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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, 13 March 11
COAL NO LONGER A CHEAP ENERGY SOURCE - THE SUNDAY LEADER
The Sunday Leader reported that, the addition of power generated through coal power to the country’s national grid was initially expected to r ...
Sunday, 13 March 11
THE FREIGHT MARKET SEEMS WILL BE FIRM FOR MARCH AND APRIL - VISTAAR
COALspot.com - The freight market continued to rise with the BDI crossing 1500 points and the cape size index up by 32 pct and all other segments al ...
Friday, 11 March 11
THE HANDY MARKET IS QUITE VOLATILE
Handy
Lacklustre week as the USG is the only bright light with high volumes of petcoke/coal into the Med (paying mid 20´s bss aps USG). Litt ...
Thursday, 10 March 11
DRY BULK MARKET SHOWING SIGNS OF STRONGER RECOVERY - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market jumped by 3.37% yesterday, with the industry’s benchmark, the Baltic Dry Index (BDI), moving up to 1,472 points, levels no ...
Wednesday, 09 March 11
INDONESIA HAS SET THE MARCH 2011 INDONESIAN COAL REFERENCE PRICE FOR THERMAL COAL AT US$ 122.43 PER TON
COALspot.com - Indonesia’s Ministry of Energy and Mineral Resources has set the March 2011 Indonesian Coal Reference Price for thermal c ...
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- Bukit Baiduri Energy - Indonesia
- European Bulk Services B.V. - Netherlands
- Kalimantan Lumbung Energi - Indonesia
- Parry Sugars Refinery, India
- Chettinad Cement Corporation Ltd - India
- Maheswari Brothers Coal Limited - India
- Simpson Spence & Young - Indonesia
- Heidelberg Cement - Germany
- GMR Energy Limited - India
- Eastern Energy - Thailand
- Bulk Trading Sa - Switzerland
- Chamber of Mines of South Africa
- Holcim Trading Pte Ltd - Singapore
- Orica Australia Pty. Ltd.
- IEA Clean Coal Centre - UK
- The State Trading Corporation of India Ltd
- Medco Energi Mining Internasional
- Samtan Co., Ltd - South Korea
- Kohat Cement Company Ltd. - Pakistan
- Tamil Nadu electricity Board
- Directorate General of MIneral and Coal - Indonesia
- Georgia Ports Authority, United States
- Global Coal Blending Company Limited - Australia
- Pipit Mutiara Jaya. PT, Indonesia
- Australian Coal Association
- Jorong Barutama Greston.PT - Indonesia
- Wood Mackenzie - Singapore
- Electricity Authority, New Zealand
- Goldman Sachs - Singapore
- Iligan Light & Power Inc, Philippines
- Port Waratah Coal Services - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Oldendorff Carriers - Singapore
- Kumho Petrochemical, South Korea
- Miang Besar Coal Terminal - Indonesia
- Bukit Makmur.PT - Indonesia
- Attock Cement Pakistan Limited
- SN Aboitiz Power Inc, Philippines
- Ambuja Cements Ltd - India
- Rio Tinto Coal - Australia
- Mercator Lines Limited - India
- Sojitz Corporation - Japan
- Offshore Bulk Terminal Pte Ltd, Singapore
- Xindia Steels Limited - India
- Binh Thuan Hamico - Vietnam
- TeaM Sual Corporation - Philippines
- New Zealand Coal & Carbon
- Parliament of New Zealand
- Ceylon Electricity Board - Sri Lanka
- Sinarmas Energy and Mining - Indonesia
- Meralco Power Generation, Philippines
- Antam Resourcindo - Indonesia
- London Commodity Brokers - England
- Singapore Mercantile Exchange
- Bhushan Steel Limited - India
- Semirara Mining and Power Corporation, Philippines
- Essar Steel Hazira Ltd - India
- Power Finance Corporation Ltd., India
- Uttam Galva Steels Limited - India
- Carbofer General Trading SA - India
- TNB Fuel Sdn Bhd - Malaysia
- Indonesian Coal Mining Association
- PetroVietnam Power Coal Import and Supply Company
- PTC India Limited - India
- Indian Energy Exchange, India
- Karbindo Abesyapradhi - Indoneisa
- Posco Energy - South Korea
- Grasim Industreis Ltd - India
- Baramulti Group, Indonesia
- Tata Chemicals Ltd - India
- Straits Asia Resources Limited - Singapore
- Coastal Gujarat Power Limited - India
- Alfred C Toepfer International GmbH - Germany
- Manunggal Multi Energi - Indonesia
- Electricity Generating Authority of Thailand
- Toyota Tsusho Corporation, Japan
- Sarangani Energy Corporation, Philippines
- Trasteel International SA, Italy
- Cigading International Bulk Terminal - Indonesia
- Mjunction Services Limited - India
- Bayan Resources Tbk. - Indonesia
- SMC Global Power, Philippines
- ASAPP Information Group - India
- IHS Mccloskey Coal Group - USA
- Rashtriya Ispat Nigam Limited - India
- Price Waterhouse Coopers - Russia
- Indo Tambangraya Megah - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Commonwealth Bank - Australia
- Marubeni Corporation - India
- Ministry of Transport, Egypt
