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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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Thursday, 09 December 10
DRY BULK MARKET LOOKING FOR DIRECTION THIS WEEK, AS CAPESIZE SHIPS END THEIR MISFORTUNES - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk has began the week on a positive note capitalizing on the positive sentiment which finally prevailed during the last days of the previo ...
Monday, 06 December 10
NTPC MAY OPT FOR INDONESIA OVER AFRICA, OZ FOR COAL MINES
Country's largest power producer NTPC, which is scouting for coal properties abroad to fuel its power plants back home, may zero in on Indonesia fo ...
Saturday, 04 December 10
INDONESIA TO INDIA AND CHINA SEA FREIGHT UP BY ABOUT US$ 2.50 PMT - CAPT. REDDY
COALspot.com - The freight market even though remained weak, but towards end of the week the market seemed to firm up.
The BDI was almost at sam ...
Saturday, 04 December 10
OFF WEST COAST OF INDIA TONNAGE IS SEEMINGLY QUITE SPARSE - FEARNBULK
Handy
The Atlantic markets are weak and remained unusually calm after the Thanksgiving ...
Friday, 03 December 10
INDONESIAN LOW RANK COAL IS ATTRACTING COAL BUYERS FROM INDIA AND CHINA
COALspot.com - Bhakti Energi Persada has sold out its whole coal production until the end of 2011, Jeffry Mulyono said during McCloskey Asia P ...
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- Star Paper Mills Limited - India
- Orica Australia Pty. Ltd.
- Thai Mozambique Logistica
- Heidelberg Cement - Germany
- Agrawal Coal Company - India
- Karaikal Port Pvt Ltd - India
- CNBM International Corporation - China
- Grasim Industreis Ltd - India
- Interocean Group of Companies - India
- Makarim & Taira - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Ceylon Electricity Board - Sri Lanka
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Tamil Nadu electricity Board
- Timah Investasi Mineral - Indoneisa
- Medco Energi Mining Internasional
- Carbofer General Trading SA - India
- Straits Asia Resources Limited - Singapore
- Bangladesh Power Developement Board
- Petron Corporation, Philippines
- Tata Chemicals Ltd - India
- Ambuja Cements Ltd - India
- Parry Sugars Refinery, India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Electricity Authority, New Zealand
- Globalindo Alam Lestari - Indonesia
- Edison Trading Spa - Italy
- Bulk Trading Sa - Switzerland
- Vijayanagar Sugar Pvt Ltd - India
- Georgia Ports Authority, United States
- Parliament of New Zealand
- Jorong Barutama Greston.PT - Indonesia
- Bukit Makmur.PT - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ministry of Transport, Egypt
- Maheswari Brothers Coal Limited - India
- The Treasury - Australian Government
- Karbindo Abesyapradhi - Indoneisa
- Pipit Mutiara Jaya. PT, Indonesia
- IEA Clean Coal Centre - UK
- Uttam Galva Steels Limited - India
- Indian Energy Exchange, India
- Planning Commission, India
- Independent Power Producers Association of India
- Deloitte Consulting - India
- Latin American Coal - Colombia
- Price Waterhouse Coopers - Russia
- Central Electricity Authority - India
- Bhatia International Limited - India
- Vizag Seaport Private Limited - India
- Sical Logistics Limited - India
- Gujarat Electricity Regulatory Commission - India
- Chettinad Cement Corporation Ltd - India
- Wood Mackenzie - Singapore
- White Energy Company Limited
- TNB Fuel Sdn Bhd - Malaysia
- Eastern Energy - Thailand
- Larsen & Toubro Limited - India
- Sindya Power Generating Company Private Ltd
- Coal and Oil Company - UAE
- Global Coal Blending Company Limited - Australia
- Binh Thuan Hamico - Vietnam
- Kapuas Tunggal Persada - Indonesia
- Iligan Light & Power Inc, Philippines
- PowerSource Philippines DevCo
- Power Finance Corporation Ltd., India
- Australian Coal Association
- Petrochimia International Co. Ltd.- Taiwan
- Kideco Jaya Agung - Indonesia
- Ind-Barath Power Infra Limited - India
- Thiess Contractors Indonesia
- Madhucon Powers Ltd - India
- Formosa Plastics Group - Taiwan
- Coastal Gujarat Power Limited - India
- Sakthi Sugars Limited - India
- San Jose City I Power Corp, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Coalindo Energy - Indonesia
- Banpu Public Company Limited - Thailand
- Mercuria Energy - Indonesia
- PTC India Limited - India
- Bayan Resources Tbk. - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Bahari Cakrawala Sebuku - Indonesia
- Baramulti Group, Indonesia
- Global Business Power Corporation, Philippines
- Kohat Cement Company Ltd. - Pakistan
- McConnell Dowell - Australia
- Xindia Steels Limited - India
