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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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Monday, 13 June 11
THE INDONESIAN COAL REFERENCE PRICE HAS JUMPED 1.2 PERCENT IN JUNE
COALspot.com - The Ministry of Energy & Mineral Resources sets coal spot price benchmark for June 2011 at US$ 119.03 per ton, higher than US$ 1. ...
Sunday, 12 June 11
THE FREIGHT MARKET IS LIKELY TO BE SOFT NEXT WEEK - CAPT. REDDY
COALspot.com - The freight market continued to soften this week except for Panamax index. The BDI was down by about 4.77 pct and closed at 1,418 poi ...
Friday, 10 June 11
DRY BULK ON RETREAT MODE - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
This week has offered dry bulk ship owners no real reason to smile, as the industry’s benchmarket, the Baltic Dry Index (BDI) has been steadil ...
Friday, 10 June 11
BUKIT ASAM RECORDED RP1.3 TRILLION PROFIT IN MAY - TEMPO INTERACTIVE
Tempo Interactive reported that, PT PT Tambang Batubara Bukit Asam Tbk (PTBA) made a net profit of Rp 1.3 trillion (approx. US$ 152,779,410) at the ...
Friday, 10 June 11
DRY BULK ON RETREAT MODE - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
This week has offered dry bulk ship owners no real reason to smile, as the industry’s benchmarket, the Baltic Dry Index (BDI) has been steadil ...
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- Coastal Gujarat Power Limited - India
- Kapuas Tunggal Persada - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Videocon Industries ltd - India
- Formosa Plastics Group - Taiwan
- Carbofer General Trading SA - India
- Timah Investasi Mineral - Indoneisa
- AsiaOL BioFuels Corp., Philippines
- Australian Commodity Traders Exchange
- Uttam Galva Steels Limited - India
- GVK Power & Infra Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Maheswari Brothers Coal Limited - India
- International Coal Ventures Pvt Ltd - India
- Indo Tambangraya Megah - Indonesia
- GMR Energy Limited - India
- Africa Commodities Group - South Africa
- Madhucon Powers Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Bharathi Cement Corporation - India
- Ceylon Electricity Board - Sri Lanka
- Trasteel International SA, Italy
- Therma Luzon, Inc, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Kobexindo Tractors - Indoneisa
- Bhushan Steel Limited - India
- White Energy Company Limited
- European Bulk Services B.V. - Netherlands
- CIMB Investment Bank - Malaysia
- Makarim & Taira - Indonesia
- Ind-Barath Power Infra Limited - India
- Price Waterhouse Coopers - Russia
- Semirara Mining Corp, Philippines
- IEA Clean Coal Centre - UK
- ASAPP Information Group - India
- VISA Power Limited - India
- Orica Mining Services - Indonesia
- Indonesian Coal Mining Association
- Pendopo Energi Batubara - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Siam City Cement PLC, Thailand
- Tamil Nadu electricity Board
- Savvy Resources Ltd - HongKong
- Toyota Tsusho Corporation, Japan
- MS Steel International - UAE
- ICICI Bank Limited - India
- Sinarmas Energy and Mining - Indonesia
- Eastern Energy - Thailand
- Karbindo Abesyapradhi - Indoneisa
- Wilmar Investment Holdings
- Ministry of Transport, Egypt
- Georgia Ports Authority, United States
- Standard Chartered Bank - UAE
- TNB Fuel Sdn Bhd - Malaysia
- Karaikal Port Pvt Ltd - India
- Energy Link Ltd, New Zealand
- Meenaskhi Energy Private Limited - India
- Krishnapatnam Port Company Ltd. - India
- Leighton Contractors Pty Ltd - Australia
- PNOC Exploration Corporation - Philippines
- Aditya Birla Group - India
- Romanian Commodities Exchange
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Billiton Holdings Pty Ltd - Australia
- Goldman Sachs - Singapore
- Sical Logistics Limited - India
- Siam City Cement - Thailand
- Global Business Power Corporation, Philippines
- Attock Cement Pakistan Limited
- Anglo American - United Kingdom
- New Zealand Coal & Carbon
- The University of Queensland
- Kideco Jaya Agung - Indonesia
- PowerSource Philippines DevCo
- Indian Oil Corporation Limited
- Thai Mozambique Logistica
- Kartika Selabumi Mining - Indonesia
- Edison Trading Spa - Italy
- Latin American Coal - Colombia
- Bhoruka Overseas - Indonesia
- Metalloyd Limited - United Kingdom
- Antam Resourcindo - Indonesia
- Meralco Power Generation, Philippines
- Interocean Group of Companies - India
- Commonwealth Bank - Australia
- Ambuja Cements Ltd - India
- Parliament of New Zealand
- Directorate General of MIneral and Coal - Indonesia
- Chettinad Cement Corporation Ltd - India
