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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, 26 October 11
PWCS GLOBAL SHIPPING BENCHMARKING ANALYSIS: RECOVERY IN 2010 BUT GREAT UNCERTAINLY FOR 2011
The recovery of global trade in 2010 to the same levels as 2008 led to an improvement in the overall performance of shipping companies in 2010 compa ...
Wednesday, 26 October 11
INDIAN MARKET WAS REMAINED TIGHT THE WHOLE LAST WEEK - BRS
The market once more seems to be at a crossroads. The indices last week remained fairly stable (except for the Panamax sector), ending the week as f ...
Tuesday, 25 October 11
DRY BULK MARKET STEADY, ANALYSTS LOOKING FOR ADDED PRESSURE ON THE MARKET - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market was unchanged on Monday, with the industry’s benchmark, the BDI (Baltic Dry Index) ending the session at 2,153 points, exa ...
Monday, 24 October 11
NEW HEAD OF INDONESIA'S MINING MINISTRY GETS RAKED OVER THE COALS - JOSEPH KIRSCHKE
COALspot.com - Following Indonesia’s presidential cabinet shakeup last week, many are questioning the qualifications of Energy and Mineral Res ...
Monday, 24 October 11
CHINA QINHUANGDAO COAL PRICE RISES TO HIGHEST IN THREE YEARS - BUSINESSWEEK
Business week reported that, China’s power-station coal price rose to the highest level in three years as power stations and central heating p ...
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- Jorong Barutama Greston.PT - Indonesia
- Formosa Plastics Group - Taiwan
- Petrochimia International Co. Ltd.- Taiwan
- Directorate General of MIneral and Coal - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Dalmia Cement Bharat India
- Manunggal Multi Energi - Indonesia
- Mercator Lines Limited - India
- Siam City Cement PLC, Thailand
- Bhoruka Overseas - Indonesia
- Electricity Generating Authority of Thailand
- Parliament of New Zealand
- Bukit Makmur.PT - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Siam City Cement - Thailand
- Sical Logistics Limited - India
- Globalindo Alam Lestari - Indonesia
- Coalindo Energy - Indonesia
- The Treasury - Australian Government
- Minerals Council of Australia
- IEA Clean Coal Centre - UK
- Renaissance Capital - South Africa
- The State Trading Corporation of India Ltd
- Sinarmas Energy and Mining - Indonesia
- Kartika Selabumi Mining - Indonesia
- Latin American Coal - Colombia
- Oldendorff Carriers - Singapore
- McConnell Dowell - Australia
- Asmin Koalindo Tuhup - Indonesia
- Simpson Spence & Young - Indonesia
- Jaiprakash Power Ventures ltd
- Uttam Galva Steels Limited - India
- Directorate Of Revenue Intelligence - India
- Interocean Group of Companies - India
- Madhucon Powers Ltd - India
- Carbofer General Trading SA - India
- Wilmar Investment Holdings
- Port Waratah Coal Services - Australia
- Antam Resourcindo - Indonesia
- PowerSource Philippines DevCo
- Bukit Baiduri Energy - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Cement Manufacturers Association - India
- Holcim Trading Pte Ltd - Singapore
- Mintek Dendrill Indonesia
- Grasim Industreis Ltd - India
- Iligan Light & Power Inc, Philippines
- AsiaOL BioFuels Corp., Philippines
- Georgia Ports Authority, United States
- Sakthi Sugars Limited - India
- Singapore Mercantile Exchange
- Makarim & Taira - Indonesia
- Ministry of Finance - Indonesia
- Indogreen Group - Indonesia
- Wood Mackenzie - Singapore
- Eastern Coal Council - USA
- Kohat Cement Company Ltd. - Pakistan
- Posco Energy - South Korea
- Miang Besar Coal Terminal - Indonesia
- Australian Commodity Traders Exchange
- Thai Mozambique Logistica
- TNB Fuel Sdn Bhd - Malaysia
- New Zealand Coal & Carbon
- SN Aboitiz Power Inc, Philippines
- Ambuja Cements Ltd - India
- Kobexindo Tractors - Indoneisa
- Cigading International Bulk Terminal - Indonesia
- Economic Council, Georgia
- Parry Sugars Refinery, India
- Attock Cement Pakistan Limited
- Merrill Lynch Commodities Europe
- PTC India Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Riau Bara Harum - Indonesia
- OPG Power Generation Pvt Ltd - India
- Power Finance Corporation Ltd., India
- Vijayanagar Sugar Pvt Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- CIMB Investment Bank - Malaysia
- Ind-Barath Power Infra Limited - India
- Indonesian Coal Mining Association
- IHS Mccloskey Coal Group - USA
- Lanco Infratech Ltd - India
- Ministry of Transport, Egypt
- Jindal Steel & Power Ltd - India
- Marubeni Corporation - India
- Kalimantan Lumbung Energi - Indonesia
- Orica Australia Pty. Ltd.
