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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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Thursday, 14 July 11
INDO GOVT. SETS JULY COAL REFERENCE PRICE AT US$ 118.24 PER TON
COALspot.com - The Ministry of Energy & Mineral Resources of Indonesia sets coal spot price benchmark for July 2011 at US$ 118.24 per ton, US$ 0 ...
Thursday, 14 July 11
DRY BULK MARKET KEEPS FALLING ON WEAK CAPESIZE SENTIMENT - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market kept on retreating on Wednesday, with the Baltic Dry Index (BDI) falling to 1,383 points, from 1,411 of the previous day. Capesi ...
Thursday, 14 July 11
UNITED TRACTORS BUYS DUTA SEJAHTERA - INSIDER STORIES
Insider Stories reported that, PT United Tractors Tbk (UNTR), via a wholly-owned subsidiary PT Tuah Turangga Agung, will acquire PT Duta Sejahtera a ...
Wednesday, 13 July 11
ANOTHER FIRMER WEEK FOR THE CAPES - BRS
Barry Rogliano Salles reported that, there were mixed results for the dry bulk market this week: the Capesize and Panamax markets performed well gai ...
Tuesday, 12 July 11
INDONESIAN MINERS PLAN $70M INVESTMENT TO UPGRADE QUALITY OF COAL - THE JAKARTA GLOBE
One of the leading english language news paper in indonesia, the Jakarta globe reported that, as the government implements a ban on the export of po ...
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- Savvy Resources Ltd - HongKong
- Central Java Power - Indonesia
- Indian Oil Corporation Limited
- Kobexindo Tractors - Indoneisa
- Xindia Steels Limited - India
- Economic Council, Georgia
- Vijayanagar Sugar Pvt Ltd - India
- Pendopo Energi Batubara - Indonesia
- White Energy Company Limited
- Indian Energy Exchange, India
- Maharashtra Electricity Regulatory Commission - India
- Ceylon Electricity Board - Sri Lanka
- Global Coal Blending Company Limited - Australia
- GAC Shipping (India) Pvt Ltd
- Orica Australia Pty. Ltd.
- Sical Logistics Limited - India
- Petron Corporation, Philippines
- Billiton Holdings Pty Ltd - Australia
- Latin American Coal - Colombia
- Australian Commodity Traders Exchange
- Ministry of Transport, Egypt
- Videocon Industries ltd - India
- Heidelberg Cement - Germany
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Indogreen Group - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Alfred C Toepfer International GmbH - Germany
- Wood Mackenzie - Singapore
- Ind-Barath Power Infra Limited - India
- Semirara Mining and Power Corporation, Philippines
- Medco Energi Mining Internasional
- CNBM International Corporation - China
- Jorong Barutama Greston.PT - Indonesia
- Lanco Infratech Ltd - India
- Bhoruka Overseas - Indonesia
- Semirara Mining Corp, Philippines
- South Luzon Thermal Energy Corporation
- Indonesian Coal Mining Association
- Trasteel International SA, Italy
- Merrill Lynch Commodities Europe
- Energy Development Corp, Philippines
- Romanian Commodities Exchange
- Cigading International Bulk Terminal - Indonesia
- Dalmia Cement Bharat India
- Riau Bara Harum - Indonesia
- Parliament of New Zealand
- Kideco Jaya Agung - Indonesia
- Agrawal Coal Company - India
- Therma Luzon, Inc, Philippines
- Kumho Petrochemical, South Korea
- Gujarat Mineral Development Corp Ltd - India
- Independent Power Producers Association of India
- Neyveli Lignite Corporation Ltd, - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- TeaM Sual Corporation - Philippines
- Ambuja Cements Ltd - India
- Electricity Authority, New Zealand
- The University of Queensland
- PowerSource Philippines DevCo
- India Bulls Power Limited - India
- Kapuas Tunggal Persada - Indonesia
- Sakthi Sugars Limited - India
- IEA Clean Coal Centre - UK
- Jaiprakash Power Ventures ltd
- Holcim Trading Pte Ltd - Singapore
- Price Waterhouse Coopers - Russia
- Sinarmas Energy and Mining - Indonesia
- Power Finance Corporation Ltd., India
- Thiess Contractors Indonesia
- Barasentosa Lestari - Indonesia
- Bhatia International Limited - India
- Siam City Cement PLC, Thailand
- Vedanta Resources Plc - India
- Asmin Koalindo Tuhup - Indonesia
- Chamber of Mines of South Africa
- Carbofer General Trading SA - India
- Rio Tinto Coal - Australia
- Ministry of Finance - Indonesia
- Sindya Power Generating Company Private Ltd
- Global Green Power PLC Corporation, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Makarim & Taira - Indonesia
- Cement Manufacturers Association - India
- Directorate Of Revenue Intelligence - India
- McConnell Dowell - Australia
- Standard Chartered Bank - UAE
- Star Paper Mills Limited - India
- Mercator Lines Limited - India
