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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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Saturday, 15 October 11
BUNKER PRICES AND DEMANDS PUSHED FREIGHT RATES UP - VISTAAR
COALspot.com - The market continued to be firm with all segments moving up with biggest gain in Handy size segment up by 15 pct. The BDI was u ...
Saturday, 15 October 11
BENGAL COAL IMPORT TEST - THE TELEGRAPH
The Telegraph reported that, the power position in Bengal improved today but alarm bells are ringing over imported coal stocks that are running out ...
Friday, 14 October 11
CAPE DERIVATIVES MARKET HAS NOT REFLECTED OWNERS EXPECTATIONS' - FEARNBULK
Handy
The Atlantic market continued its upward trend, with fresh cargo entering the market. Skaw Passero to US Gulf climbed US$ 1500 from la ...
Friday, 14 October 11
ADARO BUYS SERVO MEDA FOR RP200 BIO - INSIDER STORIES
Insider Stories reported that, PT Adaro Energy Tbk (ADRO) announced that its subsidiary PT Alam Tri Abadi (ATI), acquired 35% stake in PT Serv ...
Thursday, 13 October 11
DRY BULK MARKETS RALLY CONTINUES, BUT ANALYSTS WARN IT WILL BE SHORTLIVED - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market continued its push forward yesterday, for yet another session, as the BDI (Baltic Dry Index), the industry’s benchmark edg ...
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- Kumho Petrochemical, South Korea
- Barasentosa Lestari - Indonesia
- IHS Mccloskey Coal Group - USA
- Electricity Authority, New Zealand
- Intertek Mineral Services - Indonesia
- Maheswari Brothers Coal Limited - India
- Aboitiz Power Corporation - Philippines
- Directorate General of MIneral and Coal - Indonesia
- Port Waratah Coal Services - Australia
- Standard Chartered Bank - UAE
- Borneo Indobara - Indonesia
- Attock Cement Pakistan Limited
- Binh Thuan Hamico - Vietnam
- Eastern Coal Council - USA
- Pendopo Energi Batubara - Indonesia
- Wood Mackenzie - Singapore
- London Commodity Brokers - England
- VISA Power Limited - India
- Jorong Barutama Greston.PT - Indonesia
- International Coal Ventures Pvt Ltd - India
- Siam City Cement PLC, Thailand
- Orica Mining Services - Indonesia
- Lanco Infratech Ltd - India
- Electricity Generating Authority of Thailand
- Indonesian Coal Mining Association
- Mintek Dendrill Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Merrill Lynch Commodities Europe
- European Bulk Services B.V. - Netherlands
- Bukit Asam (Persero) Tbk - Indonesia
- Energy Link Ltd, New Zealand
- Indian Oil Corporation Limited
- Petron Corporation, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Orica Australia Pty. Ltd.
- Australian Coal Association
- Salva Resources Pvt Ltd - India
- Dalmia Cement Bharat India
- Bukit Baiduri Energy - Indonesia
- Ambuja Cements Ltd - India
- Makarim & Taira - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Essar Steel Hazira Ltd - India
- Videocon Industries ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Australian Commodity Traders Exchange
- Georgia Ports Authority, United States
- Africa Commodities Group - South Africa
- Star Paper Mills Limited - India
- Coalindo Energy - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Manunggal Multi Energi - Indonesia
- Ministry of Transport, Egypt
- PTC India Limited - India
- Global Business Power Corporation, Philippines
- Trasteel International SA, Italy
- Gujarat Mineral Development Corp Ltd - India
- Indian Energy Exchange, India
- Bayan Resources Tbk. - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kobexindo Tractors - Indoneisa
- Posco Energy - South Korea
- Banpu Public Company Limited - Thailand
- Metalloyd Limited - United Kingdom
- SMG Consultants - Indonesia
- OPG Power Generation Pvt Ltd - India
- Jaiprakash Power Ventures ltd
- IEA Clean Coal Centre - UK
- Heidelberg Cement - Germany
- Sinarmas Energy and Mining - Indonesia
- LBH Netherlands Bv - Netherlands
- Sree Jayajothi Cements Limited - India
- Savvy Resources Ltd - HongKong
- Larsen & Toubro Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Kohat Cement Company Ltd. - Pakistan
- Bank of Tokyo Mitsubishi UFJ Ltd
- Deloitte Consulting - India
- Karaikal Port Pvt Ltd - India
- Riau Bara Harum - Indonesia
- GAC Shipping (India) Pvt Ltd
- Aditya Birla Group - India
- Xindia Steels Limited - India
- Marubeni Corporation - India
- Maharashtra Electricity Regulatory Commission - India
- Rashtriya Ispat Nigam Limited - India
- Tata Chemicals Ltd - India
- Power Finance Corporation Ltd., India
- Therma Luzon, Inc, Philippines
- Thai Mozambique Logistica
- Semirara Mining Corp, Philippines
