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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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- Chamber of Mines of South Africa
- Anglo American - United Kingdom
- Globalindo Alam Lestari - Indonesia
- SN Aboitiz Power Inc, Philippines
- Rashtriya Ispat Nigam Limited - India
- Wood Mackenzie - Singapore
- Indian Energy Exchange, India
- San Jose City I Power Corp, Philippines
- Sakthi Sugars Limited - India
- Marubeni Corporation - India
- Economic Council, Georgia
- Edison Trading Spa - Italy
- Indika Energy - Indonesia
- Jaiprakash Power Ventures ltd
- Chettinad Cement Corporation Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Kideco Jaya Agung - Indonesia
- Global Green Power PLC Corporation, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Georgia Ports Authority, United States
- Kobexindo Tractors - Indoneisa
- European Bulk Services B.V. - Netherlands
- Ministry of Transport, Egypt
- Oldendorff Carriers - Singapore
- Agrawal Coal Company - India
- Videocon Industries ltd - India
- Bukit Makmur.PT - Indonesia
- London Commodity Brokers - England
- Star Paper Mills Limited - India
- Deloitte Consulting - India
- Semirara Mining Corp, Philippines
- Barasentosa Lestari - Indonesia
- Sree Jayajothi Cements Limited - India
- Australian Commodity Traders Exchange
- CIMB Investment Bank - Malaysia
- Therma Luzon, Inc, Philippines
- Tamil Nadu electricity Board
- CNBM International Corporation - China
- McConnell Dowell - Australia
- Merrill Lynch Commodities Europe
- Australian Coal Association
- IEA Clean Coal Centre - UK
- Semirara Mining and Power Corporation, Philippines
- Eastern Energy - Thailand
- VISA Power Limited - India
- Miang Besar Coal Terminal - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Cigading International Bulk Terminal - Indonesia
- Aditya Birla Group - India
- Thiess Contractors Indonesia
- Aboitiz Power Corporation - Philippines
- Indo Tambangraya Megah - Indonesia
- Rio Tinto Coal - Australia
- Electricity Authority, New Zealand
- Intertek Mineral Services - Indonesia
- Orica Australia Pty. Ltd.
- Bhatia International Limited - India
- Bulk Trading Sa - Switzerland
- Minerals Council of Australia
- Thai Mozambique Logistica
- Directorate Of Revenue Intelligence - India
- Vijayanagar Sugar Pvt Ltd - India
- Parry Sugars Refinery, India
- International Coal Ventures Pvt Ltd - India
- Jindal Steel & Power Ltd - India
- Mjunction Services Limited - India
- Bukit Baiduri Energy - Indonesia
- Africa Commodities Group - South Africa
- Eastern Coal Council - USA
- Mintek Dendrill Indonesia
- PTC India Limited - India
- Orica Mining Services - Indonesia
- Ministry of Finance - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Ministry of Mines - Canada
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- South Luzon Thermal Energy Corporation
- Toyota Tsusho Corporation, Japan
- Bayan Resources Tbk. - Indonesia
- Kaltim Prima Coal - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Attock Cement Pakistan Limited
- Larsen & Toubro Limited - India
- Bhushan Steel Limited - India
- Malabar Cements Ltd - India
- Global Coal Blending Company Limited - Australia
- Singapore Mercantile Exchange
- Borneo Indobara - Indonesia
- Straits Asia Resources Limited - Singapore
- Formosa Plastics Group - Taiwan
- Medco Energi Mining Internasional
- Dalmia Cement Bharat India
- Indonesian Coal Mining Association
- Ambuja Cements Ltd - India
- SMG Consultants - Indonesia
- Sical Logistics Limited - India
- Central Electricity Authority - India
- Price Waterhouse Coopers - Russia
- Gujarat Mineral Development Corp Ltd - India
- Siam City Cement PLC, Thailand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Ind-Barath Power Infra Limited - India
- Trasteel International SA, Italy
- The Treasury - Australian Government
- Madhucon Powers Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Energy Development Corp, Philippines
