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