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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, 02 June 11
LARGE SUPRAS FOR RBCT/INDIA ROUND ARE NOW ASKING 14K - FEARNBULK
Handy
The Handy/Supra market has in general been flat and un-exciting this week. The Black Sea market is almost non existing while the US Gulf mar ...
Thursday, 02 June 11
DRY BULK SHIP OWNERS LOOKING INTO SHORTENED WEEK WITH ANXIETY - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
With most markets in the western world closed yesterday, as a result of Memorial Day, dry bulk stakeholders weren’t able to build over the pos ...
Monday, 30 May 11
MIANG BESAR COAL TERMINAL ON TARGET
COALspot.com - MBCT, to be largest coal terminal in Asia to start construction in Indonesia’s east Kalimantan Island in July 2011 says Mr. Joh ...
Sunday, 29 May 11
THE FREIGHT MARKET CONTINUED TO GAIN MOMENTUM - VISTAAR
COALspot.com - The freight market continued to gain momentum and the BDI, Cape Index and Panamax was by up almost 10-12 pct and on all sectors, Vist ...
Saturday, 28 May 11
WCI-CHINA RATES SLIDED TO 15K AND FROM ECI AROUND 12K - FEARNLEYS AS
Handy
Rates in the Atlantic remain steady/flat with the Black Sea remaining quiet with little fresh enquiries. The Continent is seeing more tonnag ...
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- The University of Queensland
- Indian Oil Corporation Limited
- Thiess Contractors Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Krishnapatnam Port Company Ltd. - India
- Ceylon Electricity Board - Sri Lanka
- Wood Mackenzie - Singapore
- MS Steel International - UAE
- Jindal Steel & Power Ltd - India
- Grasim Industreis Ltd - India
- Parry Sugars Refinery, India
- OPG Power Generation Pvt Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Larsen & Toubro Limited - India
- Attock Cement Pakistan Limited
- Australian Commodity Traders Exchange
- Salva Resources Pvt Ltd - India
- Barasentosa Lestari - Indonesia
- London Commodity Brokers - England
- Therma Luzon, Inc, Philippines
- Central Java Power - Indonesia
- Central Electricity Authority - India
- Simpson Spence & Young - Indonesia
- Baramulti Group, Indonesia
- Meralco Power Generation, Philippines
- Tamil Nadu electricity Board
- Bahari Cakrawala Sebuku - Indonesia
- Africa Commodities Group - South Africa
- Lanco Infratech Ltd - India
- VISA Power Limited - India
- Vizag Seaport Private Limited - India
- Formosa Plastics Group - Taiwan
- Petrochimia International Co. Ltd.- Taiwan
- PowerSource Philippines DevCo
- Gujarat Mineral Development Corp Ltd - India
- Madhucon Powers Ltd - India
- Miang Besar Coal Terminal - Indonesia
- The Treasury - Australian Government
- Price Waterhouse Coopers - Russia
- Gujarat Electricity Regulatory Commission - India
- McConnell Dowell - Australia
- Romanian Commodities Exchange
- Maharashtra Electricity Regulatory Commission - India
- Jorong Barutama Greston.PT - Indonesia
- Economic Council, Georgia
- Parliament of New Zealand
- Pipit Mutiara Jaya. PT, Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Malabar Cements Ltd - India
- Energy Link Ltd, New Zealand
- Directorate Of Revenue Intelligence - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Eastern Energy - Thailand
- Altura Mining Limited, Indonesia
- Renaissance Capital - South Africa
- Interocean Group of Companies - India
- International Coal Ventures Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- European Bulk Services B.V. - Netherlands
- Kepco SPC Power Corporation, Philippines
- Ambuja Cements Ltd - India
- Binh Thuan Hamico - Vietnam
- Globalindo Alam Lestari - Indonesia
- Mercator Lines Limited - India
- Timah Investasi Mineral - Indoneisa
- Riau Bara Harum - Indonesia
- CNBM International Corporation - China
- Petron Corporation, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Antam Resourcindo - Indonesia
- Straits Asia Resources Limited - Singapore
- SN Aboitiz Power Inc, Philippines
- Port Waratah Coal Services - Australia
- Asmin Koalindo Tuhup - Indonesia
- Energy Development Corp, Philippines
- Wilmar Investment Holdings
- Ind-Barath Power Infra Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Maheswari Brothers Coal Limited - India
- Electricity Authority, New Zealand
- Edison Trading Spa - Italy
- Orica Australia Pty. Ltd.
