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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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Wednesday, 19 January 11
DRY BULK MARKET HAS BOTTOMED OUT, AS WEATHER IN AUSTRALIA DIALS DOWN - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market has finally halted its plunge, after a devastating week of yet more losses. The industry’s benchmark, the Baltic Dry Index ...
Tuesday, 18 January 11
MINISTRY SEEKS COAL FROM INDONESIA - SUNDAY OBSERVER
Sunday Observer reported that, Ministry of Power and Energy is to explore the possibilities of importing quality coal from Indonesia.
Minister Pa ...
Tuesday, 18 January 11
DRY BULK MARKET HAS BOTTOMED OUT, AS WEATHER IN AUSTRALIA DIALS DOWN - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market has finally halted its plunge, after a devastating week of yet more losses. The industry’s benchmark, the Baltic Dry Index ...
Sunday, 16 January 11
STANCHART GLOBAL RESEARCH SEES COAL PRICE RISING ON SUPPLY DISRUPTION - BURSA MALAYSIA MARKET NEWS
Bursa Malaysia Market News reported that, Standard Chartered Global Research has upgraded its 2011 forecasts for global thermal coal prices based on ...
Saturday, 15 January 11
SUPRAMAX VESSELS FIXED AROUND $ 8K FOR TRIP VIA INDONESIA TO INDIA - VISTAAR
COALspot.com - The BDI continues to drop and has touched below 1,500 points with the cape index severely affected with the index touching 1,595 poin ...
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- Directorate Of Revenue Intelligence - India
- Mintek Dendrill Indonesia
- VISA Power Limited - India
- Siam City Cement PLC, Thailand
- SN Aboitiz Power Inc, Philippines
- Petron Corporation, Philippines
- International Coal Ventures Pvt Ltd - India
- Georgia Ports Authority, United States
- IHS Mccloskey Coal Group - USA
- Formosa Plastics Group - Taiwan
- Toyota Tsusho Corporation, Japan
- Thai Mozambique Logistica
- Bangladesh Power Developement Board
- MS Steel International - UAE
- Bharathi Cement Corporation - India
- Rashtriya Ispat Nigam Limited - India
- Salva Resources Pvt Ltd - India
- Vizag Seaport Private Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Petrochimia International Co. Ltd.- Taiwan
- IEA Clean Coal Centre - UK
- Planning Commission, India
- Sojitz Corporation - Japan
- CNBM International Corporation - China
- Goldman Sachs - Singapore
- Dalmia Cement Bharat India
- European Bulk Services B.V. - Netherlands
- Attock Cement Pakistan Limited
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kartika Selabumi Mining - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Intertek Mineral Services - Indonesia
- Global Business Power Corporation, Philippines
- Alfred C Toepfer International GmbH - Germany
- Aboitiz Power Corporation - Philippines
- Bhoruka Overseas - Indonesia
- Makarim & Taira - Indonesia
- Chamber of Mines of South Africa
- Gujarat Electricity Regulatory Commission - India
- PetroVietnam Power Coal Import and Supply Company
- Kaltim Prima Coal - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Heidelberg Cement - Germany
- Carbofer General Trading SA - India
- Energy Development Corp, Philippines
- Wilmar Investment Holdings
- Straits Asia Resources Limited - Singapore
- Australian Coal Association
- Gujarat Mineral Development Corp Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Trasteel International SA, Italy
- McConnell Dowell - Australia
- Singapore Mercantile Exchange
- Mjunction Services Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Kideco Jaya Agung - Indonesia
- Electricity Generating Authority of Thailand
- Jindal Steel & Power Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Renaissance Capital - South Africa
- Thiess Contractors Indonesia
- Directorate General of MIneral and Coal - Indonesia
- India Bulls Power Limited - India
- Indo Tambangraya Megah - Indonesia
- Metalloyd Limited - United Kingdom
- Neyveli Lignite Corporation Ltd, - India
- Borneo Indobara - Indonesia
- Eastern Energy - Thailand
- Videocon Industries ltd - India
- Meenaskhi Energy Private Limited - India
- Romanian Commodities Exchange
- Tamil Nadu electricity Board
- SMG Consultants - Indonesia
- Agrawal Coal Company - India
- Africa Commodities Group - South Africa
- The University of Queensland
- Energy Link Ltd, New Zealand
- Ceylon Electricity Board - Sri Lanka
- GAC Shipping (India) Pvt Ltd
- Indika Energy - Indonesia
- Star Paper Mills Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Rio Tinto Coal - Australia
- Sindya Power Generating Company Private Ltd
- Sakthi Sugars Limited - India
- Gujarat Sidhee Cement - India
- Coalindo Energy - Indonesia
