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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, 10 September 11
THE FREIGHT MARKET LIKELY TO BE FIRM NEXT WEEK - CAPT. REDDY
COALspot.com - The freight market continued the upward trend during last week with BDI crossing 1,800 points and closing at 1,838 points up by 5.63 ...
Friday, 09 September 11
SUPRA BARA SECURES $20 MILLION LOAN - JP
The Jakarta Post reported that, Coal miner PT Supra Bara Energi says it has secured a US$20 million loan facility from BNP Paribas to buy heavy equi ...
Friday, 09 September 11
CAPESIZE CAN SECURE USD 17-18K SHORT PERIOD - FEARNBULK
Handy
The US Gulf has remained relatively steady, slightly more activity in the South Atlantic with owners aiming for low to mid USD 20k´s f ...
Thursday, 08 September 11
UKRAINES COAL PRODUCTION TO RISE 8% - IFANDP
Industrial fuels & power reported that, Ukraine will increase its coal output by about 8% this year compared to last year, said the country&rsqu ...
Thursday, 08 September 11
DRY BULK MARKETS RALLY COMES TO AN END - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
As was widely expected by analysts and shipbrokers alike, the latest rally of the dry bulk market came to a halt yesterday, with the Baltic Dry Inde ...
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- Salva Resources Pvt Ltd - India
- Uttam Galva Steels Limited - India
- Standard Chartered Bank - UAE
- Intertek Mineral Services - Indonesia
- LBH Netherlands Bv - Netherlands
- Goldman Sachs - Singapore
- Miang Besar Coal Terminal - Indonesia
- European Bulk Services B.V. - Netherlands
- Coalindo Energy - Indonesia
- Kumho Petrochemical, South Korea
- India Bulls Power Limited - India
- Ind-Barath Power Infra Limited - India
- Savvy Resources Ltd - HongKong
- Jaiprakash Power Ventures ltd
- GAC Shipping (India) Pvt Ltd
- Directorate General of MIneral and Coal - Indonesia
- Indonesian Coal Mining Association
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Orica Australia Pty. Ltd.
- Electricity Generating Authority of Thailand
- PNOC Exploration Corporation - Philippines
- Mintek Dendrill Indonesia
- Pendopo Energi Batubara - Indonesia
- Sical Logistics Limited - India
- Carbofer General Trading SA - India
- CNBM International Corporation - China
- Coastal Gujarat Power Limited - India
- Medco Energi Mining Internasional
- PowerSource Philippines DevCo
- Altura Mining Limited, Indonesia
- McConnell Dowell - Australia
- Tata Chemicals Ltd - India
- Binh Thuan Hamico - Vietnam
- Bayan Resources Tbk. - Indonesia
- Gujarat Sidhee Cement - India
- Electricity Authority, New Zealand
- SN Aboitiz Power Inc, Philippines
- Kideco Jaya Agung - Indonesia
- Posco Energy - South Korea
- VISA Power Limited - India
- Ambuja Cements Ltd - India
- Ministry of Finance - Indonesia
- Australian Coal Association
- Global Business Power Corporation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Straits Asia Resources Limited - Singapore
- Essar Steel Hazira Ltd - India
- Siam City Cement - Thailand
- Eastern Coal Council - USA
- Maharashtra Electricity Regulatory Commission - India
- Holcim Trading Pte Ltd - Singapore
- Karbindo Abesyapradhi - Indoneisa
- Oldendorff Carriers - Singapore
- Petron Corporation, Philippines
- Aditya Birla Group - India
- Chamber of Mines of South Africa
- Georgia Ports Authority, United States
- Dalmia Cement Bharat India
- Bukit Asam (Persero) Tbk - Indonesia
- Mjunction Services Limited - India
- Semirara Mining and Power Corporation, Philippines
- Bhatia International Limited - India
- Agrawal Coal Company - India
- Maheswari Brothers Coal Limited - India
- Meenaskhi Energy Private Limited - India
- Indo Tambangraya Megah - Indonesia
- Bulk Trading Sa - Switzerland
- Videocon Industries ltd - India
- Energy Link Ltd, New Zealand
- Attock Cement Pakistan Limited
- Independent Power Producers Association of India
- Bahari Cakrawala Sebuku - Indonesia
- OPG Power Generation Pvt Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Rashtriya Ispat Nigam Limited - India
- Meralco Power Generation, Philippines
- Kaltim Prima Coal - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Larsen & Toubro Limited - India
- Thiess Contractors Indonesia
- The State Trading Corporation of India Ltd
- Offshore Bulk Terminal Pte Ltd, Singapore
- Metalloyd Limited - United Kingdom
- Africa Commodities Group - South Africa
- Sojitz Corporation - Japan
- Xindia Steels Limited - India
- Alfred C Toepfer International GmbH - Germany
- Bukit Makmur.PT - Indonesia
