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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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Saturday, 07 May 11
SUPRAMAXES ARE AT AROUND $ 13,500-14,000 PER DAY FOR SINGLE TRIPS
COALspot.com - The freight remained fairly steady this week with the BDI up by 71 points and closing at 1,340 points, said Capt. Reddy, the director ...
Saturday, 07 May 11
COAL PRODUCTION MAY REACH 95M TONS IN SECOND QUARTER - THE JAKARTA POST
The Jakarta Post reported that, Indonesian miners are projected to produce around 95 million tons of coal in the second quarter of this year after l ...
Friday, 06 May 11
BUKIT ASAM TO CLOSE COAL TAKEOVER IN Q2 - INSIDER STORIES
The state-controlled PT Tambang Bukit Asam Tbk (PTBA) expects to complete acquisition of two coal mining companies from four companies which is now ...
Thursday, 05 May 11
SUPRAS IN NORTH CHINA ARE GETTING CLOSE TO $ 13K FOR INDO-INDIA
Handy
The Atlantic market is stable/flat with positive undertone meaning more enquiries hitting the market today. Lack of prompt vessels. Trips to ...
Thursday, 05 May 11
PANAMAXES LEAD DRY BULK MARKET TO HIGHER GROUND - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market’s benchmark, the Baltic Dry Index (BDI) managed to edge higher yesterday, rising by 1.81% to 1,292 points, in the first po ...
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- Gujarat Sidhee Cement - India
- Oldendorff Carriers - Singapore
- AsiaOL BioFuels Corp., Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Makarim & Taira - Indonesia
- The University of Queensland
- International Coal Ventures Pvt Ltd - India
- Bhatia International Limited - India
- Jindal Steel & Power Ltd - India
- VISA Power Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Renaissance Capital - South Africa
- PowerSource Philippines DevCo
- Global Coal Blending Company Limited - Australia
- Marubeni Corporation - India
- Grasim Industreis Ltd - India
- Karaikal Port Pvt Ltd - India
- Wilmar Investment Holdings
- Baramulti Group, Indonesia
- Jorong Barutama Greston.PT - Indonesia
- PTC India Limited - India
- Indonesian Coal Mining Association
- Alfred C Toepfer International GmbH - Germany
- GAC Shipping (India) Pvt Ltd
- Heidelberg Cement - Germany
- Vijayanagar Sugar Pvt Ltd - India
- Videocon Industries ltd - India
- Deloitte Consulting - India
- Cigading International Bulk Terminal - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Therma Luzon, Inc, Philippines
- Aboitiz Power Corporation - Philippines
- Thai Mozambique Logistica
- Ceylon Electricity Board - Sri Lanka
- India Bulls Power Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bukit Asam (Persero) Tbk - Indonesia
- Jaiprakash Power Ventures ltd
- Kaltim Prima Coal - Indonesia
- Vedanta Resources Plc - India
- CIMB Investment Bank - Malaysia
- Kumho Petrochemical, South Korea
- Antam Resourcindo - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Power Finance Corporation Ltd., India
- Aditya Birla Group - India
- Toyota Tsusho Corporation, Japan
- GVK Power & Infra Limited - India
- Sindya Power Generating Company Private Ltd
- Kalimantan Lumbung Energi - Indonesia
- Global Business Power Corporation, Philippines
- Wood Mackenzie - Singapore
- Bhoruka Overseas - Indonesia
- Eastern Coal Council - USA
- Bangladesh Power Developement Board
- Larsen & Toubro Limited - India
- Bhushan Steel Limited - India
- Rashtriya Ispat Nigam Limited - India
- Standard Chartered Bank - UAE
- Sarangani Energy Corporation, Philippines
- Minerals Council of Australia
- Coal and Oil Company - UAE
- Rio Tinto Coal - Australia
- Ind-Barath Power Infra Limited - India
- Indika Energy - Indonesia
- Carbofer General Trading SA - India
- Meenaskhi Energy Private Limited - India
- Romanian Commodities Exchange
- The Treasury - Australian Government
- Ministry of Finance - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Price Waterhouse Coopers - Russia
- Pipit Mutiara Jaya. PT, Indonesia
- Energy Link Ltd, New Zealand
- Savvy Resources Ltd - HongKong
- Metalloyd Limited - United Kingdom
- GMR Energy Limited - India
- Star Paper Mills Limited - India
- Sojitz Corporation - Japan
- Essar Steel Hazira Ltd - India
- Goldman Sachs - Singapore
- Xindia Steels Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Meralco Power Generation, Philippines
- Georgia Ports Authority, United States
- Dalmia Cement Bharat India
- Miang Besar Coal Terminal - Indonesia
- MS Steel International - UAE
- McConnell Dowell - Australia
- Bukit Baiduri Energy - Indonesia
- South Luzon Thermal Energy Corporation
- Ambuja Cements Ltd - India