- Sojitz Corporation - Japan
- TeaM Sual Corporation - Philippines
- AsiaOL BioFuels Corp., Philippines
- Chettinad Cement Corporation Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Sical Logistics Limited - India
- McConnell Dowell - Australia
- TNB Fuel Sdn Bhd - Malaysia
- Bhatia International Limited - India
- Bharathi Cement Corporation - India
- Latin American Coal - Colombia
- Indika Energy - Indonesia
- Meralco Power Generation, Philippines
- Bulk Trading Sa - Switzerland
- Iligan Light & Power Inc, Philippines
- Siam City Cement - Thailand
- Gujarat Electricity Regulatory Commission - India
- Meenaskhi Energy Private Limited - India
- Energy Development Corp, Philippines
- Oldendorff Carriers - Singapore
- Ministry of Finance - Indonesia
- Price Waterhouse Coopers - Russia
- Baramulti Group, Indonesia
- Antam Resourcindo - Indonesia
- White Energy Company Limited
- Indo Tambangraya Megah - Indonesia
- Tamil Nadu electricity Board
- Formosa Plastics Group - Taiwan
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Minerals Council of Australia
- Uttam Galva Steels Limited - India
- Timah Investasi Mineral - Indoneisa
- Chamber of Mines of South Africa
- Cigading International Bulk Terminal - Indonesia
- Coastal Gujarat Power Limited - India
- Holcim Trading Pte Ltd - Singapore
- CIMB Investment Bank - Malaysia
- Gujarat Sidhee Cement - India
- Parry Sugars Refinery, India
- ICICI Bank Limited - India
- Leighton Contractors Pty Ltd - Australia
- GN Power Mariveles Coal Plant, Philippines
- Sindya Power Generating Company Private Ltd
- Economic Council, Georgia
- Semirara Mining and Power Corporation, Philippines
- PNOC Exploration Corporation - Philippines
- Mercuria Energy - Indonesia
- The University of Queensland
- Kartika Selabumi Mining - Indonesia
- Independent Power Producers Association of India
- Carbofer General Trading SA - India
- Cement Manufacturers Association - India
- Global Coal Blending Company Limited - Australia
- Renaissance Capital - South Africa
- Singapore Mercantile Exchange
- Mercator Lines Limited - India
- Mjunction Services Limited - India
- Indogreen Group - Indonesia
- Toyota Tsusho Corporation, Japan
- GVK Power & Infra Limited - India
- Goldman Sachs - Singapore
- Kideco Jaya Agung - Indonesia
- Simpson Spence & Young - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- India Bulls Power Limited - India
- Samtan Co., Ltd - South Korea
- Parliament of New Zealand
- Ministry of Mines - Canada
- Sakthi Sugars Limited - India
- Interocean Group of Companies - India
- Edison Trading Spa - Italy
- Bangladesh Power Developement Board
- Ind-Barath Power Infra Limited - India
- Central Electricity Authority - India
- SN Aboitiz Power Inc, Philippines
- Rio Tinto Coal - Australia
- Petrochimia International Co. Ltd.- Taiwan
- Bahari Cakrawala Sebuku - Indonesia
- CNBM International Corporation - China
- Bukit Makmur.PT - Indonesia
- GMR Energy Limited - India
- Thiess Contractors Indonesia
- New Zealand Coal & Carbon
- The State Trading Corporation of India Ltd
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Central Java Power - Indonesia
- Eastern Energy - Thailand
- Kapuas Tunggal Persada - Indonesia
- Straits Asia Resources Limited - Singapore
- Directorate Of Revenue Intelligence - India
- Kepco SPC Power Corporation, Philippines
- Global Green Power PLC Corporation, Philippines
- Bhoruka Overseas - Indonesia
- Anglo American - United Kingdom
- ASAPP Information Group - India
- Wilmar Investment Holdings
- San Jose City I Power Corp, Philippines
- The Treasury - Australian Government
- Jindal Steel & Power Ltd - India
- Grasim Industreis Ltd - India
- Malabar Cements Ltd - India
- Ceylon Electricity Board - Sri Lanka
- SMC Global Power, Philippines
- Miang Besar Coal Terminal - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Kalimantan Lumbung Energi - Indonesia
- Kaltim Prima Coal - Indonesia
- Globalindo Alam Lestari - Indonesia
- Krishnapatnam Port Company Ltd. - India
- PowerSource Philippines DevCo
- Commonwealth Bank - Australia
- Medco Energi Mining Internasional
- Pipit Mutiara Jaya. PT, Indonesia
- Sarangani Energy Corporation, Philippines
- Bhushan Steel Limited - India
- Madhucon Powers Ltd - India
- Coal and Oil Company - UAE
- Asia Pacific Energy Resources Ventures Inc, Philippines
- South Luzon Thermal Energy Corporation
- Romanian Commodities Exchange
- Agrawal Coal Company - India
- Vedanta Resources Plc - India
- MS Steel International - UAE
- Altura Mining Limited, Indonesia
- Vizag Seaport Private Limited - India
- Planning Commission, India
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