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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, 12 January 11
BULKER DELIVERIES WEIGHING IN ON FREIGHT RATES KEEPING SENTIMENT ON A NEGATIVE MODE - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
A flurry of new buildings still hitting the water has caught up for good with the freight market, with capesizes unable to weather the storm. With r ...
Tuesday, 11 January 11
SUPRAMAX TRIP VIA INDONESIA TO INDIA US$ 8,000 PER DAY
Despite continued growth in the bulk trades, the delivery of new vessels is beginning to take its toll. The BDI continued its decline, finishing las ...
Tuesday, 11 January 11
DRY BULK MARKET REACHES NEW LOWS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market’s benchmark index, the Baltic Dry Index (BDI) lost further ground in the beginning of the week, following the trend of the ...
Monday, 10 January 11
MINING INVESTMENT TARGET TOO LOW - TEMPO INTERACTIVE
TEMPO Interactive reported that, the Indonesian Mining Association’s executive director, Priyo Pribadi, believes the government’s invest ...
Monday, 10 January 11
COAL MONGOLIA IS INVITING YOU TO THE INTERNATIONAL COAL SECTOR INVESTORS CONFERENCE
COALspot.com - (Press Release) - The Coal Mongolian Conference will take place at Chinggis Hotel, in Ulaanbaatar on 24-25, Feb 2011. The coal bonanz ...
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- Bahari Cakrawala Sebuku - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Australian Commodity Traders Exchange
- Offshore Bulk Terminal Pte Ltd, Singapore
- Antam Resourcindo - Indonesia
- Kepco SPC Power Corporation, Philippines
- Straits Asia Resources Limited - Singapore
- Baramulti Group, Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Krishnapatnam Port Company Ltd. - India
- Indika Energy - Indonesia
- IHS Mccloskey Coal Group - USA
- Semirara Mining Corp, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Deloitte Consulting - India
- Vijayanagar Sugar Pvt Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Central Java Power - Indonesia
- GAC Shipping (India) Pvt Ltd
- Bangladesh Power Developement Board
- Indonesian Coal Mining Association
- Global Coal Blending Company Limited - Australia
- Maheswari Brothers Coal Limited - India
- Uttam Galva Steels Limited - India
- Altura Mining Limited, Indonesia
- IEA Clean Coal Centre - UK
- Jaiprakash Power Ventures ltd
- Port Waratah Coal Services - Australia
- Gujarat Electricity Regulatory Commission - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Indian Energy Exchange, India
- Neyveli Lignite Corporation Ltd, - India
- The State Trading Corporation of India Ltd
- Merrill Lynch Commodities Europe
- TeaM Sual Corporation - Philippines
- Orica Australia Pty. Ltd.
- Romanian Commodities Exchange
- Bhatia International Limited - India
- Sindya Power Generating Company Private Ltd
- London Commodity Brokers - England
- Ceylon Electricity Board - Sri Lanka
- Xindia Steels Limited - India
- Rashtriya Ispat Nigam Limited - India
- Mercator Lines Limited - India
- Lanco Infratech Ltd - India
- Jindal Steel & Power Ltd - India
- ICICI Bank Limited - India
- Bukit Makmur.PT - Indonesia
- Price Waterhouse Coopers - Russia
- Georgia Ports Authority, United States
- Electricity Authority, New Zealand
- Toyota Tsusho Corporation, Japan
- Eastern Energy - Thailand
- Asmin Koalindo Tuhup - Indonesia
- McConnell Dowell - Australia
- Thiess Contractors Indonesia
- Star Paper Mills Limited - India
- India Bulls Power Limited - India
- Alfred C Toepfer International GmbH - Germany
- Semirara Mining and Power Corporation, Philippines
- Simpson Spence & Young - Indonesia
- New Zealand Coal & Carbon
- Karaikal Port Pvt Ltd - India
- Coalindo Energy - Indonesia
- Siam City Cement PLC, Thailand
- Kideco Jaya Agung - Indonesia
- Sakthi Sugars Limited - India
- Malabar Cements Ltd - India
- Formosa Plastics Group - Taiwan
- Goldman Sachs - Singapore
- Attock Cement Pakistan Limited
- GN Power Mariveles Coal Plant, Philippines
- Anglo American - United Kingdom
- Directorate General of MIneral and Coal - Indonesia
- PowerSource Philippines DevCo
- GMR Energy Limited - India
- Energy Link Ltd, New Zealand
- Latin American Coal - Colombia
- Ministry of Finance - Indonesia
- The Treasury - Australian Government
- Africa Commodities Group - South Africa
- International Coal Ventures Pvt Ltd - India
- Thai Mozambique Logistica
- Petron Corporation, Philippines
- Coal and Oil Company - UAE
- South Luzon Thermal Energy Corporation
- Essar Steel Hazira Ltd - India
- Standard Chartered Bank - UAE
