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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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Tuesday, 12 July 11
DRY BULK MARKET BEGINS WEEK ON RETREAT MODE - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
As was evident by the end of the previous week, the dry bulk market’s growth momentum was about to lose steam, something proven yesterday, whe ...
Monday, 11 July 11
REFLECTIONS ON THE FLEET REACHING ONE BILLION TONNES - CLARKSONS / HELLENIC SHIPPING
“A billion gross tonnes of shipping” has a nice ring to it. It presents the industry as a business of substance, with its 85,000 ships w ...
Sunday, 10 July 11
UNTR PROVIDES US$100 MIO TO TTA - INSIDER STORIES
PT United Tractors Tbk (UNTR) agreed to allocate US$100 million to its coal subsidiary dubbed PT Tuah Turangga Agung (TTA).The US$100 million was pa ...
Sunday, 10 July 11
HARDLY ANY CARGO FROM WC INDIA UNTIL END OF MONSOONS - VISTAAR
COALspot.com - The BDI continued to hold last week and firmed up by 27 points with cape and panama index supporting the BDI.
The BDI closed at 1, ...
Sunday, 10 July 11
PTBA INCREASES SHARES IN COAL TRAIN PROJECT - TEMPO INTERACTIVE
TEMPO Interactive reported that, PT Tambang Batubara Bukit Asam (PTBA) is still studying the plan to buy 20 percent of shares in the PT Bukit Asam T ...
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- GVK Power & Infra Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Rio Tinto Coal - Australia
- PowerSource Philippines DevCo
- Edison Trading Spa - Italy
- Georgia Ports Authority, United States
- Intertek Mineral Services - Indonesia
- Pendopo Energi Batubara - Indonesia
- Coastal Gujarat Power Limited - India
- Bangladesh Power Developement Board
- VISA Power Limited - India
- Sical Logistics Limited - India
- Gujarat Electricity Regulatory Commission - India
- Vijayanagar Sugar Pvt Ltd - India
- Wilmar Investment Holdings
- Jindal Steel & Power Ltd - India
- Aboitiz Power Corporation - Philippines
- SN Aboitiz Power Inc, Philippines
- Borneo Indobara - Indonesia
- European Bulk Services B.V. - Netherlands
- Goldman Sachs - Singapore
- GAC Shipping (India) Pvt Ltd
- Kohat Cement Company Ltd. - Pakistan
- Indo Tambangraya Megah - Indonesia
- Kobexindo Tractors - Indoneisa
- Cement Manufacturers Association - India
- SMC Global Power, Philippines
- Antam Resourcindo - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Bukit Baiduri Energy - Indonesia
- Wood Mackenzie - Singapore
- Coal and Oil Company - UAE
- Parry Sugars Refinery, India
- Bukit Asam (Persero) Tbk - Indonesia
- Dalmia Cement Bharat India
- Leighton Contractors Pty Ltd - Australia
- Electricity Authority, New Zealand
- Baramulti Group, Indonesia
- Toyota Tsusho Corporation, Japan
- Renaissance Capital - South Africa
- Asmin Koalindo Tuhup - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- The University of Queensland
- Eastern Energy - Thailand
- Xindia Steels Limited - India
- Global Coal Blending Company Limited - Australia
- Gujarat Sidhee Cement - India
- Ministry of Finance - Indonesia
- Directorate Of Revenue Intelligence - India
- Sakthi Sugars Limited - India
- Deloitte Consulting - India
- Bulk Trading Sa - Switzerland
- Interocean Group of Companies - India
- Jorong Barutama Greston.PT - Indonesia
- Siam City Cement PLC, Thailand
- Port Waratah Coal Services - Australia
- Bhushan Steel Limited - India
- India Bulls Power Limited - India
- Central Electricity Authority - India
- Neyveli Lignite Corporation Ltd, - India
- AsiaOL BioFuels Corp., Philippines
- Trasteel International SA, Italy
- ASAPP Information Group - India
- Kepco SPC Power Corporation, Philippines
- Anglo American - United Kingdom
- TeaM Sual Corporation - Philippines
- Sinarmas Energy and Mining - Indonesia
- Samtan Co., Ltd - South Korea
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sree Jayajothi Cements Limited - India
- The Treasury - Australian Government
- Minerals Council of Australia
- Petrochimia International Co. Ltd.- Taiwan
- Orica Mining Services - Indonesia
- Meralco Power Generation, Philippines
- Energy Link Ltd, New Zealand
- Latin American Coal - Colombia
- Sojitz Corporation - Japan
- Directorate General of MIneral and Coal - Indonesia
- Indian Energy Exchange, India
- Karaikal Port Pvt Ltd - India
- Manunggal Multi Energi - Indonesia
- Straits Asia Resources Limited - Singapore
- Posco Energy - South Korea
- PNOC Exploration Corporation - Philippines
- Star Paper Mills Limited - India
- Therma Luzon, Inc, Philippines
