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