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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, 23 July 11
PANAMAX MARKET FACED A LIMITED ACTIVITY IN ALL BASINS
Handy
Atlantic softening across all segments with little fresh enquiry ex Bsea/Cont/USG and ECSA. Trips to Far east remain healthy. More cargoes ex ...
Friday, 22 July 11
MARUBENI ACQUIRING 42.86% SHARE OF YTL JAWA POWER HOLDINGS
COALspot.com - Japan’s Marubeni Corporation acquisition 42.86% stake in YTL Jawa Power Holdings BV, which owns a 35% equity interest in Indone ...
Thursday, 21 July 11
INDIA IMPORTS 36.033 MILLION TONS OF INDONESIAN COAL TILL JUNE
COALspot.com - Indonesia shipped 28.27 Million tons of coal in June 2011, a 2.3 percent lesser than May export of about 28.962 million tons, I ...
Thursday, 21 July 11
COAL PRICES ARE AT US$ 120 A TONNE
COALspot.com - Indonesian coal production in 2011 is expected to reach 360 million tons or 5.8 percent higher than government's forecasts. The incr ...
Thursday, 21 July 11
DRY BULK RATES EDGE FURTHER DOWN ON WEAK MARKET SENTIMENT - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market fell once again on Wednesday marking the ninth straight day of losses. The industry’s benchmark, the Baltic Dry Index (BDI ...
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- Essar Steel Hazira Ltd - India
- Trasteel International SA, Italy
- ASAPP Information Group - India
- Bahari Cakrawala Sebuku - Indonesia
- Australian Commodity Traders Exchange
- Attock Cement Pakistan Limited
- Banpu Public Company Limited - Thailand
- Semirara Mining and Power Corporation, Philippines
- Larsen & Toubro Limited - India
- Intertek Mineral Services - Indonesia
- Simpson Spence & Young - Indonesia
- Australian Coal Association
- Indogreen Group - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Planning Commission, India
- Barasentosa Lestari - Indonesia
- PNOC Exploration Corporation - Philippines
- Goldman Sachs - Singapore
- Heidelberg Cement - Germany
- Independent Power Producers Association of India
- Formosa Plastics Group - Taiwan
- Global Coal Blending Company Limited - Australia
- Chamber of Mines of South Africa
- TNB Fuel Sdn Bhd - Malaysia
- Meralco Power Generation, Philippines
- Economic Council, Georgia
- Anglo American - United Kingdom
- Kohat Cement Company Ltd. - Pakistan
- Vijayanagar Sugar Pvt Ltd - India
- Borneo Indobara - Indonesia
- Power Finance Corporation Ltd., India
- MS Steel International - UAE
- Vizag Seaport Private Limited - India
- Commonwealth Bank - Australia
- LBH Netherlands Bv - Netherlands
- Marubeni Corporation - India
- IHS Mccloskey Coal Group - USA
- Kideco Jaya Agung - Indonesia
- Thai Mozambique Logistica
- Sree Jayajothi Cements Limited - India
- Orica Mining Services - Indonesia
- Africa Commodities Group - South Africa
- Kumho Petrochemical, South Korea
- Price Waterhouse Coopers - Russia
- Mjunction Services Limited - India
- Bayan Resources Tbk. - Indonesia
- Georgia Ports Authority, United States
- Karbindo Abesyapradhi - Indoneisa
- Sarangani Energy Corporation, Philippines
- Kobexindo Tractors - Indoneisa
- Jaiprakash Power Ventures ltd
- Mintek Dendrill Indonesia
- Interocean Group of Companies - India
- London Commodity Brokers - England
- PowerSource Philippines DevCo
- Electricity Generating Authority of Thailand
- IEA Clean Coal Centre - UK
- Krishnapatnam Port Company Ltd. - India
- Antam Resourcindo - Indonesia
- Riau Bara Harum - Indonesia
- McConnell Dowell - Australia
- Bharathi Cement Corporation - India
- Miang Besar Coal Terminal - Indonesia
- Bulk Trading Sa - Switzerland
- Binh Thuan Hamico - Vietnam
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Chettinad Cement Corporation Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Xindia Steels Limited - India
- Petron Corporation, Philippines
- Ministry of Finance - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Tamil Nadu electricity Board
- Petrochimia International Co. Ltd.- Taiwan
- SMG Consultants - Indonesia
- Kepco SPC Power Corporation, Philippines
- Coal and Oil Company - UAE
- Semirara Mining Corp, Philippines
- Grasim Industreis Ltd - India
- Toyota Tsusho Corporation, Japan
- Baramulti Group, Indonesia
- Merrill Lynch Commodities Europe
- VISA Power Limited - India
- ICICI Bank Limited - India
- The State Trading Corporation of India Ltd
- Bukit Asam (Persero) Tbk - Indonesia
- Ministry of Mines - Canada
- Cigading International Bulk Terminal - Indonesia
- International Coal Ventures Pvt Ltd - India
- Kartika Selabumi Mining - Indonesia
