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