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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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Tuesday, 25 January 11
DRY BULK RATES CONTINUED TO TUMBLE LAST WEEK - BRS
With weather-related problems affecting the short-term outlook, and new building deliveries the longer-term picture, dry bulk rates continued to tum ...
Tuesday, 25 January 11
R-POWER TO INVEST $5BN IN INDONESIA - THE TIMES OF INDIA
The Times of India reported that, In what is being seen as one of the largest foreign investments in Indonesia, Reliance Power will infuse $5 billio ...
Monday, 24 January 11
GOVT PROMISES COAL FOR PLN DESPITE PRICE SPIKES - THE JAKARTA POST
The Jakarta Post reported that, the government says state electricity company PT PLN will receive enough coal to fire its power plants, despite pric ...
Monday, 24 January 11
DRY BULK MARKETS DOWNTURN SEES NO RELIEF - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market has kept falling for yet another week, with the industry’s benchmark, the Baltic Dry Index (BDI) losing an additional 4.79 ...
Sunday, 23 January 11
THE AVERAGE CHARTER RATE FOR CAPE SIZE VESSELS WAS AT $ 8,859 PD ALMOST CLOSE TO 2008 LOWS - VISTAAR
COALspot.com - The BDI continues to drop and saw a drop of about 5 pct this week closing at 1,370 points. “ In May 2010 the BDI touched ...
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- PTC India Limited - India
- Economic Council, Georgia
- Bahari Cakrawala Sebuku - Indonesia
- Vizag Seaport Private Limited - India
- Bhoruka Overseas - Indonesia
- Energy Development Corp, Philippines
- Oldendorff Carriers - Singapore
- Latin American Coal - Colombia
- Commonwealth Bank - Australia
- Miang Besar Coal Terminal - Indonesia
- Maheswari Brothers Coal Limited - India
- Agrawal Coal Company - India
- Indogreen Group - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Indonesian Coal Mining Association
- Directorate General of MIneral and Coal - Indonesia
- Mintek Dendrill Indonesia
- Ind-Barath Power Infra Limited - India
- Mercator Lines Limited - India
- Wilmar Investment Holdings
- CNBM International Corporation - China
- Altura Mining Limited, Indonesia
- Africa Commodities Group - South Africa
- GAC Shipping (India) Pvt Ltd
- Merrill Lynch Commodities Europe
- Price Waterhouse Coopers - Russia
- Thai Mozambique Logistica
- Therma Luzon, Inc, Philippines
- Bhatia International Limited - India
- Renaissance Capital - South Africa
- Minerals Council of Australia
- European Bulk Services B.V. - Netherlands
- Kideco Jaya Agung - Indonesia
- Dalmia Cement Bharat India
- Australian Commodity Traders Exchange
- Sakthi Sugars Limited - India
- Singapore Mercantile Exchange
- Kaltim Prima Coal - Indonesia
- GVK Power & Infra Limited - India
- Interocean Group of Companies - India
- Neyveli Lignite Corporation Ltd, - India
- Indika Energy - Indonesia
- Grasim Industreis Ltd - India
- Siam City Cement PLC, Thailand
- Siam City Cement - Thailand
- Ministry of Transport, Egypt
- Krishnapatnam Port Company Ltd. - India
- Port Waratah Coal Services - Australia
- CIMB Investment Bank - Malaysia
- Orica Mining Services - Indonesia
- Bharathi Cement Corporation - India
- Pendopo Energi Batubara - Indonesia
- Thiess Contractors Indonesia
- Leighton Contractors Pty Ltd - Australia
- GN Power Mariveles Coal Plant, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Holcim Trading Pte Ltd - Singapore
- White Energy Company Limited
- Sarangani Energy Corporation, Philippines
- Attock Cement Pakistan Limited
- Energy Link Ltd, New Zealand
- Bayan Resources Tbk. - Indonesia
- Central Java Power - Indonesia
- Alfred C Toepfer International GmbH - Germany
- SMG Consultants - Indonesia
- OPG Power Generation Pvt Ltd - India
- Directorate Of Revenue Intelligence - India
- Coastal Gujarat Power Limited - India
- Posco Energy - South Korea
- SMC Global Power, Philippines
- PNOC Exploration Corporation - Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Australian Coal Association
- Electricity Authority, New Zealand
- Orica Australia Pty. Ltd.