- Renaissance Capital - South Africa
- Aboitiz Power Corporation - Philippines
- Sarangani Energy Corporation, Philippines
- Straits Asia Resources Limited - Singapore
- Riau Bara Harum - Indonesia
- Bangladesh Power Developement Board
- Chamber of Mines of South Africa
- Globalindo Alam Lestari - Indonesia
- Iligan Light & Power Inc, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Miang Besar Coal Terminal - Indonesia
- Global Green Power PLC Corporation, Philippines
- Independent Power Producers Association of India
- Kohat Cement Company Ltd. - Pakistan
- Bukit Makmur.PT - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Power Finance Corporation Ltd., India
- London Commodity Brokers - England
- McConnell Dowell - Australia
- Australian Coal Association
- Altura Mining Limited, Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Energy Development Corp, Philippines
- Coalindo Energy - Indonesia
- Agrawal Coal Company - India
- Malabar Cements Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Manunggal Multi Energi - Indonesia
- Simpson Spence & Young - Indonesia
- Kumho Petrochemical, South Korea
- OPG Power Generation Pvt Ltd - India
- Indika Energy - Indonesia
- Central Electricity Authority - India
- Eastern Coal Council - USA
- The State Trading Corporation of India Ltd
- Mjunction Services Limited - India
- Heidelberg Cement - Germany
- Jorong Barutama Greston.PT - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Marubeni Corporation - India
- Posco Energy - South Korea
- Bukit Baiduri Energy - Indonesia
- Port Waratah Coal Services - Australia
- Baramulti Group, Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Vedanta Resources Plc - India
- Cement Manufacturers Association - India
- Wood Mackenzie - Singapore
- Orica Australia Pty. Ltd.
- Coal and Oil Company - UAE
- Samtan Co., Ltd - South Korea
- Medco Energi Mining Internasional
- Gujarat Electricity Regulatory Commission - India
- Dalmia Cement Bharat India
- Salva Resources Pvt Ltd - India
- Semirara Mining and Power Corporation, Philippines
- The Treasury - Australian Government
- PetroVietnam Power Coal Import and Supply Company
- Cigading International Bulk Terminal - Indonesia
- Bayan Resources Tbk. - Indonesia
- Mercuria Energy - Indonesia
- Lanco Infratech Ltd - India
- CNBM International Corporation - China
- Electricity Authority, New Zealand
- Oldendorff Carriers - Singapore
- Merrill Lynch Commodities Europe
- Singapore Mercantile Exchange
- Essar Steel Hazira Ltd - India
- Grasim Industreis Ltd - India
- Indian Energy Exchange, India
- Intertek Mineral Services - Indonesia
- Sojitz Corporation - Japan
- Binh Thuan Hamico - Vietnam
- India Bulls Power Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Global Coal Blending Company Limited - Australia
- Ministry of Finance - Indonesia
- SMC Global Power, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Larsen & Toubro Limited - India
- Economic Council, Georgia
- Deloitte Consulting - India
- Gujarat Sidhee Cement - India
- Star Paper Mills Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sree Jayajothi Cements Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Vizag Seaport Private Limited - India
- Tata Chemicals Ltd - India
- Kepco SPC Power Corporation, Philippines
- Barasentosa Lestari - Indonesia
- Electricity Generating Authority of Thailand
- Parry Sugars Refinery, India
- SMG Consultants - Indonesia
- Banpu Public Company Limited - Thailand
- Borneo Indobara - Indonesia
- Central Java Power - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Indogreen Group - Indonesia
- San Jose City I Power Corp, Philippines
- Jindal Steel & Power Ltd - India
- Kaltim Prima Coal - Indonesia
- Mercator Lines Limited - India
- Bhatia International Limited - India
- South Luzon Thermal Energy Corporation
- LBH Netherlands Bv - Netherlands
- PTC India Limited - India
- Petron Corporation, Philippines
- Ministry of Mines - Canada
- Thiess Contractors Indonesia
- Rio Tinto Coal - Australia
- Mintek Dendrill Indonesia
- Planning Commission, India
- Bulk Trading Sa - Switzerland
- Jaiprakash Power Ventures ltd
- TeaM Sual Corporation - Philippines
- SN Aboitiz Power Inc, Philippines
- GAC Shipping (India) Pvt Ltd
- Petrochimia International Co. Ltd.- Taiwan
- Sindya Power Generating Company Private Ltd
- Directorate Of Revenue Intelligence - India
- IHS Mccloskey Coal Group - USA
- Minerals Council of Australia
- Xindia Steels Limited - India
- Sakthi Sugars Limited - India
- Rashtriya Ispat Nigam Limited - India
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