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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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Sunday, 10 April 11
SOFT FREIGHT MARKET TREND LIKELY TO BE CONTINUED - VISTAAR SHIPPING
COALspot.com - The freight market continued to soften further with the BDI breaking the 1,500 points and closing at 1376 points down by almost 10 pc ...
Thursday, 07 April 11
HANDY RATES SLIDING NOW - FEARNBULK
Handy
Slowly softening rates as more tonnage is accumulating in the Atlantic basin.The trans-Atlantic round is around $15k pd with trips to ...
Thursday, 07 April 11
DRY BULK MARKET PLUNGING EVEN FURTHER ON LOW CARGO DEMAND - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market has continued its falling pattern this week, with every day proving to be painful for ship owners, especially those of the large ...
Thursday, 07 April 11
INDIKA BUYS MITRABAHTERA AT US$ 0.183
PT Indika Energy Tbk (INDY), integrated energy company, today has exercised an option agreement to acquire 51% shareholding in newly listed coal tug ...
Wednesday, 06 April 11
FORBES & MANHATTAN COAL ANNOUNCES SIGNIFICANT OFF TAKE AGREEMENT
Steady Cash Flow Will Fund Production Ramp Up
Forbes & Manhattan Coal Corp., ("Forbes Coal" or the "Company") is a produc ...
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- Sarangani Energy Corporation, Philippines
- Formosa Plastics Group - Taiwan
- Grasim Industreis Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Coal and Oil Company - UAE
- International Coal Ventures Pvt Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- South Luzon Thermal Energy Corporation
- Deloitte Consulting - India
- Larsen & Toubro Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Chamber of Mines of South Africa
- White Energy Company Limited
- Ministry of Mines - Canada
- European Bulk Services B.V. - Netherlands
- Attock Cement Pakistan Limited
- Videocon Industries ltd - India
- Holcim Trading Pte Ltd - Singapore
- Renaissance Capital - South Africa
- Vizag Seaport Private Limited - India
- Indika Energy - Indonesia
- Global Business Power Corporation, Philippines
- Semirara Mining and Power Corporation, Philippines
- Essar Steel Hazira Ltd - India
- PTC India Limited - India
- Makarim & Taira - Indonesia
- Sical Logistics Limited - India
- Australian Commodity Traders Exchange
- Xindia Steels Limited - India
- Sinarmas Energy and Mining - Indonesia
- Wood Mackenzie - Singapore
- Baramulti Group, Indonesia
- Price Waterhouse Coopers - Russia
- Thiess Contractors Indonesia
- Global Green Power PLC Corporation, Philippines
- Riau Bara Harum - Indonesia
- Vedanta Resources Plc - India
- Kepco SPC Power Corporation, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Sakthi Sugars Limited - India
- Siam City Cement PLC, Thailand
- Energy Development Corp, Philippines
- Bhushan Steel Limited - India
- Singapore Mercantile Exchange
- McConnell Dowell - Australia
- GMR Energy Limited - India
- Heidelberg Cement - Germany
- Tata Chemicals Ltd - India
- Dalmia Cement Bharat India
- New Zealand Coal & Carbon
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Intertek Mineral Services - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Georgia Ports Authority, United States
- Barasentosa Lestari - Indonesia
- Lanco Infratech Ltd - India
- Gujarat Sidhee Cement - India
- Uttam Galva Steels Limited - India
- Posco Energy - South Korea
- Australian Coal Association
- Wilmar Investment Holdings
- IEA Clean Coal Centre - UK
- Thai Mozambique Logistica
- Carbofer General Trading SA - India
- Planning Commission, India
- Ceylon Electricity Board - Sri Lanka
- Toyota Tsusho Corporation, Japan
- Directorate General of MIneral and Coal - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Bukit Baiduri Energy - Indonesia
- Mercuria Energy - Indonesia
- Edison Trading Spa - Italy
- Marubeni Corporation - India
- Electricity Authority, New Zealand
- Parry Sugars Refinery, India
- Kalimantan Lumbung Energi - Indonesia
- ICICI Bank Limited - India
- Parliament of New Zealand
- Semirara Mining Corp, Philippines
- Altura Mining Limited, Indonesia
- Mercator Lines Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Antam Resourcindo - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Billiton Holdings Pty Ltd - Australia
- SN Aboitiz Power Inc, Philippines
- AsiaOL BioFuels Corp., Philippines
- Africa Commodities Group - South Africa
- LBH Netherlands Bv - Netherlands
- PNOC Exploration Corporation - Philippines
