
- VISA Power Limited - India
- Aditya Birla Group - India
- Straits Asia Resources Limited - Singapore
- Bayan Resources Tbk. - Indonesia
- Global Green Power PLC Corporation, Philippines
- Africa Commodities Group - South Africa
- Meenaskhi Energy Private Limited - India
- New Zealand Coal & Carbon
- Timah Investasi Mineral - Indoneisa
- IHS Mccloskey Coal Group - USA
- Indian Oil Corporation Limited
- The State Trading Corporation of India Ltd
- Port Waratah Coal Services - Australia
- South Luzon Thermal Energy Corporation
- Therma Luzon, Inc, Philippines
- ICICI Bank Limited - India
- Iligan Light & Power Inc, Philippines
- Madhucon Powers Ltd - India
- Baramulti Group, Indonesia
- Maheswari Brothers Coal Limited - India
- Interocean Group of Companies - India
- CNBM International Corporation - China
- Oldendorff Carriers - Singapore
- SMC Global Power, Philippines
- European Bulk Services B.V. - Netherlands
- Indogreen Group - Indonesia
- Attock Cement Pakistan Limited
- Simpson Spence & Young - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- GVK Power & Infra Limited - India
- Deloitte Consulting - India
- Tata Chemicals Ltd - India
- Minerals Council of Australia
- Trasteel International SA, Italy
- Posco Energy - South Korea
- Commonwealth Bank - Australia
- Independent Power Producers Association of India
- Globalindo Alam Lestari - Indonesia
- Wood Mackenzie - Singapore
- Wilmar Investment Holdings
- Kepco SPC Power Corporation, Philippines
- Eastern Energy - Thailand
- Cigading International Bulk Terminal - Indonesia
- Manunggal Multi Energi - Indonesia
- Mercuria Energy - Indonesia
- Anglo American - United Kingdom
- Vedanta Resources Plc - India
- Videocon Industries ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Binh Thuan Hamico - Vietnam
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Renaissance Capital - South Africa
- Samtan Co., Ltd - South Korea
- The University of Queensland
- Aboitiz Power Corporation - Philippines
- Leighton Contractors Pty Ltd - Australia
- Indika Energy - Indonesia
- Power Finance Corporation Ltd., India
- OPG Power Generation Pvt Ltd - India
- Grasim Industreis Ltd - India
- Bhatia International Limited - India
- Merrill Lynch Commodities Europe
- Karaikal Port Pvt Ltd - India
- Thai Mozambique Logistica
- Billiton Holdings Pty Ltd - Australia
- LBH Netherlands Bv - Netherlands
- Lanco Infratech Ltd - India
- San Jose City I Power Corp, Philippines
- Ceylon Electricity Board - Sri Lanka
- ASAPP Information Group - India
- Georgia Ports Authority, United States
- PetroVietnam Power Coal Import and Supply Company
- Kartika Selabumi Mining - Indonesia
- Australian Commodity Traders Exchange
- McConnell Dowell - Australia
- Bhoruka Overseas - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Directorate General of MIneral and Coal - Indonesia
- CIMB Investment Bank - Malaysia
- Coastal Gujarat Power Limited - India
- Kaltim Prima Coal - Indonesia
- India Bulls Power Limited - India
- Goldman Sachs - Singapore
- Malabar Cements Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Medco Energi Mining Internasional
- Bukit Baiduri Energy - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Ministry of Finance - Indonesia
- Sindya Power Generating Company Private Ltd
- Bhushan Steel Limited - India
- Xindia Steels Limited - India
- Chettinad Cement Corporation Ltd - India
- Ind-Barath Power Infra Limited - India
- Pendopo Energi Batubara - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Jindal Steel & Power Ltd - India
- Antam Resourcindo - Indonesia
- International Coal Ventures Pvt Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Essar Steel Hazira Ltd - India
- The Treasury - Australian Government
- Sical Logistics Limited - India
- Semirara Mining and Power Corporation, Philippines
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