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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, 03 November 11
DRY BULK MARKET OFFICIALLY IN THE RED ON LOWER CARGO DEMAND - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market kept falling yesterday, on lower iron ore demand, which has caused the industry’s benchmark, the BDI (Baltic Dry Index) to ...
Wednesday, 02 November 11
MMTC TO BUY 3.73 MILLION TONS OF COAL FOR 2011- 2013
COALspot.com - India’s state-owned coal and mineral trader MMTC looking for 3.73 million tons of power plant coal for the period 2011 - 2012/ ...
Wednesday, 02 November 11
PANAMAX MARKET BECAME QUIETER AFTER THE RECENT RECOVERY - BRS
There were substantial losses across the board this week: the BDI lost 6.3% to end at 2,018 and the BCI 8.2% to end 3,274. In the smaller sizes the ...
Tuesday, 01 November 11
BORNEO LUMBUNG BUYS 23.8% INTEREST IN BUMI
COALspot.com - PT. Borneo Lumbung Energi (BORN), an Indonesian coking coal producer announces that it has signed a sale and purchase agreement, cond ...
Tuesday, 01 November 11
BAKRIE FORMS STRATEGIC PARTNERSHIP WITH BORNEO - REDUCING DEBT BY USD 1 BILLION
Press Release - Enhancing the standing of “Indonesia Inc.” at the London Stock Exchange PT Bakrie & Brothers Tbk (“BNBR” ...
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- Parry Sugars Refinery, India
- Xindia Steels Limited - India
- SN Aboitiz Power Inc, Philippines
- Jaiprakash Power Ventures ltd
- Therma Luzon, Inc, Philippines
- Kobexindo Tractors - Indoneisa
- Central Electricity Authority - India
- PowerSource Philippines DevCo
- Manunggal Multi Energi - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ind-Barath Power Infra Limited - India
- Leighton Contractors Pty Ltd - Australia
- Semirara Mining Corp, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Gujarat Sidhee Cement - India
- Port Waratah Coal Services - Australia
- Rashtriya Ispat Nigam Limited - India
- Mercuria Energy - Indonesia
- Eastern Energy - Thailand
- GMR Energy Limited - India
- Globalindo Alam Lestari - Indonesia
- VISA Power Limited - India
- Antam Resourcindo - Indonesia
- Price Waterhouse Coopers - Russia
- Iligan Light & Power Inc, Philippines
- South Luzon Thermal Energy Corporation
- Videocon Industries ltd - India
- Vizag Seaport Private Limited - India
- Bukit Makmur.PT - Indonesia
- Electricity Authority, New Zealand
- ASAPP Information Group - India
- Sarangani Energy Corporation, Philippines
- Indian Energy Exchange, India
- Attock Cement Pakistan Limited
- Larsen & Toubro Limited - India
- London Commodity Brokers - England
- Romanian Commodities Exchange
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- SMC Global Power, Philippines
- Timah Investasi Mineral - Indoneisa
- The University of Queensland
- SMG Consultants - Indonesia
- Orica Australia Pty. Ltd.
- Sree Jayajothi Cements Limited - India
- Ambuja Cements Ltd - India
- Anglo American - United Kingdom
- Maharashtra Electricity Regulatory Commission - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Simpson Spence & Young - Indonesia
- The State Trading Corporation of India Ltd
- Eastern Coal Council - USA
- ICICI Bank Limited - India
- Wilmar Investment Holdings
- Bukit Asam (Persero) Tbk - Indonesia
- Indian Oil Corporation Limited
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Binh Thuan Hamico - Vietnam
- PTC India Limited - India
- Grasim Industreis Ltd - India
- Independent Power Producers Association of India
- Alfred C Toepfer International GmbH - Germany
- CIMB Investment Bank - Malaysia
- Chamber of Mines of South Africa
- Aboitiz Power Corporation - Philippines
- IEA Clean Coal Centre - UK
- Sojitz Corporation - Japan
- New Zealand Coal & Carbon
- San Jose City I Power Corp, Philippines
- Ceylon Electricity Board - Sri Lanka
- Uttam Galva Steels Limited - India
- Kaltim Prima Coal - Indonesia
- Georgia Ports Authority, United States
- Planning Commission, India
- Australian Coal Association
- Global Business Power Corporation, Philippines
- Energy Link Ltd, New Zealand
- Sindya Power Generating Company Private Ltd
- Cigading International Bulk Terminal - Indonesia
- Bhushan Steel Limited - India
- Australian Commodity Traders Exchange
- Bahari Cakrawala Sebuku - Indonesia
- CNBM International Corporation - China
- Global Coal Blending Company Limited - Australia
- Bulk Trading Sa - Switzerland
- MS Steel International - UAE
- Meralco Power Generation, Philippines
- PNOC Exploration Corporation - Philippines
- Indonesian Coal Mining Association
