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