- Antam Resourcindo - Indonesia
- Kumho Petrochemical, South Korea
- Maheswari Brothers Coal Limited - India
- Barasentosa Lestari - Indonesia
- Riau Bara Harum - Indonesia
- GVK Power & Infra Limited - India
- Coastal Gujarat Power Limited - India
- Siam City Cement - Thailand
- ASAPP Information Group - India
- Port Waratah Coal Services - Australia
- Jaiprakash Power Ventures ltd
- Madhucon Powers Ltd - India
- Savvy Resources Ltd - HongKong
- Sarangani Energy Corporation, Philippines
- Interocean Group of Companies - India
- Tata Chemicals Ltd - India
- Cigading International Bulk Terminal - Indonesia
- TeaM Sual Corporation - Philippines
- San Jose City I Power Corp, Philippines
- Pendopo Energi Batubara - Indonesia
- Semirara Mining Corp, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Deloitte Consulting - India
- Cement Manufacturers Association - India
- Global Coal Blending Company Limited - Australia
- Kohat Cement Company Ltd. - Pakistan
- Vedanta Resources Plc - India
- Standard Chartered Bank - UAE
- Indogreen Group - Indonesia
- PTC India Limited - India
- PowerSource Philippines DevCo
- Independent Power Producers Association of India
- The State Trading Corporation of India Ltd
- Eastern Coal Council - USA
- Manunggal Multi Energi - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Orica Mining Services - Indonesia
- Ministry of Mines - Canada
- Merrill Lynch Commodities Europe
- Central Java Power - Indonesia
- Karaikal Port Pvt Ltd - India
- PNOC Exploration Corporation - Philippines
- Price Waterhouse Coopers - Russia
- Malabar Cements Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Marubeni Corporation - India
- CIMB Investment Bank - Malaysia
- AsiaOL BioFuels Corp., Philippines
- Binh Thuan Hamico - Vietnam
- Chettinad Cement Corporation Ltd - India
- White Energy Company Limited
- Indian Energy Exchange, India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Global Green Power PLC Corporation, Philippines
- Medco Energi Mining Internasional
- Kapuas Tunggal Persada - Indonesia
- Sical Logistics Limited - India
- Larsen & Toubro Limited - India
- Meralco Power Generation, Philippines
- Ambuja Cements Ltd - India
- New Zealand Coal & Carbon
- Jorong Barutama Greston.PT - Indonesia
- Orica Australia Pty. Ltd.
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bhatia International Limited - India
- South Luzon Thermal Energy Corporation
- Globalindo Alam Lestari - Indonesia
- Indonesian Coal Mining Association
- Therma Luzon, Inc, Philippines
- Bayan Resources Tbk. - Indonesia
- Parry Sugars Refinery, India
- Bukit Asam (Persero) Tbk - Indonesia
- Electricity Authority, New Zealand
- Semirara Mining and Power Corporation, Philippines
- Anglo American - United Kingdom
- Minerals Council of Australia
- London Commodity Brokers - England
- LBH Netherlands Bv - Netherlands
- Altura Mining Limited, Indonesia
- Timah Investasi Mineral - Indoneisa
- Central Electricity Authority - India
- Economic Council, Georgia
- Krishnapatnam Port Company Ltd. - India
- Uttam Galva Steels Limited - India
- Aditya Birla Group - India
- Kobexindo Tractors - Indoneisa
- Xindia Steels Limited - India
- Leighton Contractors Pty Ltd - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- ICICI Bank Limited - India
- Power Finance Corporation Ltd., India
- Bhushan Steel Limited - India
- Posco Energy - South Korea
- Bukit Baiduri Energy - Indonesia
- Banpu Public Company Limited - Thailand
- Lanco Infratech Ltd - India
- Coal and Oil Company - UAE
- Parliament of New Zealand
- Wood Mackenzie - Singapore
- Kepco SPC Power Corporation, Philippines
- The Treasury - Australian Government
- Latin American Coal - Colombia
- Simpson Spence & Young - Indonesia
- Samtan Co., Ltd - South Korea
- Indian Oil Corporation Limited
- Sinarmas Energy and Mining - Indonesia
- Essar Steel Hazira Ltd - India
- Ind-Barath Power Infra Limited - India
- Ministry of Transport, Egypt
- Mercuria Energy - Indonesia
- OPG Power Generation Pvt Ltd - India
- Iligan Light & Power Inc, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Commonwealth Bank - Australia
- Bukit Makmur.PT - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Sree Jayajothi Cements Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Grasim Industreis Ltd - India
- Bulk Trading Sa - Switzerland
- GMR Energy Limited - India
- Ministry of Finance - Indonesia
- Edison Trading Spa - Italy
- Oldendorff Carriers - Singapore
- Mercator Lines Limited - India
- SMC Global Power, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Baramulti Group, Indonesia
- Australian Commodity Traders Exchange
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