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