- CIMB Investment Bank - Malaysia
- Sinarmas Energy and Mining - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Kumho Petrochemical, South Korea
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Siam City Cement - Thailand
- Mjunction Services Limited - India
- Bhoruka Overseas - Indonesia
- Anglo American - United Kingdom
- Offshore Bulk Terminal Pte Ltd, Singapore
- PNOC Exploration Corporation - Philippines
- Commonwealth Bank - Australia
- New Zealand Coal & Carbon
- Bank of Tokyo Mitsubishi UFJ Ltd
- Dalmia Cement Bharat India
- Central Java Power - Indonesia
- Aboitiz Power Corporation - Philippines
- South Luzon Thermal Energy Corporation
- GAC Shipping (India) Pvt Ltd
- Borneo Indobara - Indonesia
- Meenaskhi Energy Private Limited - India
- OPG Power Generation Pvt Ltd - India
- Sree Jayajothi Cements Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Sarangani Energy Corporation, Philippines
- Savvy Resources Ltd - HongKong
- Kobexindo Tractors - Indoneisa
- Toyota Tsusho Corporation, Japan
- Oldendorff Carriers - Singapore
- Indian Oil Corporation Limited
- Trasteel International SA, Italy
- Antam Resourcindo - Indonesia
- Lanco Infratech Ltd - India
- Singapore Mercantile Exchange
- VISA Power Limited - India
- Miang Besar Coal Terminal - Indonesia
- Videocon Industries ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Mintek Dendrill Indonesia
- Malabar Cements Ltd - India
- Standard Chartered Bank - UAE
- Directorate Of Revenue Intelligence - India
- Cigading International Bulk Terminal - Indonesia
- ASAPP Information Group - India
- Indogreen Group - Indonesia
- SMC Global Power, Philippines
- ICICI Bank Limited - India
- Kepco SPC Power Corporation, Philippines
- LBH Netherlands Bv - Netherlands
- Meralco Power Generation, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Therma Luzon, Inc, Philippines
- Bhushan Steel Limited - India
- Salva Resources Pvt Ltd - India
- SMG Consultants - Indonesia
- Gujarat Sidhee Cement - India
- Jaiprakash Power Ventures ltd
- Manunggal Multi Energi - Indonesia
- Renaissance Capital - South Africa
- Pendopo Energi Batubara - Indonesia
- Barasentosa Lestari - Indonesia
- Indika Energy - Indonesia
- TeaM Sual Corporation - Philippines
- Mercator Lines Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Posco Energy - South Korea
- Wilmar Investment Holdings
- Indonesian Coal Mining Association
- AsiaOL BioFuels Corp., Philippines
- Sojitz Corporation - Japan
- Gujarat Mineral Development Corp Ltd - India
- Merrill Lynch Commodities Europe
- Rashtriya Ispat Nigam Limited - India
- India Bulls Power Limited - India
- Jindal Steel & Power Ltd - India
- The University of Queensland
- Ministry of Finance - Indonesia
- Rio Tinto Coal - Australia
- Altura Mining Limited, Indonesia
- Goldman Sachs - Singapore
- Krishnapatnam Port Company Ltd. - India
- Semirara Mining Corp, Philippines
- Samtan Co., Ltd - South Korea
- Eastern Coal Council - USA
- European Bulk Services B.V. - Netherlands
- Ministry of Mines - Canada
- International Coal Ventures Pvt Ltd - India
- Orica Mining Services - Indonesia
- Kartika Selabumi Mining - Indonesia
- Electricity Generating Authority of Thailand
- Semirara Mining and Power Corporation, Philippines
- SN Aboitiz Power Inc, Philippines
- Kaltim Prima Coal - Indonesia
- Metalloyd Limited - United Kingdom
- Bukit Baiduri Energy - Indonesia
- Vedanta Resources Plc - India
- Australian Commodity Traders Exchange
- Global Green Power PLC Corporation, Philippines
- Minerals Council of Australia
- Economic Council, Georgia
- Siam City Cement PLC, Thailand
- Cement Manufacturers Association - India
- The State Trading Corporation of India Ltd
- Simpson Spence & Young - Indonesia
- Romanian Commodities Exchange
- GVK Power & Infra Limited - India
- GMR Energy Limited - India
- Chamber of Mines of South Africa
- Marubeni Corporation - India
- Bharathi Cement Corporation - India
- London Commodity Brokers - England
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Port Waratah Coal Services - Australia
- Essar Steel Hazira Ltd - India
- Energy Development Corp, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Neyveli Lignite Corporation Ltd, - India
- Attock Cement Pakistan Limited
- Riau Bara Harum - Indonesia
- IHS Mccloskey Coal Group - USA
- Energy Link Ltd, New Zealand
- Indo Tambangraya Megah - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Aditya Birla Group - India
- Intertek Mineral Services - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- MS Steel International - UAE
- Africa Commodities Group - South Africa
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