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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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Monday, 08 November 10
INDONESIAN HBA HAS INCREASED TO $ 95.51 PER TON FOR NOVEMBER LOADING
COALspot.com: The Directorate General of Mineral, Coal and Geothermal of Indonesia has been publishing a monthly coal price reference (HBA) since Fe ...
Sunday, 07 November 10
THE SUPRAMAX INDEX IN THE FAR EAST CONTINUED TO BE UNDER PRESSURE - CAPT. REDDY
COALspot.com: The freight market continued to remain soft and all segments were down by almost about 6 pct.
The BDI and Cape Size index was down ...
Saturday, 06 November 10
DRY BULK MARKET LACKING SUPPORT TO SUSTAIN CURRENT LEVELS, BUT PANAMAX OWNERS ARE MORE FORTUNATE - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
Posting its fifth straight losing session, the dry bulk market benchmark, the BDI (Baltic Dry Index) was down yesterday by another 1.26% to 2510 poi ...
Friday, 05 November 10
RI COAL EXPORT PROSPECTS STILL BRIGHT - THE JAKARTA POST
The Jakarta Post reported that, Indonesia, already the world’s largest exporter of seaborne thermal coal since 2005, will continue to be a maj ...
Thursday, 04 November 10
CAPE SIZE SENTIMENT FOR THIS WEEK WAS NEGATIVE - FEARNBULK
Handy
The Atlantic markets remain flat and lackluster. High volume of tonnage availabi ...
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- Indogreen Group - Indonesia
- Agrawal Coal Company - India
- Dalmia Cement Bharat India
- Australian Commodity Traders Exchange
- Indo Tambangraya Megah - Indonesia
- Aditya Birla Group - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Binh Thuan Hamico - Vietnam
- Indian Energy Exchange, India
- India Bulls Power Limited - India
- Samtan Co., Ltd - South Korea
- Kepco SPC Power Corporation, Philippines
- Australian Coal Association
- Posco Energy - South Korea
- Tata Chemicals Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Planning Commission, India
- Lanco Infratech Ltd - India
- SN Aboitiz Power Inc, Philippines
- Mercator Lines Limited - India
- Uttam Galva Steels Limited - India
- Thai Mozambique Logistica
- Pipit Mutiara Jaya. PT, Indonesia
- CNBM International Corporation - China
- Vizag Seaport Private Limited - India
- Oldendorff Carriers - Singapore
- Semirara Mining and Power Corporation, Philippines
- TeaM Sual Corporation - Philippines
- The Treasury - Australian Government
- Directorate General of MIneral and Coal - Indonesia
- PTC India Limited - India
- Star Paper Mills Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Parry Sugars Refinery, India
- Larsen & Toubro Limited - India
- Simpson Spence & Young - Indonesia
- Banpu Public Company Limited - Thailand
- Makarim & Taira - Indonesia
- Sical Logistics Limited - India
- Parliament of New Zealand
- Deloitte Consulting - India
- Economic Council, Georgia
- Bukit Baiduri Energy - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Ceylon Electricity Board - Sri Lanka
- Bayan Resources Tbk. - Indonesia
- Singapore Mercantile Exchange
- Karaikal Port Pvt Ltd - India
- Chamber of Mines of South Africa
- Indonesian Coal Mining Association
- Madhucon Powers Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Ministry of Mines - Canada
- Power Finance Corporation Ltd., India
- OPG Power Generation Pvt Ltd - India
- San Jose City I Power Corp, Philippines
- Timah Investasi Mineral - Indoneisa
- Salva Resources Pvt Ltd - India
- Siam City Cement - Thailand
- Alfred C Toepfer International GmbH - Germany
- Kumho Petrochemical, South Korea
- Price Waterhouse Coopers - Russia
- Latin American Coal - Colombia
- SMG Consultants - Indonesia
- Borneo Indobara - Indonesia
- Thiess Contractors Indonesia
- Bharathi Cement Corporation - India
- Toyota Tsusho Corporation, Japan
- Karbindo Abesyapradhi - Indoneisa
- Miang Besar Coal Terminal - Indonesia
- Energy Link Ltd, New Zealand
- Medco Energi Mining Internasional
- Central Electricity Authority - India
- Iligan Light & Power Inc, Philippines
- Sindya Power Generating Company Private Ltd
- Goldman Sachs - Singapore
- AsiaOL BioFuels Corp., Philippines
- Ministry of Finance - Indonesia
- Global Coal Blending Company Limited - Australia
- Kohat Cement Company Ltd. - Pakistan
- Riau Bara Harum - Indonesia
- GVK Power & Infra Limited - India
- SMC Global Power, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Romanian Commodities Exchange
- McConnell Dowell - Australia
- Essar Steel Hazira Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Merrill Lynch Commodities Europe