- Altura Mining Limited, Indonesia
- ASAPP Information Group - India
- The State Trading Corporation of India Ltd
- The University of Queensland
- Lanco Infratech Ltd - India
- Indogreen Group - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Essar Steel Hazira Ltd - India
- Makarim & Taira - Indonesia
- MS Steel International - UAE
- Grasim Industreis Ltd - India
- Simpson Spence & Young - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Ceylon Electricity Board - Sri Lanka
- ICICI Bank Limited - India
- Coal and Oil Company - UAE
- Carbofer General Trading SA - India
- Posco Energy - South Korea
- Kumho Petrochemical, South Korea
- Central Java Power - Indonesia
- Siam City Cement - Thailand
- Neyveli Lignite Corporation Ltd, - India
- Bharathi Cement Corporation - India
- Krishnapatnam Port Company Ltd. - India
- LBH Netherlands Bv - Netherlands
- Parliament of New Zealand
- PetroVietnam Power Coal Import and Supply Company
- GMR Energy Limited - India
- PNOC Exploration Corporation - Philippines
- Romanian Commodities Exchange
- Manunggal Multi Energi - Indonesia
- Sojitz Corporation - Japan
- Interocean Group of Companies - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Uttam Galva Steels Limited - India
- Samtan Co., Ltd - South Korea
- Kohat Cement Company Ltd. - Pakistan
- Coastal Gujarat Power Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Port Waratah Coal Services - Australia
- GVK Power & Infra Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- New Zealand Coal & Carbon
- Sinarmas Energy and Mining - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Heidelberg Cement - Germany
- Kepco SPC Power Corporation, Philippines
- AsiaOL BioFuels Corp., Philippines
- Wilmar Investment Holdings
- Gujarat Sidhee Cement - India
- Renaissance Capital - South Africa
- White Energy Company Limited
- OPG Power Generation Pvt Ltd - India
- Planning Commission, India
- Commonwealth Bank - Australia
- Petron Corporation, Philippines
- Sindya Power Generating Company Private Ltd
- Sarangani Energy Corporation, Philippines
- Coalindo Energy - Indonesia
- Maheswari Brothers Coal Limited - India
- Alfred C Toepfer International GmbH - Germany
- TeaM Sual Corporation - Philippines
- PowerSource Philippines DevCo
- Antam Resourcindo - Indonesia
- Goldman Sachs - Singapore
- Latin American Coal - Colombia
- Leighton Contractors Pty Ltd - Australia
- Vedanta Resources Plc - India
- Standard Chartered Bank - UAE
- Pendopo Energi Batubara - Indonesia
- Indian Oil Corporation Limited
- Kapuas Tunggal Persada - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Tata Chemicals Ltd - India
- IHS Mccloskey Coal Group - USA
- Banpu Public Company Limited - Thailand
- Iligan Light & Power Inc, Philippines
- GAC Shipping (India) Pvt Ltd
- Cement Manufacturers Association - India
- Vizag Seaport Private Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Savvy Resources Ltd - HongKong
- Mercator Lines Limited - India
- Timah Investasi Mineral - Indoneisa
- Karaikal Port Pvt Ltd - India
- Bhoruka Overseas - Indonesia
- Riau Bara Harum - Indonesia
- Power Finance Corporation Ltd., India
- Meralco Power Generation, Philippines
- Xindia Steels Limited - India
- Salva Resources Pvt Ltd - India
- Meenaskhi Energy Private Limited - India
- Baramulti Group, Indonesia
- Global Business Power Corporation, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Karbindo Abesyapradhi - Indoneisa
- Holcim Trading Pte Ltd - Singapore
- Independent Power Producers Association of India
- India Bulls Power Limited - India
- Bangladesh Power Developement Board
- Metalloyd Limited - United Kingdom
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Mercuria Energy - Indonesia
- Kartika Selabumi Mining - Indonesia
- Electricity Generating Authority of Thailand
- SMC Global Power, Philippines
- Binh Thuan Hamico - Vietnam
- Energy Link Ltd, New Zealand
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