- Globalindo Alam Lestari - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Jorong Barutama Greston.PT - Indonesia
- ICICI Bank Limited - India
- Samtan Co., Ltd - South Korea
- Directorate Of Revenue Intelligence - India
- Neyveli Lignite Corporation Ltd, - India
- Barasentosa Lestari - Indonesia
- Anglo American - United Kingdom
- CIMB Investment Bank - Malaysia
- Sindya Power Generating Company Private Ltd
- Heidelberg Cement - Germany
- Trasteel International SA, Italy
- Riau Bara Harum - Indonesia
- Vedanta Resources Plc - India
- Parliament of New Zealand
- Sinarmas Energy and Mining - Indonesia
- Power Finance Corporation Ltd., India
- Bharathi Cement Corporation - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Economic Council, Georgia
- TeaM Sual Corporation - Philippines
- Sakthi Sugars Limited - India
- Bangladesh Power Developement Board
- Parry Sugars Refinery, India
- Kepco SPC Power Corporation, Philippines
- Cement Manufacturers Association - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Indogreen Group - Indonesia
- MS Steel International - UAE
- Makarim & Taira - Indonesia
- The Treasury - Australian Government
- PetroVietnam Power Coal Import and Supply Company
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Orica Mining Services - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Edison Trading Spa - Italy
- Kapuas Tunggal Persada - Indonesia
- Bhushan Steel Limited - India
- Port Waratah Coal Services - Australia
- Semirara Mining Corp, Philippines
- Lanco Infratech Ltd - India
- SMC Global Power, Philippines
- Indian Energy Exchange, India
- Antam Resourcindo - Indonesia
- White Energy Company Limited
- Eastern Energy - Thailand
- Commonwealth Bank - Australia
- Singapore Mercantile Exchange
- GVK Power & Infra Limited - India
- Mercator Lines Limited - India
- Kartika Selabumi Mining - Indonesia
- Australian Commodity Traders Exchange
- ASAPP Information Group - India
- Kobexindo Tractors - Indoneisa
- Siam City Cement PLC, Thailand
- Banpu Public Company Limited - Thailand
- Baramulti Group, Indonesia
- Interocean Group of Companies - India
- Indian Oil Corporation Limited
- Marubeni Corporation - India
- Ministry of Mines - Canada
- Planning Commission, India
- IHS Mccloskey Coal Group - USA
- Wilmar Investment Holdings
- GMR Energy Limited - India
- Timah Investasi Mineral - Indoneisa
- San Jose City I Power Corp, Philippines
- Energy Development Corp, Philippines
- Price Waterhouse Coopers - Russia
- Petrochimia International Co. Ltd.- Taiwan
- Therma Luzon, Inc, Philippines
- Formosa Plastics Group - Taiwan
- Kalimantan Lumbung Energi - Indonesia
- Gujarat Electricity Regulatory Commission - India
- IEA Clean Coal Centre - UK
- Merrill Lynch Commodities Europe
- Cigading International Bulk Terminal - Indonesia
- Central Java Power - Indonesia
- Karaikal Port Pvt Ltd - India
- Ministry of Transport, Egypt
- Latin American Coal - Colombia
- Grasim Industreis Ltd - India
- Jindal Steel & Power Ltd - India
- Bukit Baiduri Energy - Indonesia
- Deloitte Consulting - India
- Chettinad Cement Corporation Ltd - India
- Renaissance Capital - South Africa
- Borneo Indobara - Indonesia
- Global Coal Blending Company Limited - Australia
- Wood Mackenzie - Singapore
- Ceylon Electricity Board - Sri Lanka
- Romanian Commodities Exchange
- Coal and Oil Company - UAE
- Thai Mozambique Logistica
- Star Paper Mills Limited - India
- Rio Tinto Coal - Australia
- Krishnapatnam Port Company Ltd. - India
- Simpson Spence & Young - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Sree Jayajothi Cements Limited - India
- Bhoruka Overseas - Indonesia
- Vizag Seaport Private Limited - India
- International Coal Ventures Pvt Ltd - India
- Madhucon Powers Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Manunggal Multi Energi - Indonesia
- Malabar Cements Ltd - India
- London Commodity Brokers - England
- Global Green Power PLC Corporation, Philippines
- South Luzon Thermal Energy Corporation
- Mercuria Energy - Indonesia
- Iligan Light & Power Inc, Philippines
- PTC India Limited - India
- The University of Queensland
- GN Power Mariveles Coal Plant, Philippines
- Sarangani Energy Corporation, Philippines
- New Zealand Coal & Carbon
- Toyota Tsusho Corporation, Japan
- Central Electricity Authority - India
- Tamil Nadu electricity Board
- AsiaOL BioFuels Corp., Philippines
- Asmin Koalindo Tuhup - Indonesia
- Minerals Council of Australia
- SMG Consultants - Indonesia
- Aboitiz Power Corporation - Philippines
- Indika Energy - Indonesia
- Leighton Contractors Pty Ltd - Australia
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