- Iligan Light & Power Inc, Philippines
- SMG Consultants - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- VISA Power Limited - India
- Larsen & Toubro Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Global Business Power Corporation, Philippines
- Jindal Steel & Power Ltd - India
- ICICI Bank Limited - India
- Orica Mining Services - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Timah Investasi Mineral - Indoneisa
- Uttam Galva Steels Limited - India
- Simpson Spence & Young - Indonesia
- Sojitz Corporation - Japan
- Intertek Mineral Services - Indonesia
- Bangladesh Power Developement Board
- Sarangani Energy Corporation, Philippines
- Rashtriya Ispat Nigam Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Interocean Group of Companies - India
- Tamil Nadu electricity Board
- Globalindo Alam Lestari - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Indo Tambangraya Megah - Indonesia
- PNOC Exploration Corporation - Philippines
- Africa Commodities Group - South Africa
- Posco Energy - South Korea
- Anglo American - United Kingdom
- Bukit Baiduri Energy - Indonesia
- Mintek Dendrill Indonesia
- Banpu Public Company Limited - Thailand
- The Treasury - Australian Government
- Attock Cement Pakistan Limited
- Metalloyd Limited - United Kingdom
- Bulk Trading Sa - Switzerland
- Toyota Tsusho Corporation, Japan
- Indika Energy - Indonesia
- Kepco SPC Power Corporation, Philippines
- Kalimantan Lumbung Energi - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Marubeni Corporation - India
- Kartika Selabumi Mining - Indonesia
- Altura Mining Limited, Indonesia
- MS Steel International - UAE
- Oldendorff Carriers - Singapore
- Chettinad Cement Corporation Ltd - India
- Mercuria Energy - Indonesia
- Gujarat Sidhee Cement - India
- Wilmar Investment Holdings
- Essar Steel Hazira Ltd - India
- Coalindo Energy - Indonesia
- Minerals Council of Australia
- Karaikal Port Pvt Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- GVK Power & Infra Limited - India
- Bayan Resources Tbk. - Indonesia
- Parry Sugars Refinery, India
- Aboitiz Power Corporation - Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- SN Aboitiz Power Inc, Philippines
- Malabar Cements Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Bhushan Steel Limited - India
- Miang Besar Coal Terminal - Indonesia
- Edison Trading Spa - Italy
- New Zealand Coal & Carbon
- Krishnapatnam Port Company Ltd. - India
- Maheswari Brothers Coal Limited - India
- Planning Commission, India
- Electricity Generating Authority of Thailand
- Karbindo Abesyapradhi - Indoneisa
- CIMB Investment Bank - Malaysia
- Formosa Plastics Group - Taiwan
- Binh Thuan Hamico - Vietnam
- Madhucon Powers Ltd - India
- IHS Mccloskey Coal Group - USA
- Bukit Asam (Persero) Tbk - Indonesia
- Eastern Coal Council - USA
- Singapore Mercantile Exchange
- Grasim Industreis Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- GMR Energy Limited - India
- Bukit Makmur.PT - Indonesia
- Coal and Oil Company - UAE
- Deloitte Consulting - India
- Central Electricity Authority - India
- Borneo Indobara - Indonesia
- Port Waratah Coal Services - Australia
- London Commodity Brokers - England
- OPG Power Generation Pvt Ltd - India
- Bharathi Cement Corporation - India
- Georgia Ports Authority, United States
- Energy Link Ltd, New Zealand
- Eastern Energy - Thailand
- Sree Jayajothi Cements Limited - India
- Straits Asia Resources Limited - Singapore
- Manunggal Multi Energi - Indonesia
- Kaltim Prima Coal - Indonesia
- LBH Netherlands Bv - Netherlands
- Mjunction Services Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Renaissance Capital - South Africa
- Leighton Contractors Pty Ltd - Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Meenaskhi Energy Private Limited - India
- Samtan Co., Ltd - South Korea
- PTC India Limited - India
- Coastal Gujarat Power Limited - India
- International Coal Ventures Pvt Ltd - India
- Commonwealth Bank - Australia
- European Bulk Services B.V. - Netherlands
- Goldman Sachs - Singapore
- ASAPP Information Group - India
- AsiaOL BioFuels Corp., Philippines
- Aditya Birla Group - India
- San Jose City I Power Corp, Philippines
- Vizag Seaport Private Limited - India
- Baramulti Group, Indonesia
- Siam City Cement - Thailand
- Australian Coal Association
- Salva Resources Pvt Ltd - India
- Ministry of Mines - Canada
- Meralco Power Generation, Philippines
- Antam Resourcindo - Indonesia
- SMC Global Power, Philippines
- Thai Mozambique Logistica
- Tata Chemicals Ltd - India
- The State Trading Corporation of India Ltd
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