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