- Kobexindo Tractors - Indoneisa
- Meralco Power Generation, Philippines
- Jindal Steel & Power Ltd - India
- Electricity Generating Authority of Thailand
- Vedanta Resources Plc - India
- Maheswari Brothers Coal Limited - India
- Eastern Energy - Thailand
- Rashtriya Ispat Nigam Limited - India
- Africa Commodities Group - South Africa
- Rio Tinto Coal - Australia
- Intertek Mineral Services - Indonesia
- LBH Netherlands Bv - Netherlands
- Bukit Asam (Persero) Tbk - Indonesia
- Sarangani Energy Corporation, Philippines
- Therma Luzon, Inc, Philippines
- London Commodity Brokers - England
- South Luzon Thermal Energy Corporation
- Eastern Coal Council - USA
- Petrochimia International Co. Ltd.- Taiwan
- Maharashtra Electricity Regulatory Commission - India
- Baramulti Group, Indonesia
- Altura Mining Limited, Indonesia
- Savvy Resources Ltd - HongKong
- Billiton Holdings Pty Ltd - Australia
- Kaltim Prima Coal - Indonesia
- VISA Power Limited - India
- ICICI Bank Limited - India
- Indika Energy - Indonesia
- Attock Cement Pakistan Limited
- Meenaskhi Energy Private Limited - India
- Wilmar Investment Holdings
- Manunggal Multi Energi - Indonesia
- Gujarat Sidhee Cement - India
- Globalindo Alam Lestari - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Mercuria Energy - Indonesia
- Energy Development Corp, Philippines
- Jaiprakash Power Ventures ltd
- Trasteel International SA, Italy
- Heidelberg Cement - Germany
- Standard Chartered Bank - UAE
- Independent Power Producers Association of India
- Kideco Jaya Agung - Indonesia
- Siam City Cement PLC, Thailand
- Sakthi Sugars Limited - India
- Antam Resourcindo - Indonesia
- White Energy Company Limited
- Ministry of Transport, Egypt
- Tamil Nadu electricity Board
- GMR Energy Limited - India
- Georgia Ports Authority, United States
- Bahari Cakrawala Sebuku - Indonesia
- Semirara Mining Corp, Philippines
- Interocean Group of Companies - India
- Metalloyd Limited - United Kingdom
- Pendopo Energi Batubara - Indonesia
- Bhushan Steel Limited - India
- Ind-Barath Power Infra Limited - India
- Cement Manufacturers Association - India
- Global Business Power Corporation, Philippines
- Commonwealth Bank - Australia
- Gujarat Electricity Regulatory Commission - India
- Bulk Trading Sa - Switzerland
- Bhoruka Overseas - Indonesia
- Xindia Steels Limited - India
- Malabar Cements Ltd - India
- Grasim Industreis Ltd - India
- Edison Trading Spa - Italy
- The University of Queensland
- Formosa Plastics Group - Taiwan
- Indian Oil Corporation Limited
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Port Waratah Coal Services - Australia
- The State Trading Corporation of India Ltd
- CIMB Investment Bank - Malaysia
- Videocon Industries ltd - India
- PowerSource Philippines DevCo
- Coalindo Energy - Indonesia
- Petron Corporation, Philippines
- Leighton Contractors Pty Ltd - Australia
- IHS Mccloskey Coal Group - USA
- Coastal Gujarat Power Limited - India
- Minerals Council of Australia
- Aboitiz Power Corporation - Philippines
- Renaissance Capital - South Africa
- PNOC Exploration Corporation - Philippines
- Holcim Trading Pte Ltd - Singapore
- Anglo American - United Kingdom
- Carbofer General Trading SA - India
- Orica Mining Services - Indonesia
- Bangladesh Power Developement Board
- Ambuja Cements Ltd - India
- Marubeni Corporation - India
- Wood Mackenzie - Singapore
- GAC Shipping (India) Pvt Ltd
- Directorate Of Revenue Intelligence - India
- Kartika Selabumi Mining - Indonesia
- Central Java Power - Indonesia
- Bukit Makmur.PT - Indonesia
- Sojitz Corporation - Japan
- IEA Clean Coal Centre - UK
- Mintek Dendrill Indonesia
- Jorong Barutama Greston.PT - Indonesia
- New Zealand Coal & Carbon
- Orica Australia Pty. Ltd.
- Sinarmas Energy and Mining - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Bhatia International Limited - India
- Kapuas Tunggal Persada - Indonesia
- Coal and Oil Company - UAE
- Vijayanagar Sugar Pvt Ltd - India
- International Coal Ventures Pvt Ltd - India
- ASAPP Information Group - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Electricity Authority, New Zealand
- Cigading International Bulk Terminal - Indonesia
- Barasentosa Lestari - Indonesia
- Global Green Power PLC Corporation, Philippines
- Straits Asia Resources Limited - Singapore
- European Bulk Services B.V. - Netherlands
- MS Steel International - UAE
- Chettinad Cement Corporation Ltd - India
- Mjunction Services Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Sree Jayajothi Cements Limited - India
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