- Binh Thuan Hamico - Vietnam
- Independent Power Producers Association of India
- Savvy Resources Ltd - HongKong
- Standard Chartered Bank - UAE
- Jorong Barutama Greston.PT - Indonesia
- Meenaskhi Energy Private Limited - India
- Eastern Coal Council - USA
- Maharashtra Electricity Regulatory Commission - India
- Energy Link Ltd, New Zealand
- Kumho Petrochemical, South Korea
- Power Finance Corporation Ltd., India
- MS Steel International - UAE
- GAC Shipping (India) Pvt Ltd
- Petron Corporation, Philippines
- Madhucon Powers Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Simpson Spence & Young - Indonesia
- Merrill Lynch Commodities Europe
- Sojitz Corporation - Japan
- Bayan Resources Tbk. - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Central Java Power - Indonesia
- Interocean Group of Companies - India
- CNBM International Corporation - China
- PetroVietnam Power Coal Import and Supply Company
- Karaikal Port Pvt Ltd - India
- Ind-Barath Power Infra Limited - India
- Borneo Indobara - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Kartika Selabumi Mining - Indonesia
- Chettinad Cement Corporation Ltd - India
- Anglo American - United Kingdom
- Ambuja Cements Ltd - India
- Rio Tinto Coal - Australia
- Economic Council, Georgia
- Salva Resources Pvt Ltd - India
- Kideco Jaya Agung - Indonesia
- Directorate Of Revenue Intelligence - India
- TNB Fuel Sdn Bhd - Malaysia
- Central Electricity Authority - India
- IHS Mccloskey Coal Group - USA
- San Jose City I Power Corp, Philippines
- Indian Oil Corporation Limited
- Goldman Sachs - Singapore
- Romanian Commodities Exchange
- Latin American Coal - Colombia
- TeaM Sual Corporation - Philippines
- Aboitiz Power Corporation - Philippines
- Kohat Cement Company Ltd. - Pakistan
- GN Power Mariveles Coal Plant, Philippines
- Bangladesh Power Developement Board
- Oldendorff Carriers - Singapore
- Coalindo Energy - Indonesia
- Indonesian Coal Mining Association
- Straits Asia Resources Limited - Singapore
- Kobexindo Tractors - Indoneisa
- Ministry of Finance - Indonesia
- The Treasury - Australian Government
- Ministry of Transport, Egypt
- Orica Australia Pty. Ltd.
- Mjunction Services Limited - India
- Jindal Steel & Power Ltd - India
- OPG Power Generation Pvt Ltd - India
- Siam City Cement - Thailand
- Aditya Birla Group - India
- Kaltim Prima Coal - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Jaiprakash Power Ventures ltd
- Meralco Power Generation, Philippines
- SMC Global Power, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Orica Mining Services - Indonesia
- Bharathi Cement Corporation - India
- Mintek Dendrill Indonesia
- Global Coal Blending Company Limited - Australia
- Vijayanagar Sugar Pvt Ltd - India
- The University of Queensland
- Iligan Light & Power Inc, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- ASAPP Information Group - India
- London Commodity Brokers - England
- Therma Luzon, Inc, Philippines
- Indo Tambangraya Megah - Indonesia
- Sree Jayajothi Cements Limited - India
- Star Paper Mills Limited - India
- Timah Investasi Mineral - Indoneisa
- Malabar Cements Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Globalindo Alam Lestari - Indonesia
- Pendopo Energi Batubara - Indonesia
- Bukit Makmur.PT - Indonesia
- Bhatia International Limited - India
- Bulk Trading Sa - Switzerland
- Metalloyd Limited - United Kingdom
- Medco Energi Mining Internasional
- VISA Power Limited - India
- Trasteel International SA, Italy
- Coastal Gujarat Power Limited - India
- Port Waratah Coal Services - Australia
- Sindya Power Generating Company Private Ltd
- India Bulls Power Limited - India
- Tamil Nadu electricity Board
- Cigading International Bulk Terminal - Indonesia
- Manunggal Multi Energi - Indonesia
- CIMB Investment Bank - Malaysia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Minerals Council of Australia
- Banpu Public Company Limited - Thailand
- Maheswari Brothers Coal Limited - India
- Eastern Energy - Thailand
- GVK Power & Infra Limited - India
- Bhoruka Overseas - Indonesia
- Samtan Co., Ltd - South Korea
- Indian Energy Exchange, India
- Cement Manufacturers Association - India
- Commonwealth Bank - Australia
- Indogreen Group - Indonesia
- Electricity Generating Authority of Thailand
- Agrawal Coal Company - India
- SMG Consultants - Indonesia
- PowerSource Philippines DevCo
- The State Trading Corporation of India Ltd
- Alfred C Toepfer International GmbH - Germany
- Bank of Tokyo Mitsubishi UFJ Ltd
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