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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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Sunday, 03 July 11
INDONESIAN GOVERNMENT HAS CLEARED 1509 COAL IUP'S AS CLEAR AND CLEAN
COALspot.com - The Directorate general of mineral & coal of Indonesia has cleared around 1,509 IUP holders (coal mining companies) as "clea ...
Sunday, 03 July 11
MONSOON IN INDIA PUSHED FREIGHTS UP FROM INDONESIA TO WC INDIA - VISTAAR
COALspot.com - The BDI continued to hold closing just 2 points below last week at 1,422 points which was supported by Cape index which was up by 71 ...
Friday, 01 July 11
BEN LINE OPENS A NEW OFFICE IN BERAU
COALspot.com - Ben Line Agencies has announced that it has opened a new office in the busy coal loading port of Berau in East Kalimantan increasing ...
Friday, 01 July 11
CAPESIZE RATES TO REMAIN DEPRESSED IN COMING MONTHS SAYS SHIPPING ORGANIZATION - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
In a recent report, BIMCO reassessed that Capesize freight rates will remain in depressed territory in the coming months. Capesize Time Charter Aver ...
Thursday, 30 June 11
DRY BULK MARKET SHOWS SIGNS OF FURTHER WEAKENING - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market seems to be unable to shake off the additional supply of vessels, an oversupply issue of grave concern that would have occured e ...
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- Riau Bara Harum - Indonesia
- Siam City Cement - Thailand
- Simpson Spence & Young - Indonesia
- Electricity Generating Authority of Thailand
- Xindia Steels Limited - India
- Semirara Mining and Power Corporation, Philippines
- Gujarat Sidhee Cement - India
- Bhushan Steel Limited - India
- The Treasury - Australian Government
- Sojitz Corporation - Japan
- Offshore Bulk Terminal Pte Ltd, Singapore
- Binh Thuan Hamico - Vietnam
- White Energy Company Limited
- Ambuja Cements Ltd - India
- Tamil Nadu electricity Board
- GAC Shipping (India) Pvt Ltd
- Star Paper Mills Limited - India
- Coalindo Energy - Indonesia
- ICICI Bank Limited - India
- Straits Asia Resources Limited - Singapore
- European Bulk Services B.V. - Netherlands
- CIMB Investment Bank - Malaysia
- Electricity Authority, New Zealand
- Antam Resourcindo - Indonesia
- ASAPP Information Group - India
- Romanian Commodities Exchange
- Central Java Power - Indonesia
- LBH Netherlands Bv - Netherlands
- Malabar Cements Ltd - India
- Eastern Coal Council - USA
- Jorong Barutama Greston.PT - Indonesia
- Semirara Mining Corp, Philippines
- Bhoruka Overseas - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Global Coal Blending Company Limited - Australia
- Coastal Gujarat Power Limited - India
- South Luzon Thermal Energy Corporation
- Bahari Cakrawala Sebuku - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Indonesian Coal Mining Association
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Lanco Infratech Ltd - India
- Heidelberg Cement - Germany
- Timah Investasi Mineral - Indoneisa
- London Commodity Brokers - England
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Africa Commodities Group - South Africa
- Ministry of Mines - Canada
- Indian Oil Corporation Limited
- Asmin Koalindo Tuhup - Indonesia
- Maheswari Brothers Coal Limited - India
- Sakthi Sugars Limited - India
- Samtan Co., Ltd - South Korea
- Global Green Power PLC Corporation, Philippines
- Interocean Group of Companies - India
- Bukit Asam (Persero) Tbk - Indonesia
- Energy Link Ltd, New Zealand
- Vedanta Resources Plc - India
- Parry Sugars Refinery, India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Central Electricity Authority - India
- Petrochimia International Co. Ltd.- Taiwan
- San Jose City I Power Corp, Philippines
- Dalmia Cement Bharat India
- Neyveli Lignite Corporation Ltd, - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Jindal Steel & Power Ltd - India
- Savvy Resources Ltd - HongKong
- Rashtriya Ispat Nigam Limited - India
- Australian Coal Association
- TNB Fuel Sdn Bhd - Malaysia
- International Coal Ventures Pvt Ltd - India
- Indogreen Group - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Commonwealth Bank - Australia
- Price Waterhouse Coopers - Russia
- GVK Power & Infra Limited - India
- Baramulti Group, Indonesia
- Port Waratah Coal Services - Australia
- Madhucon Powers Ltd - India
- Karaikal Port Pvt Ltd - India
- Intertek Mineral Services - Indonesia
- Chamber of Mines of South Africa
- Orica Mining Services - Indonesia
- Bulk Trading Sa - Switzerland
- Metalloyd Limited - United Kingdom
- New Zealand Coal & Carbon
- Rio Tinto Coal - Australia