- Sree Jayajothi Cements Limited - India
- Metalloyd Limited - United Kingdom
- Trasteel International SA, Italy
- European Bulk Services B.V. - Netherlands
- Cement Manufacturers Association - India
- Kalimantan Lumbung Energi - Indonesia
- Bukit Baiduri Energy - Indonesia
- CNBM International Corporation - China
- Tata Chemicals Ltd - India
- Edison Trading Spa - Italy
- Ministry of Transport, Egypt
- PNOC Exploration Corporation - Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Renaissance Capital - South Africa
- TNB Fuel Sdn Bhd - Malaysia
- Pendopo Energi Batubara - Indonesia
- Larsen & Toubro Limited - India
- Kumho Petrochemical, South Korea
- Australian Coal Association
- Indian Oil Corporation Limited
- Marubeni Corporation - India
- Ind-Barath Power Infra Limited - India
- Global Business Power Corporation, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Wilmar Investment Holdings
- Planning Commission, India
- Iligan Light & Power Inc, Philippines
- Sarangani Energy Corporation, Philippines
- San Jose City I Power Corp, Philippines
- Rio Tinto Coal - Australia
- Aboitiz Power Corporation - Philippines
- Interocean Group of Companies - India
- Power Finance Corporation Ltd., India
- Videocon Industries ltd - India
- Riau Bara Harum - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Ambuja Cements Ltd - India
- Dalmia Cement Bharat India
- AsiaOL BioFuels Corp., Philippines
- Tamil Nadu electricity Board
- GVK Power & Infra Limited - India
- Sojitz Corporation - Japan
- Petrochimia International Co. Ltd.- Taiwan
- Posco Energy - South Korea
- Indo Tambangraya Megah - Indonesia
- Siam City Cement - Thailand
- Kaltim Prima Coal - Indonesia
- Bhoruka Overseas - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Binh Thuan Hamico - Vietnam
- Economic Council, Georgia
- Medco Energi Mining Internasional
- Intertek Mineral Services - Indonesia
- Ministry of Mines - Canada
- MS Steel International - UAE
- SN Aboitiz Power Inc, Philippines
- Mjunction Services Limited - India
- Meralco Power Generation, Philippines
- Oldendorff Carriers - Singapore
- Electricity Generating Authority of Thailand
- Global Green Power PLC Corporation, Philippines
- Aditya Birla Group - India
- Bhushan Steel Limited - India
- Gujarat Sidhee Cement - India
- Singapore Mercantile Exchange
- Heidelberg Cement - Germany
- PTC India Limited - India
- Bharathi Cement Corporation - India
- ASAPP Information Group - India
- Kartika Selabumi Mining - Indonesia
- Makarim & Taira - Indonesia
- Therma Luzon, Inc, Philippines
- White Energy Company Limited
- Central Electricity Authority - India
- CIMB Investment Bank - Malaysia
- Indogreen Group - Indonesia
- Grasim Industreis Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Chamber of Mines of South Africa
- Wood Mackenzie - Singapore
- Gujarat Mineral Development Corp Ltd - India
- Orica Mining Services - Indonesia
- Salva Resources Pvt Ltd - India
- Savvy Resources Ltd - HongKong
- Carbofer General Trading SA - India
- OPG Power Generation Pvt Ltd - India
- Sical Logistics Limited - India
- Bulk Trading Sa - Switzerland
- Kapuas Tunggal Persada - Indonesia
- Kobexindo Tractors - Indoneisa
- SMC Global Power, Philippines
- Globalindo Alam Lestari - Indonesia
- Timah Investasi Mineral - Indoneisa
- Madhucon Powers Ltd - India
- Meenaskhi Energy Private Limited - India
- Energy Development Corp, Philippines
- Coastal Gujarat Power Limited - India
- Bayan Resources Tbk. - Indonesia
- LBH Netherlands Bv - Netherlands
- Samtan Co., Ltd - South Korea
- Borneo Indobara - Indonesia
- SMG Consultants - Indonesia
- Eastern Coal Council - USA
- The University of Queensland
- Karbindo Abesyapradhi - Indoneisa
- Miang Besar Coal Terminal - Indonesia
- Independent Power Producers Association of India
- Commonwealth Bank - Australia
- Parliament of New Zealand
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Minerals Council of Australia
- Mercuria Energy - Indonesia
- Cigading International Bulk Terminal - Indonesia
- VISA Power Limited - India
- Agrawal Coal Company - India
- Leighton Contractors Pty Ltd - Australia
- PetroVietnam Power Coal Import and Supply Company
- Directorate Of Revenue Intelligence - India
- Chettinad Cement Corporation Ltd - India
- Barasentosa Lestari - Indonesia
- Vedanta Resources Plc - India
- Parry Sugars Refinery, India
- Vizag Seaport Private Limited - India
- Mintek Dendrill Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Banpu Public Company Limited - Thailand
- Manunggal Multi Energi - Indonesia
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