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