- GN Power Mariveles Coal Plant, Philippines
- CNBM International Corporation - China
- Mintek Dendrill Indonesia
- Sarangani Energy Corporation, Philippines
- Holcim Trading Pte Ltd - Singapore
- McConnell Dowell - Australia
- Billiton Holdings Pty Ltd - Australia
- Semirara Mining and Power Corporation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Coalindo Energy - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Metalloyd Limited - United Kingdom
- Marubeni Corporation - India
- Oldendorff Carriers - Singapore
- Krishnapatnam Port Company Ltd. - India
- Essar Steel Hazira Ltd - India
- Kumho Petrochemical, South Korea
- Kaltim Prima Coal - Indonesia
- Sindya Power Generating Company Private Ltd
- Maheswari Brothers Coal Limited - India
- Parliament of New Zealand
- Kalimantan Lumbung Energi - Indonesia
- Africa Commodities Group - South Africa
- Rashtriya Ispat Nigam Limited - India
- Tamil Nadu electricity Board
- Merrill Lynch Commodities Europe
- CIMB Investment Bank - Malaysia
- Bukit Makmur.PT - Indonesia
- Ministry of Transport, Egypt
- Bayan Resources Tbk. - Indonesia
- Global Business Power Corporation, Philippines
- New Zealand Coal & Carbon
- San Jose City I Power Corp, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Energy Development Corp, Philippines
- Romanian Commodities Exchange
- Thiess Contractors Indonesia
- Vizag Seaport Private Limited - India
- Iligan Light & Power Inc, Philippines
- Central Java Power - Indonesia
- Eastern Coal Council - USA
- Heidelberg Cement - Germany
- Indogreen Group - Indonesia
- International Coal Ventures Pvt Ltd - India
- OPG Power Generation Pvt Ltd - India
- SMG Consultants - Indonesia
- Mercuria Energy - Indonesia
- Orica Australia Pty. Ltd.
- Carbofer General Trading SA - India
- Singapore Mercantile Exchange
- IEA Clean Coal Centre - UK
- Agrawal Coal Company - India
- Alfred C Toepfer International GmbH - Germany
- Bharathi Cement Corporation - India
- Aditya Birla Group - India
- Bhoruka Overseas - Indonesia
- Ambuja Cements Ltd - India
- Malabar Cements Ltd - India
- ICICI Bank Limited - India
- Australian Commodity Traders Exchange
- The State Trading Corporation of India Ltd
- Vedanta Resources Plc - India
- Chamber of Mines of South Africa
- Siam City Cement - Thailand
- Bhatia International Limited - India
- Grasim Industreis Ltd - India
- Power Finance Corporation Ltd., India
- Indian Oil Corporation Limited
- TNB Fuel Sdn Bhd - Malaysia
- Electricity Generating Authority of Thailand
- Jaiprakash Power Ventures ltd
- Savvy Resources Ltd - HongKong
- Lanco Infratech Ltd - India
- Banpu Public Company Limited - Thailand
- Petron Corporation, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- South Luzon Thermal Energy Corporation
- Chettinad Cement Corporation Ltd - India
- PTC India Limited - India
- MS Steel International - UAE
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Indika Energy - Indonesia
- Mjunction Services Limited - India
- Kartika Selabumi Mining - Indonesia
- Formosa Plastics Group - Taiwan
- Videocon Industries ltd - India
- Attock Cement Pakistan Limited
- Larsen & Toubro Limited - India
- Miang Besar Coal Terminal - Indonesia
- Makarim & Taira - Indonesia
- IHS Mccloskey Coal Group - USA
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Ceylon Electricity Board - Sri Lanka
- GMR Energy Limited - India
- Mercator Lines Limited - India
- Price Waterhouse Coopers - Russia
- Semirara Mining Corp, Philippines
- Riau Bara Harum - Indonesia
- Standard Chartered Bank - UAE
- Meenaskhi Energy Private Limited - India
- Planning Commission, India
- Timah Investasi Mineral - Indoneisa
- Independent Power Producers Association of India
- Tata Chemicals Ltd - India
- Medco Energi Mining Internasional
- White Energy Company Limited
- Uttam Galva Steels Limited - India
- LBH Netherlands Bv - Netherlands
- Thai Mozambique Logistica
- Binh Thuan Hamico - Vietnam
- Indonesian Coal Mining Association
- London Commodity Brokers - England
- Ministry of Mines - Canada
- Simpson Spence & Young - Indonesia
- Economic Council, Georgia
- Madhucon Powers Ltd - India
- Global Green Power PLC Corporation, Philippines
- Salva Resources Pvt Ltd - India
- Globalindo Alam Lestari - Indonesia
- Australian Coal Association
- Pipit Mutiara Jaya. PT, Indonesia
- Commonwealth Bank - Australia
- Altura Mining Limited, Indonesia
- Ind-Barath Power Infra Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Barasentosa Lestari - Indonesia
- Kideco Jaya Agung - Indonesia
- Kapuas Tunggal Persada - Indonesia
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