- Sical Logistics Limited - India
- Indogreen Group - Indonesia
- Barasentosa Lestari - Indonesia
- Mintek Dendrill Indonesia
- Coastal Gujarat Power Limited - India
- Sinarmas Energy and Mining - Indonesia
- Samtan Co., Ltd - South Korea
- Australian Commodity Traders Exchange
- Directorate Of Revenue Intelligence - India
- White Energy Company Limited
- Manunggal Multi Energi - Indonesia
- Anglo American - United Kingdom
- PNOC Exploration Corporation - Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- IHS Mccloskey Coal Group - USA
- Sakthi Sugars Limited - India
- Siam City Cement PLC, Thailand
- LBH Netherlands Bv - Netherlands
- Maheswari Brothers Coal Limited - India
- ASAPP Information Group - India
- SMC Global Power, Philippines
- Indo Tambangraya Megah - Indonesia
- Borneo Indobara - Indonesia
- Binh Thuan Hamico - Vietnam
- Globalindo Alam Lestari - Indonesia
- Malabar Cements Ltd - India
- Bulk Trading Sa - Switzerland
- European Bulk Services B.V. - Netherlands
- Energy Development Corp, Philippines
- Chettinad Cement Corporation Ltd - India
- Pendopo Energi Batubara - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- SMG Consultants - Indonesia
- Eastern Energy - Thailand
- Holcim Trading Pte Ltd - Singapore
- Port Waratah Coal Services - Australia
- Kobexindo Tractors - Indoneisa
- Mercator Lines Limited - India
- Petron Corporation, Philippines
- Kideco Jaya Agung - Indonesia
- Attock Cement Pakistan Limited
- Intertek Mineral Services - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Merrill Lynch Commodities Europe
- Altura Mining Limited, Indonesia
- Bayan Resources Tbk. - Indonesia
- Agrawal Coal Company - India
- Madhucon Powers Ltd - India
- Bharathi Cement Corporation - India
- Global Green Power PLC Corporation, Philippines
- Leighton Contractors Pty Ltd - Australia
- IEA Clean Coal Centre - UK
- TeaM Sual Corporation - Philippines
- GN Power Mariveles Coal Plant, Philippines
- Coalindo Energy - Indonesia
- Electricity Generating Authority of Thailand
- Orica Mining Services - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Central Java Power - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Parry Sugars Refinery, India
- Singapore Mercantile Exchange
- Iligan Light & Power Inc, Philippines
- Chamber of Mines of South Africa
- New Zealand Coal & Carbon
- London Commodity Brokers - England
- Uttam Galva Steels Limited - India
- Parliament of New Zealand
- Krishnapatnam Port Company Ltd. - India
- Posco Energy - South Korea
- Vizag Seaport Private Limited - India
- Thiess Contractors Indonesia
- Tamil Nadu electricity Board
- Indian Energy Exchange, India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kartika Selabumi Mining - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- OPG Power Generation Pvt Ltd - India
- Simpson Spence & Young - Indonesia
- Bukit Makmur.PT - Indonesia
- Kepco SPC Power Corporation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Asmin Koalindo Tuhup - Indonesia
- ICICI Bank Limited - India
- Economic Council, Georgia
- Electricity Authority, New Zealand
- Tata Chemicals Ltd - India
- Siam City Cement - Thailand
- Central Electricity Authority - India
- Interocean Group of Companies - India
- Mjunction Services Limited - India
- Orica Australia Pty. Ltd.
- Australian Coal Association
- Formosa Plastics Group - Taiwan
- Timah Investasi Mineral - Indoneisa
- Cement Manufacturers Association - India
- Indian Oil Corporation Limited
- Independent Power Producers Association of India
- Mercuria Energy - Indonesia
- Trasteel International SA, Italy
- San Jose City I Power Corp, Philippines
- Sree Jayajothi Cements Limited - India
- Gujarat Electricity Regulatory Commission - India
- Africa Commodities Group - South Africa
- Banpu Public Company Limited - Thailand
- Ministry of Mines - Canada
- Edison Trading Spa - Italy
- Latin American Coal - Colombia
- Directorate General of MIneral and Coal - Indonesia
- CNBM International Corporation - China
- Riau Bara Harum - Indonesia
- Billiton Holdings Pty Ltd - Australia
- The State Trading Corporation of India Ltd
- Salva Resources Pvt Ltd - India
- Planning Commission, India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Semirara Mining Corp, Philippines
- Commonwealth Bank - Australia
- Ministry of Transport, Egypt
- Straits Asia Resources Limited - Singapore
- SN Aboitiz Power Inc, Philippines
- Medco Energi Mining Internasional
- PetroVietnam Power Coal Import and Supply Company
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Lanco Infratech Ltd - India
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