- Malabar Cements Ltd - India
- Indian Oil Corporation Limited
- Tamil Nadu electricity Board
- London Commodity Brokers - England
- Sinarmas Energy and Mining - Indonesia
- Coal and Oil Company - UAE
- Asmin Koalindo Tuhup - Indonesia
- Iligan Light & Power Inc, Philippines
- Borneo Indobara - Indonesia
- ICICI Bank Limited - India
- Coalindo Energy - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Antam Resourcindo - Indonesia
- Chamber of Mines of South Africa
- South Luzon Thermal Energy Corporation
- GMR Energy Limited - India
- The Treasury - Australian Government
- Straits Asia Resources Limited - Singapore
- Goldman Sachs - Singapore
- MS Steel International - UAE
- IHS Mccloskey Coal Group - USA
- Chettinad Cement Corporation Ltd - India
- Baramulti Group, Indonesia
- Jaiprakash Power Ventures ltd
- Savvy Resources Ltd - HongKong
- Sree Jayajothi Cements Limited - India
- Larsen & Toubro Limited - India
- Eastern Coal Council - USA
- Makarim & Taira - Indonesia
- Medco Energi Mining Internasional
- Jorong Barutama Greston.PT - Indonesia
- Billiton Holdings Pty Ltd - Australia
- San Jose City I Power Corp, Philippines
- Binh Thuan Hamico - Vietnam
- TNB Fuel Sdn Bhd - Malaysia
- Sical Logistics Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sojitz Corporation - Japan
- Salva Resources Pvt Ltd - India
- Parry Sugars Refinery, India
- Trasteel International SA, Italy
- Bangladesh Power Developement Board
- Banpu Public Company Limited - Thailand
- Aboitiz Power Corporation - Philippines
- Videocon Industries ltd - India
- International Coal Ventures Pvt Ltd - India
- Global Green Power PLC Corporation, Philippines
- Star Paper Mills Limited - India
- Globalindo Alam Lestari - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Formosa Plastics Group - Taiwan
- Kalimantan Lumbung Energi - Indonesia
- Samtan Co., Ltd - South Korea
- Xindia Steels Limited - India
- Gujarat Sidhee Cement - India
- Bukit Makmur.PT - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Manunggal Multi Energi - Indonesia
- Ministry of Mines - Canada
- Gujarat Mineral Development Corp Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Vedanta Resources Plc - India
- Planning Commission, India
- Semirara Mining Corp, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Intertek Mineral Services - Indonesia
- Bhushan Steel Limited - India
- Eastern Energy - Thailand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Parliament of New Zealand
- PowerSource Philippines DevCo
- Meralco Power Generation, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Cement Manufacturers Association - India
- Electricity Generating Authority of Thailand
- Bukit Asam (Persero) Tbk - Indonesia
- The University of Queensland
- Madhucon Powers Ltd - India
- Power Finance Corporation Ltd., India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- SN Aboitiz Power Inc, Philippines
- Sindya Power Generating Company Private Ltd
- Tata Chemicals Ltd - India
- Deloitte Consulting - India
- Wood Mackenzie - Singapore
- Indian Energy Exchange, India
- Karaikal Port Pvt Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Kartika Selabumi Mining - Indonesia
- Petron Corporation, Philippines
- Mjunction Services Limited - India
- Bulk Trading Sa - Switzerland
- Global Coal Blending Company Limited - Australia
- PetroVietnam Power Coal Import and Supply Company
- The State Trading Corporation of India Ltd
- Essar Steel Hazira Ltd - India
- Barasentosa Lestari - Indonesia
- Georgia Ports Authority, United States
- Aditya Birla Group - India
- Ministry of Finance - Indonesia
- ASAPP Information Group - India
- Lanco Infratech Ltd - India
- Independent Power Producers Association of India
- Global Business Power Corporation, Philippines
- Romanian Commodities Exchange
- Marubeni Corporation - India
- Standard Chartered Bank - UAE
- Rio Tinto Coal - Australia
- Timah Investasi Mineral - Indoneisa
- Edison Trading Spa - Italy
- McConnell Dowell - Australia
- Riau Bara Harum - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Central Electricity Authority - India
- Toyota Tsusho Corporation, Japan
- Mercuria Energy - Indonesia
- Kumho Petrochemical, South Korea
- Heidelberg Cement - Germany
- Metalloyd Limited - United Kingdom
- Rashtriya Ispat Nigam Limited - India
- Uttam Galva Steels Limited - India
- Ceylon Electricity Board - Sri Lanka
- TeaM Sual Corporation - Philippines
- Semirara Mining and Power Corporation, Philippines
- Anglo American - United Kingdom
- Cigading International Bulk Terminal - Indonesia
- Ambuja Cements Ltd - India
- LBH Netherlands Bv - Netherlands
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kepco SPC Power Corporation, Philippines
- India Bulls Power Limited - India
- AsiaOL BioFuels Corp., Philippines
- New Zealand Coal & Carbon
- VISA Power Limited - India
- Indo Tambangraya Megah - Indonesia
- Carbofer General Trading SA - India
- Jindal Steel & Power Ltd - India
- Simpson Spence & Young - Indonesia
- IEA Clean Coal Centre - UK
- Bukit Baiduri Energy - Indonesia
- Kobexindo Tractors - Indoneisa
- Meenaskhi Energy Private Limited - India
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