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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, 19 May 11
OVERSUPPLY, VERY LARGE ORE CARRIERS EAT UP ON DRY BULK FREIGHT RATES - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
After a brief upward momentum which ended early last week, the Baltic Dry Index, the dry bulk market’s benchmark has returned to its usual pat ...
Wednesday, 18 May 11
THE US COAL INDUSTRY LOGGED EXPORTS OF AROUND 25M TONNES IN 1Q OF 2011 - BRS
Another slow decline in the bulk markets this week, with the BCI losing the most at nearly 5%, the BPI 2.8% and the smaller sizes sub-1% amounts. Th ...
Wednesday, 18 May 11
AKR AIMS TO SELL COAL WORTH RP216 BILLION - PAPER
Bisnis Indonesia, an Indonesia's one of the leading business paper reported that, PT AKR Corporindo Tbk has targeted coal sales valued at Rp216 bil ...
Wednesday, 18 May 11
OVERHAUL OF MINING LAW MAY DETER INVESTMENT, S&P SAYS - THE JAKARTA GLOBE
The Jakarta Globe, an Indonesian English language news paper reported that, A report by Standard & Poor’s Ratings Services that a regulatory ...
Tuesday, 17 May 11
DRY BULK MARKET ENTERS WEEK ON WEAK MODE - HELLENIC SHIPPING
In yet another sign of softening freight rates for dry bulk carriers and oversupply issues, the dry bulk market entered this week on a downward path ...
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- Iligan Light & Power Inc, Philippines
- Medco Energi Mining Internasional
- Samtan Co., Ltd - South Korea
- Bangladesh Power Developement Board
- Renaissance Capital - South Africa
- CIMB Investment Bank - Malaysia
- Vedanta Resources Plc - India
- LBH Netherlands Bv - Netherlands
- Bharathi Cement Corporation - India
- Semirara Mining and Power Corporation, Philippines
- Riau Bara Harum - Indonesia
- Makarim & Taira - Indonesia
- SMC Global Power, Philippines
- Romanian Commodities Exchange
- Bhushan Steel Limited - India
- Borneo Indobara - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Marubeni Corporation - India
- Gujarat Mineral Development Corp Ltd - India
- Gujarat Sidhee Cement - India
- Madhucon Powers Ltd - India
- Vizag Seaport Private Limited - India
- Indonesian Coal Mining Association
- Karbindo Abesyapradhi - Indoneisa
- Neyveli Lignite Corporation Ltd, - India
- AsiaOL BioFuels Corp., Philippines
- GAC Shipping (India) Pvt Ltd
- Aboitiz Power Corporation - Philippines
- Baramulti Group, Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Simpson Spence & Young - Indonesia
- Indo Tambangraya Megah - Indonesia
- Bhatia International Limited - India
- Cement Manufacturers Association - India
- Siam City Cement PLC, Thailand
- Uttam Galva Steels Limited - India
- PetroVietnam Power Coal Import and Supply Company
- White Energy Company Limited
- Rio Tinto Coal - Australia
- Maheswari Brothers Coal Limited - India
- New Zealand Coal & Carbon
- Essar Steel Hazira Ltd - India
- Dalmia Cement Bharat India
- Aditya Birla Group - India
- Wilmar Investment Holdings
- Australian Coal Association
- Maharashtra Electricity Regulatory Commission - India
- Thai Mozambique Logistica
- Sarangani Energy Corporation, Philippines
- International Coal Ventures Pvt Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bukit Makmur.PT - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Parry Sugars Refinery, India
- The University of Queensland
- Interocean Group of Companies - India
- TNB Fuel Sdn Bhd - Malaysia
- Orica Mining Services - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Timah Investasi Mineral - Indoneisa
- Indian Oil Corporation Limited
- Ceylon Electricity Board - Sri Lanka
- SMG Consultants - Indonesia
- PTC India Limited - India
- IEA Clean Coal Centre - UK
- SN Aboitiz Power Inc, Philippines
- PNOC Exploration Corporation - Philippines
- Altura Mining Limited, Indonesia
- Kobexindo Tractors - Indoneisa
- Ambuja Cements Ltd - India
- Formosa Plastics Group - Taiwan
- Sree Jayajothi Cements Limited - India
- Price Waterhouse Coopers - Russia
- Indian Energy Exchange, India
- Thiess Contractors Indonesia
- Metalloyd Limited - United Kingdom
- Planning Commission, India
- Ministry of Transport, Egypt
- Jindal Steel & Power Ltd - India
- Global Coal Blending Company Limited - Australia
- Mercuria Energy - Indonesia
- Banpu Public Company Limited - Thailand
- Eastern Energy - Thailand
- Australian Commodity Traders Exchange
- Energy Link Ltd, New Zealand
- ICICI Bank Limited - India
- Jaiprakash Power Ventures ltd
- Kumho Petrochemical, South Korea
- Parliament of New Zealand
- Globalindo Alam Lestari - Indonesia
- Meenaskhi Energy Private Limited - India