- Vedanta Resources Plc - India
- Romanian Commodities Exchange
- Banpu Public Company Limited - Thailand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Central Java Power - Indonesia
- Bharathi Cement Corporation - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bahari Cakrawala Sebuku - Indonesia
- CNBM International Corporation - China
- Straits Asia Resources Limited - Singapore
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Goldman Sachs - Singapore
- TeaM Sual Corporation - Philippines
- Mercuria Energy - Indonesia
- Malabar Cements Ltd - India
- Africa Commodities Group - South Africa
- Toyota Tsusho Corporation, Japan
- GMR Energy Limited - India
- Essar Steel Hazira Ltd - India
- Rio Tinto Coal - Australia
- Eastern Energy - Thailand
- Sojitz Corporation - Japan
- Kepco SPC Power Corporation, Philippines
- Heidelberg Cement - Germany
- Global Business Power Corporation, Philippines
- Energy Development Corp, Philippines
- Vizag Seaport Private Limited - India
- Bhushan Steel Limited - India
- Sarangani Energy Corporation, Philippines
- Intertek Mineral Services - Indonesia
- Trasteel International SA, Italy
- Karaikal Port Pvt Ltd - India
- Medco Energi Mining Internasional
- Indika Energy - Indonesia
- Price Waterhouse Coopers - Russia
- Baramulti Group, Indonesia
- Coal and Oil Company - UAE
- Alfred C Toepfer International GmbH - Germany
- SMG Consultants - Indonesia
- Kumho Petrochemical, South Korea
- Deloitte Consulting - India
- Anglo American - United Kingdom
- Borneo Indobara - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Larsen & Toubro Limited - India
- Videocon Industries ltd - India
- Petron Corporation, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Meenaskhi Energy Private Limited - India
- Timah Investasi Mineral - Indoneisa
- Gujarat Electricity Regulatory Commission - India
- International Coal Ventures Pvt Ltd - India
- Commonwealth Bank - Australia
- Gujarat Mineral Development Corp Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Kideco Jaya Agung - Indonesia
- Mjunction Services Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- GAC Shipping (India) Pvt Ltd
- London Commodity Brokers - England
- Orica Mining Services - Indonesia
- Gujarat Sidhee Cement - India
- Salva Resources Pvt Ltd - India
- ASAPP Information Group - India
- Billiton Holdings Pty Ltd - Australia
- ICICI Bank Limited - India
- Global Coal Blending Company Limited - Australia
- Bangladesh Power Developement Board
- India Bulls Power Limited - India
- Chettinad Cement Corporation Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Rashtriya Ispat Nigam Limited - India
- Binh Thuan Hamico - Vietnam
- Therma Luzon, Inc, Philippines
- Xindia Steels Limited - India
- Planning Commission, India
- PNOC Exploration Corporation - Philippines
- Electricity Authority, New Zealand
- GVK Power & Infra Limited - India
- Chamber of Mines of South Africa
- European Bulk Services B.V. - Netherlands
- Star Paper Mills Limited - India
- Aboitiz Power Corporation - Philippines
- Maharashtra Electricity Regulatory Commission - India
- Semirara Mining and Power Corporation, Philippines
- Central Electricity Authority - India
- Edison Trading Spa - Italy
- Australian Coal Association
- Barasentosa Lestari - Indonesia
- Aditya Birla Group - India
- Coastal Gujarat Power Limited - India
- Kaltim Prima Coal - Indonesia
- The University of Queensland
- Semirara Mining Corp, Philippines
- Bayan Resources Tbk. - Indonesia
- South Luzon Thermal Energy Corporation
- SMC Global Power, Philippines
- MS Steel International - UAE
- Bhatia International Limited - India
- Standard Chartered Bank - UAE
- VISA Power Limited - India
- Global Green Power PLC Corporation, Philippines
- Tata Chemicals Ltd - India
- Tamil Nadu electricity Board
- Energy Link Ltd, New Zealand
- Samtan Co., Ltd - South Korea
- Meralco Power Generation, Philippines
- Sree Jayajothi Cements Limited - India
- Ministry of Mines - Canada
- Indian Energy Exchange, India
- Leighton Contractors Pty Ltd - Australia
- Pendopo Energi Batubara - Indonesia
- Maheswari Brothers Coal Limited - India
- White Energy Company Limited
- Offshore Bulk Terminal Pte Ltd, Singapore
- Savvy Resources Ltd - HongKong
- Neyveli Lignite Corporation Ltd, - India
- LBH Netherlands Bv - Netherlands
- Agrawal Coal Company - India
- Bulk Trading Sa - Switzerland
- Indo Tambangraya Megah - Indonesia
- Thiess Contractors Indonesia
- San Jose City I Power Corp, Philippines
- Altura Mining Limited, Indonesia
- Independent Power Producers Association of India
- Sindya Power Generating Company Private Ltd
- Metalloyd Limited - United Kingdom
- Indian Oil Corporation Limited
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