- SMC Global Power, Philippines
- Mintek Dendrill Indonesia
- Borneo Indobara - Indonesia
- Thai Mozambique Logistica
- Vijayanagar Sugar Pvt Ltd - India
- Sindya Power Generating Company Private Ltd
- Sakthi Sugars Limited - India
- ICICI Bank Limited - India
- Global Business Power Corporation, Philippines
- Independent Power Producers Association of India
- Deloitte Consulting - India
- Banpu Public Company Limited - Thailand
- Ministry of Mines - Canada
- Sojitz Corporation - Japan
- Kobexindo Tractors - Indoneisa
- Vedanta Resources Plc - India
- Trasteel International SA, Italy
- Singapore Mercantile Exchange
- Global Green Power PLC Corporation, Philippines
- Bhatia International Limited - India
- GAC Shipping (India) Pvt Ltd
- Coastal Gujarat Power Limited - India
- Videocon Industries ltd - India
- Bukit Makmur.PT - Indonesia
- India Bulls Power Limited - India
- Coal and Oil Company - UAE
- Toyota Tsusho Corporation, Japan
- GN Power Mariveles Coal Plant, Philippines
- Global Coal Blending Company Limited - Australia
- The State Trading Corporation of India Ltd
- Bukit Baiduri Energy - Indonesia
- Ministry of Transport, Egypt
- Latin American Coal - Colombia
- Bharathi Cement Corporation - India
- Xindia Steels Limited - India
- Cement Manufacturers Association - India
- GMR Energy Limited - India
- TeaM Sual Corporation - Philippines
- Eastern Coal Council - USA
- Tata Chemicals Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Kapuas Tunggal Persada - Indonesia
- Carbofer General Trading SA - India
- Bangladesh Power Developement Board
- Standard Chartered Bank - UAE
- Manunggal Multi Energi - Indonesia
- Star Paper Mills Limited - India
- Goldman Sachs - Singapore
- Uttam Galva Steels Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Bhushan Steel Limited - India
- Siam City Cement PLC, Thailand
- Indogreen Group - Indonesia
- Kideco Jaya Agung - Indonesia
- Essar Steel Hazira Ltd - India
- Power Finance Corporation Ltd., India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kohat Cement Company Ltd. - Pakistan
- IEA Clean Coal Centre - UK
- Sinarmas Energy and Mining - Indonesia
- Pendopo Energi Batubara - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Agrawal Coal Company - India
- Kaltim Prima Coal - Indonesia
- Siam City Cement - Thailand
- Cigading International Bulk Terminal - Indonesia
- Dalmia Cement Bharat India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Georgia Ports Authority, United States
- New Zealand Coal & Carbon
- Mjunction Services Limited - India
- PTC India Limited - India
- Intertek Mineral Services - Indonesia
- GVK Power & Infra Limited - India
- Mercuria Energy - Indonesia
- White Energy Company Limited
- Heidelberg Cement - Germany
- Gujarat Sidhee Cement - India
- Indo Tambangraya Megah - Indonesia
- Alfred C Toepfer International GmbH - Germany
- CIMB Investment Bank - Malaysia
- LBH Netherlands Bv - Netherlands
- Coalindo Energy - Indonesia
- Indika Energy - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- IHS Mccloskey Coal Group - USA
- Sarangani Energy Corporation, Philippines
- Ministry of Finance - Indonesia
- Bhoruka Overseas - Indonesia
- South Luzon Thermal Energy Corporation
- San Jose City I Power Corp, Philippines
- Commonwealth Bank - Australia
- Sical Logistics Limited - India
- Chamber of Mines of South Africa
- Directorate General of MIneral and Coal - Indonesia
- Aboitiz Power Corporation - Philippines
- Minerals Council of Australia
- Rashtriya Ispat Nigam Limited - India
- Makarim & Taira - Indonesia
- Samtan Co., Ltd - South Korea
- Meenaskhi Energy Private Limited - India
- Sree Jayajothi Cements Limited - India
- Leighton Contractors Pty Ltd - Australia
- Iligan Light & Power Inc, Philippines
- Merrill Lynch Commodities Europe
- Billiton Holdings Pty Ltd - Australia
- Australian Coal Association
- Oldendorff Carriers - Singapore
- Kumho Petrochemical, South Korea
- Savvy Resources Ltd - HongKong
- Karaikal Port Pvt Ltd - India
- Posco Energy - South Korea
- PNOC Exploration Corporation - Philippines
- Metalloyd Limited - United Kingdom
- Bayan Resources Tbk. - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Kartika Selabumi Mining - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- ASAPP Information Group - India
- Marubeni Corporation - India
- SMG Consultants - Indonesia
- Medco Energi Mining Internasional
- Electricity Generating Authority of Thailand
- Rio Tinto Coal - Australia
- Aditya Birla Group - India
- Indonesian Coal Mining Association
- Jaiprakash Power Ventures ltd
- Semirara Mining Corp, Philippines
- Chettinad Cement Corporation Ltd - India
- Indian Energy Exchange, India
- Planning Commission, India
- Orica Mining Services - Indonesia
- Anglo American - United Kingdom
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