- TeaM Sual Corporation - Philippines
- Essar Steel Hazira Ltd - India
- Ind-Barath Power Infra Limited - India
- Standard Chartered Bank - UAE
- Posco Energy - South Korea
- Meenaskhi Energy Private Limited - India
- Banpu Public Company Limited - Thailand
- Bukit Baiduri Energy - Indonesia
- Kobexindo Tractors - Indoneisa
- Tata Chemicals Ltd - India
- Toyota Tsusho Corporation, Japan
- Krishnapatnam Port Company Ltd. - India
- Kideco Jaya Agung - Indonesia
- Indian Energy Exchange, India
- Parliament of New Zealand
- Renaissance Capital - South Africa
- Singapore Mercantile Exchange
- MS Steel International - UAE
- PNOC Exploration Corporation - Philippines
- CNBM International Corporation - China
- Planning Commission, India
- Therma Luzon, Inc, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Energy Development Corp, Philippines
- Sree Jayajothi Cements Limited - India
- Pendopo Energi Batubara - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Medco Energi Mining Internasional
- Power Finance Corporation Ltd., India
- Kumho Petrochemical, South Korea
- Goldman Sachs - Singapore
- IEA Clean Coal Centre - UK
- Kalimantan Lumbung Energi - Indonesia
- Bharathi Cement Corporation - India
- Indo Tambangraya Megah - Indonesia
- Cement Manufacturers Association - India
- Uttam Galva Steels Limited - India
- Kapuas Tunggal Persada - Indonesia
- Makarim & Taira - Indonesia
- SMG Consultants - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Barasentosa Lestari - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Georgia Ports Authority, United States
- Sarangani Energy Corporation, Philippines
- SN Aboitiz Power Inc, Philippines
- Carbofer General Trading SA - India
- Kepco SPC Power Corporation, Philippines
- Iligan Light & Power Inc, Philippines
- Mercuria Energy - Indonesia
- Miang Besar Coal Terminal - Indonesia
- SMC Global Power, Philippines
- Directorate Of Revenue Intelligence - India
- Siam City Cement PLC, Thailand
- Oldendorff Carriers - Singapore
- Cigading International Bulk Terminal - Indonesia
- Trasteel International SA, Italy
- Bukit Makmur.PT - Indonesia
- Minerals Council of Australia
- Wilmar Investment Holdings
- Grasim Industreis Ltd - India
- Merrill Lynch Commodities Europe
- Vijayanagar Sugar Pvt Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- PTC India Limited - India
- Attock Cement Pakistan Limited
- Altura Mining Limited, Indonesia
- Videocon Industries ltd - India
- Mjunction Services Limited - India
- Meralco Power Generation, Philippines
- Chettinad Cement Corporation Ltd - India
- Vizag Seaport Private Limited - India
- Agrawal Coal Company - India
- Bayan Resources Tbk. - Indonesia
- Larsen & Toubro Limited - India
- Mintek Dendrill Indonesia
- Petron Corporation, Philippines
- OPG Power Generation Pvt Ltd - India
- IHS Mccloskey Coal Group - USA
- Globalindo Alam Lestari - Indonesia
- Edison Trading Spa - Italy
- VISA Power Limited - India
- Sical Logistics Limited - India
- Aboitiz Power Corporation - Philippines
- Kartika Selabumi Mining - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Manunggal Multi Energi - Indonesia
- Borneo Indobara - Indonesia
- PowerSource Philippines DevCo
- Thai Mozambique Logistica
- Gujarat Mineral Development Corp Ltd - India
- Indika Energy - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Aditya Birla Group - India
- The State Trading Corporation of India Ltd
- Orica Australia Pty. Ltd.
- Economic Council, Georgia
- AsiaOL BioFuels Corp., Philippines
- Eastern Energy - Thailand
- Mercator Lines Limited - India
- Kaltim Prima Coal - Indonesia
- Global Business Power Corporation, Philippines
- India Bulls Power Limited - India
- Holcim Trading Pte Ltd - Singapore
- GMR Energy Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Australian Commodity Traders Exchange
- Kohat Cement Company Ltd. - Pakistan
- Marubeni Corporation - India
- Salva Resources Pvt Ltd - India
- Anglo American - United Kingdom
- Jaiprakash Power Ventures ltd
- Ministry of Finance - Indonesia
- Ministry of Transport, Egypt
- Formosa Plastics Group - Taiwan
- Thiess Contractors Indonesia
- Deloitte Consulting - India
- Coal and Oil Company - UAE
- Alfred C Toepfer International GmbH - Germany
- Sindya Power Generating Company Private Ltd
- Independent Power Producers Association of India
- Wood Mackenzie - Singapore
- PetroVietnam Power Coal Import and Supply Company
- Bhatia International Limited - India
- Bangladesh Power Developement Board
- Latin American Coal - Colombia
- The University of Queensland
- McConnell Dowell - Australia
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