- Sindya Power Generating Company Private Ltd
- Minerals Council of Australia
- Kepco SPC Power Corporation, Philippines
- Ind-Barath Power Infra Limited - India
- Merrill Lynch Commodities Europe
- Central Electricity Authority - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bhoruka Overseas - Indonesia
- Mintek Dendrill Indonesia
- Agrawal Coal Company - India
- Savvy Resources Ltd - HongKong
- Barasentosa Lestari - Indonesia
- Bangladesh Power Developement Board
- Central Java Power - Indonesia
- Leighton Contractors Pty Ltd - Australia
- PNOC Exploration Corporation - Philippines
- Jindal Steel & Power Ltd - India
- San Jose City I Power Corp, Philippines
- Indika Energy - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- SMG Consultants - Indonesia
- McConnell Dowell - Australia
- Aditya Birla Group - India
- The Treasury - Australian Government
- CIMB Investment Bank - Malaysia
- Sree Jayajothi Cements Limited - India
- Meenaskhi Energy Private Limited - India
- Bharathi Cement Corporation - India
- Siam City Cement - Thailand
- Standard Chartered Bank - UAE
- Renaissance Capital - South Africa
- Orica Mining Services - Indonesia
- Indogreen Group - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Eastern Coal Council - USA
- Gujarat Electricity Regulatory Commission - India
- Global Green Power PLC Corporation, Philippines
- Petron Corporation, Philippines
- Kapuas Tunggal Persada - Indonesia
- Kartika Selabumi Mining - Indonesia
- Latin American Coal - Colombia
- Romanian Commodities Exchange
- Bhatia International Limited - India
- GAC Shipping (India) Pvt Ltd
- Asmin Koalindo Tuhup - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Mercuria Energy - Indonesia
- Karaikal Port Pvt Ltd - India
- Banpu Public Company Limited - Thailand
- Larsen & Toubro Limited - India
- GVK Power & Infra Limited - India
- Directorate Of Revenue Intelligence - India
- MS Steel International - UAE
- International Coal Ventures Pvt Ltd - India
- Edison Trading Spa - Italy
- LBH Netherlands Bv - Netherlands
- Semirara Mining Corp, Philippines
- GN Power Mariveles Coal Plant, Philippines
- South Luzon Thermal Energy Corporation
- Bukit Asam (Persero) Tbk - Indonesia
- Malabar Cements Ltd - India
- PowerSource Philippines DevCo
- Metalloyd Limited - United Kingdom
- Ministry of Finance - Indonesia
- Kaltim Prima Coal - Indonesia
- Cement Manufacturers Association - India
- Riau Bara Harum - Indonesia
- Vedanta Resources Plc - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Intertek Mineral Services - Indonesia
- Wilmar Investment Holdings
- Energy Development Corp, Philippines
- Jaiprakash Power Ventures ltd
- Billiton Holdings Pty Ltd - Australia
- VISA Power Limited - India
- Global Business Power Corporation, Philippines
- Siam City Cement PLC, Thailand
- Neyveli Lignite Corporation Ltd, - India
- Lanco Infratech Ltd - India
- Interocean Group of Companies - India
- Sakthi Sugars Limited - India
- Therma Luzon, Inc, Philippines
- Thai Mozambique Logistica
- Krishnapatnam Port Company Ltd. - India
- Altura Mining Limited, Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Indian Oil Corporation Limited
- Maharashtra Electricity Regulatory Commission - India
- White Energy Company Limited
- Borneo Indobara - Indonesia
- Deloitte Consulting - India
- Independent Power Producers Association of India
- Thiess Contractors Indonesia
- Vizag Seaport Private Limited - India
- Aboitiz Power Corporation - Philippines
- India Bulls Power Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- CNBM International Corporation - China
- Energy Link Ltd, New Zealand
- Formosa Plastics Group - Taiwan
- Coalindo Energy - Indonesia
- Dalmia Cement Bharat India
- Gujarat Sidhee Cement - India
- OPG Power Generation Pvt Ltd - India
- Sical Logistics Limited - India
- Globalindo Alam Lestari - Indonesia
- ICICI Bank Limited - India
- The University of Queensland
- Gujarat Mineral Development Corp Ltd - India
- Planning Commission, India
- Kobexindo Tractors - Indoneisa
- Makarim & Taira - Indonesia
- Coal and Oil Company - UAE
- Timah Investasi Mineral - Indoneisa
- Star Paper Mills Limited - India
- Economic Council, Georgia
- Africa Commodities Group - South Africa
- Ministry of Mines - Canada
- Madhucon Powers Ltd - India
- Salva Resources Pvt Ltd - India
- Australian Commodity Traders Exchange
- Pendopo Energi Batubara - Indonesia
- Anglo American - United Kingdom
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Videocon Industries ltd - India
- Kideco Jaya Agung - Indonesia
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