- Rio Tinto Coal - Australia
- Meenaskhi Energy Private Limited - India
- Marubeni Corporation - India
- Agrawal Coal Company - India
- Bukit Baiduri Energy - Indonesia
- India Bulls Power Limited - India
- Cement Manufacturers Association - India
- McConnell Dowell - Australia
- Jorong Barutama Greston.PT - Indonesia
- TeaM Sual Corporation - Philippines
- Asmin Koalindo Tuhup - Indonesia
- Economic Council, Georgia
- Mintek Dendrill Indonesia
- Bhoruka Overseas - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Coal and Oil Company - UAE
- Sakthi Sugars Limited - India
- Gujarat Electricity Regulatory Commission - India
- Global Green Power PLC Corporation, Philippines
- Bharathi Cement Corporation - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- GVK Power & Infra Limited - India
- Essar Steel Hazira Ltd - India
- Siam City Cement PLC, Thailand
- European Bulk Services B.V. - Netherlands
- Tamil Nadu electricity Board
- Kumho Petrochemical, South Korea
- Savvy Resources Ltd - HongKong
- Kepco SPC Power Corporation, Philippines
- Indika Energy - Indonesia
- Mjunction Services Limited - India
- Goldman Sachs - Singapore
- Barasentosa Lestari - Indonesia
- Latin American Coal - Colombia
- Heidelberg Cement - Germany
- OPG Power Generation Pvt Ltd - India
- Pendopo Energi Batubara - Indonesia
- Merrill Lynch Commodities Europe
- Makarim & Taira - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Karaikal Port Pvt Ltd - India
- Sical Logistics Limited - India
- Renaissance Capital - South Africa
- TNB Fuel Sdn Bhd - Malaysia
- Bayan Resources Tbk. - Indonesia
- Electricity Generating Authority of Thailand
- Kalimantan Lumbung Energi - Indonesia
- Africa Commodities Group - South Africa
- Tata Chemicals Ltd - India
- Indogreen Group - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Singapore Mercantile Exchange
- AsiaOL BioFuels Corp., Philippines
- Ministry of Finance - Indonesia
- Formosa Plastics Group - Taiwan
- Carbofer General Trading SA - India
- Ministry of Transport, Egypt
- Wood Mackenzie - Singapore
- Holcim Trading Pte Ltd - Singapore
- Altura Mining Limited, Indonesia
- Energy Development Corp, Philippines
- Lanco Infratech Ltd - India
- Coastal Gujarat Power Limited - India
- Central Java Power - Indonesia
- Directorate Of Revenue Intelligence - India
- Salva Resources Pvt Ltd - India
- LBH Netherlands Bv - Netherlands
- Neyveli Lignite Corporation Ltd, - India
- Samtan Co., Ltd - South Korea
- Maheswari Brothers Coal Limited - India
- Edison Trading Spa - Italy
- Kapuas Tunggal Persada - Indonesia
- Orica Mining Services - Indonesia
- Commonwealth Bank - Australia
- Banpu Public Company Limited - Thailand
- Semirara Mining and Power Corporation, Philippines
- Kartika Selabumi Mining - Indonesia
- Dalmia Cement Bharat India
- Thiess Contractors Indonesia
- Indo Tambangraya Megah - Indonesia
- Coalindo Energy - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Kideco Jaya Agung - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Baramulti Group, Indonesia
- Chettinad Cement Corporation Ltd - India
- Borneo Indobara - Indonesia
- Vedanta Resources Plc - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kohat Cement Company Ltd. - Pakistan
- Medco Energi Mining Internasional
- Deloitte Consulting - India
- Riau Bara Harum - Indonesia
- Thai Mozambique Logistica
- GAC Shipping (India) Pvt Ltd
- Krishnapatnam Port Company Ltd. - India
- Minerals Council of Australia
- International Coal Ventures Pvt Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Ministry of Mines - Canada
- Power Finance Corporation Ltd., India
- Petrochimia International Co. Ltd.- Taiwan
- Metalloyd Limited - United Kingdom
- Bangladesh Power Developement Board
- The Treasury - Australian Government
- Intertek Mineral Services - Indonesia
- Malabar Cements Ltd - India
- Mercator Lines Limited - India
- Madhucon Powers Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Aditya Birla Group - India
- IHS Mccloskey Coal Group - USA
- Oldendorff Carriers - Singapore
- Parliament of New Zealand
- Jindal Steel & Power Ltd - India
- Posco Energy - South Korea
- Sinarmas Energy and Mining - Indonesia
- Siam City Cement - Thailand
- Toyota Tsusho Corporation, Japan
- White Energy Company Limited
- Petron Corporation, Philippines
- Bhatia International Limited - India
- Interocean Group of Companies - India
- Standard Chartered Bank - UAE
- Trasteel International SA, Italy
- Star Paper Mills Limited - India
- Straits Asia Resources Limited - Singapore
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