- Global Green Power PLC Corporation, Philippines
- Sakthi Sugars Limited - India
- PowerSource Philippines DevCo
- Port Waratah Coal Services - Australia
- Grasim Industreis Ltd - India
- VISA Power Limited - India
- Carbofer General Trading SA - India
- Bukit Baiduri Energy - Indonesia
- Coal and Oil Company - UAE
- OPG Power Generation Pvt Ltd - India
- Therma Luzon, Inc, Philippines
- Antam Resourcindo - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Ministry of Mines - Canada
- Tamil Nadu electricity Board
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bhoruka Overseas - Indonesia
- Edison Trading Spa - Italy
- Billiton Holdings Pty Ltd - Australia
- Xindia Steels Limited - India
- Electricity Authority, New Zealand
- Ind-Barath Power Infra Limited - India
- Kepco SPC Power Corporation, Philippines
- Heidelberg Cement - Germany
- McConnell Dowell - Australia
- Indika Energy - Indonesia
- TeaM Sual Corporation - Philippines
- Barasentosa Lestari - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Intertek Mineral Services - Indonesia
- Larsen & Toubro Limited - India
- Directorate General of MIneral and Coal - Indonesia
- The Treasury - Australian Government
- Leighton Contractors Pty Ltd - Australia
- San Jose City I Power Corp, Philippines
- Manunggal Multi Energi - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- India Bulls Power Limited - India
- Posco Energy - South Korea
- Rashtriya Ispat Nigam Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- GMR Energy Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bayan Resources Tbk. - Indonesia
- Central Electricity Authority - India
- South Luzon Thermal Energy Corporation
- Kalimantan Lumbung Energi - Indonesia
- GVK Power & Infra Limited - India
- Economic Council, Georgia
- Straits Asia Resources Limited - Singapore
- Semirara Mining Corp, Philippines
- Commonwealth Bank - Australia
- Jorong Barutama Greston.PT - Indonesia
- Salva Resources Pvt Ltd - India
- IHS Mccloskey Coal Group - USA
- Meralco Power Generation, Philippines
- Chettinad Cement Corporation Ltd - India
- London Commodity Brokers - England
- Mjunction Services Limited - India
- Binh Thuan Hamico - Vietnam
- Alfred C Toepfer International GmbH - Germany
- Mercator Lines Limited - India
- Sinarmas Energy and Mining - Indonesia
- Savvy Resources Ltd - HongKong
- Malabar Cements Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Goldman Sachs - Singapore
- Videocon Industries ltd - India
- Kapuas Tunggal Persada - Indonesia
- Ministry of Finance - Indonesia
- Georgia Ports Authority, United States
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Standard Chartered Bank - UAE
- Kohat Cement Company Ltd. - Pakistan
- CNBM International Corporation - China
- Toyota Tsusho Corporation, Japan
- Minerals Council of Australia
- Bukit Asam (Persero) Tbk - Indonesia
- Wood Mackenzie - Singapore
- Latin American Coal - Colombia
- Agrawal Coal Company - India
- Kideco Jaya Agung - Indonesia
- Sical Logistics Limited - India
- Coalindo Energy - Indonesia
- The State Trading Corporation of India Ltd
- Krishnapatnam Port Company Ltd. - India
- Cigading International Bulk Terminal - Indonesia
- Eastern Coal Council - USA
- Oldendorff Carriers - Singapore
- Global Business Power Corporation, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Tata Chemicals Ltd - India
- Independent Power Producers Association of India
- Energy Development Corp, Philippines
- MS Steel International - UAE
- Karaikal Port Pvt Ltd - India
- Singapore Mercantile Exchange
- Anglo American - United Kingdom
- Merrill Lynch Commodities Europe
- ASAPP Information Group - India
- Pipit Mutiara Jaya. PT, Indonesia
- Africa Commodities Group - South Africa
- Coastal Gujarat Power Limited - India
- Power Finance Corporation Ltd., India
- Electricity Generating Authority of Thailand
- Sojitz Corporation - Japan
- Trasteel International SA, Italy
- Orica Australia Pty. Ltd.
- Pendopo Energi Batubara - Indonesia
- Lanco Infratech Ltd - India
- Kaltim Prima Coal - Indonesia
- Indogreen Group - Indonesia
- Kartika Selabumi Mining - Indonesia
- Central Java Power - Indonesia
- Mintek Dendrill Indonesia
- Siam City Cement - Thailand
- Chamber of Mines of South Africa
- Bulk Trading Sa - Switzerland
- Star Paper Mills Limited - India
- European Bulk Services B.V. - Netherlands
- Attock Cement Pakistan Limited
- Directorate Of Revenue Intelligence - India
- Sindya Power Generating Company Private Ltd
- Deloitte Consulting - India
- Petron Corporation, Philippines
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