- PTC India Limited - India
- Rio Tinto Coal - Australia
- Global Business Power Corporation, Philippines
- Iligan Light & Power Inc, Philippines
- Sindya Power Generating Company Private Ltd
- SMC Global Power, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Romanian Commodities Exchange
- Carbofer General Trading SA - India
- Timah Investasi Mineral - Indoneisa
- Bhoruka Overseas - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Malabar Cements Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- White Energy Company Limited
- Jorong Barutama Greston.PT - Indonesia
- Bhatia International Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Central Electricity Authority - India
- Ind-Barath Power Infra Limited - India
- GMR Energy Limited - India
- San Jose City I Power Corp, Philippines
- Eastern Energy - Thailand
- Uttam Galva Steels Limited - India
- SN Aboitiz Power Inc, Philippines
- Dalmia Cement Bharat India
- Latin American Coal - Colombia
- Manunggal Multi Energi - Indonesia
- GVK Power & Infra Limited - India
- Jindal Steel & Power Ltd - India
- Singapore Mercantile Exchange
- OPG Power Generation Pvt Ltd - India
- Maheswari Brothers Coal Limited - India
- Coalindo Energy - Indonesia
- Samtan Co., Ltd - South Korea
- Gujarat Mineral Development Corp Ltd - India
- Sojitz Corporation - Japan
- Karaikal Port Pvt Ltd - India
- Medco Energi Mining Internasional
- PetroVietnam Power Coal Import and Supply Company
- GAC Shipping (India) Pvt Ltd
- Indonesian Coal Mining Association
- Savvy Resources Ltd - HongKong
- Pendopo Energi Batubara - Indonesia
- Makarim & Taira - Indonesia
- Wood Mackenzie - Singapore
- Billiton Holdings Pty Ltd - Australia
- Indian Oil Corporation Limited
- Meenaskhi Energy Private Limited - India
- Agrawal Coal Company - India
- Siam City Cement PLC, Thailand
- Kaltim Prima Coal - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Directorate Of Revenue Intelligence - India
- Central Java Power - Indonesia
- Oldendorff Carriers - Singapore
- Renaissance Capital - South Africa
- Sakthi Sugars Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Vedanta Resources Plc - India
- Bukit Baiduri Energy - Indonesia
- Parry Sugars Refinery, India
- The Treasury - Australian Government
- Cement Manufacturers Association - India
- South Luzon Thermal Energy Corporation
- Pipit Mutiara Jaya. PT, Indonesia
- Indo Tambangraya Megah - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Thiess Contractors Indonesia
- Deloitte Consulting - India
- Therma Luzon, Inc, Philippines
- Ambuja Cements Ltd - India
- Bangladesh Power Developement Board
- TeaM Sual Corporation - Philippines
- Globalindo Alam Lestari - Indonesia
- Parliament of New Zealand
- Leighton Contractors Pty Ltd - Australia
- Ministry of Transport, Egypt
- Aditya Birla Group - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Directorate General of MIneral and Coal - Indonesia
- Metalloyd Limited - United Kingdom
- Ceylon Electricity Board - Sri Lanka
- Aboitiz Power Corporation - Philippines
- Minerals Council of Australia
- Coastal Gujarat Power Limited - India
- Indian Energy Exchange, India
- Orica Australia Pty. Ltd.
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Mercuria Energy - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Posco Energy - South Korea
- Tata Chemicals Ltd - India
- Electricity Authority, New Zealand
- Altura Mining Limited, Indonesia
- Edison Trading Spa - Italy
- Bhushan Steel Limited - India
- Bukit Makmur.PT - Indonesia
- Wilmar Investment Holdings
- European Bulk Services B.V. - Netherlands
- Port Waratah Coal Services - Australia
- Gujarat Sidhee Cement - India
- Videocon Industries ltd - India
- Energy Development Corp, Philippines
- Global Green Power PLC Corporation, Philippines
- The University of Queensland
- India Bulls Power Limited - India
- Siam City Cement - Thailand
- Eastern Coal Council - USA
- AsiaOL BioFuels Corp., Philippines
- Kapuas Tunggal Persada - Indonesia
- Mercator Lines Limited - India
- Salva Resources Pvt Ltd - India
- CNBM International Corporation - China
- Madhucon Powers Ltd - India
- New Zealand Coal & Carbon
- Standard Chartered Bank - UAE
- Sical Logistics Limited - India
- Star Paper Mills Limited - India
- Indika Energy - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Rashtriya Ispat Nigam Limited - India
- Lanco Infratech Ltd - India
- Straits Asia Resources Limited - Singapore
- Energy Link Ltd, New Zealand
- CIMB Investment Bank - Malaysia
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