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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, 04 November 10
GVK TALKS WITH MEC FOR INDONESIAN MINES DEAL - DNA INDIA
As reported by DNA India, GVK Power and Infrastructure on Wednesday said it is in talks with Gulf-based MEC Coal to buy its coal mines in Indonesia, ...
Wednesday, 03 November 10
PANAMAX SIZE DRY-BULK CARRIER MARKET IS STRONG - GERSON LEHRMAN
Panamax class vessels have been part of the fluctuation of the broader current dry bulk market. They have experienced occasional steep movements, du ...
Tuesday, 02 November 10
ADDED VALUE REMAINS STAGNANT - MAJALAH TAMBANG
The improvement of added value of mining products in accordance with mandate of the mining law has not been visible. Minerals and coal are still exp ...
Saturday, 30 October 10
THE SUPRAMAX FREIGHT MARKET THIS WEEK REMAINED ALMOST AT LAST WEEK LEVELS - VISTAAR SINGAPORE
COALspot.com: The freight market this week remained almost at same levels except for Panamax index which was up by 191 points.
The feast/SE Asia ...
Friday, 29 October 10
CAPE MARKET STARTED TO BREAK THOUGH THE UPWARDS RESISTANCE LEVEL OF USD 40K DAILY FOR SPOT CARGOS - FEARNLEYS
HANDY
The Atlantic markets remain flat and lackluster. The expectations that the grain ...
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- Coalindo Energy - Indonesia
- Economic Council, Georgia
- ASAPP Information Group - India
- Formosa Plastics Group - Taiwan
- European Bulk Services B.V. - Netherlands
- Aboitiz Power Corporation - Philippines
- Siam City Cement - Thailand
- Eastern Coal Council - USA
- Attock Cement Pakistan Limited
- The University of Queensland
- Billiton Holdings Pty Ltd - Australia
- Malabar Cements Ltd - India
- Coastal Gujarat Power Limited - India
- Banpu Public Company Limited - Thailand
- Renaissance Capital - South Africa
- PetroVietnam Power Coal Import and Supply Company
- Semirara Mining Corp, Philippines
- The Treasury - Australian Government
- Kartika Selabumi Mining - Indonesia
- Posco Energy - South Korea
- GAC Shipping (India) Pvt Ltd
- Jaiprakash Power Ventures ltd
- Deloitte Consulting - India
- LBH Netherlands Bv - Netherlands
- Tata Chemicals Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Samtan Co., Ltd - South Korea
- Merrill Lynch Commodities Europe
- Kideco Jaya Agung - Indonesia
- Sakthi Sugars Limited - India
- Sarangani Energy Corporation, Philippines
- Vizag Seaport Private Limited - India
- Thiess Contractors Indonesia
- Wood Mackenzie - Singapore
- Parry Sugars Refinery, India
- PNOC Exploration Corporation - Philippines
- Port Waratah Coal Services - Australia
- Star Paper Mills Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Pendopo Energi Batubara - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Sinarmas Energy and Mining - Indonesia
- Chettinad Cement Corporation Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Bahari Cakrawala Sebuku - Indonesia
- Gujarat Sidhee Cement - India
- Minerals Council of Australia
- Baramulti Group, Indonesia
- Goldman Sachs - Singapore
- Directorate Of Revenue Intelligence - India
- Videocon Industries ltd - India
- Salva Resources Pvt Ltd - India
- GVK Power & Infra Limited - India
- Kapuas Tunggal Persada - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Miang Besar Coal Terminal - Indonesia
- Straits Asia Resources Limited - Singapore
- Cigading International Bulk Terminal - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- McConnell Dowell - Australia
- Therma Luzon, Inc, Philippines
- Independent Power Producers Association of India
- Wilmar Investment Holdings
- India Bulls Power Limited - India
- Bulk Trading Sa - Switzerland
- Bangladesh Power Developement Board
- Bayan Resources Tbk. - Indonesia
- Mjunction Services Limited - India
- Parliament of New Zealand
- Larsen & Toubro Limited - India
- Kumho Petrochemical, South Korea
- Sical Logistics Limited - India
- Global Green Power PLC Corporation, Philippines
- Georgia Ports Authority, United States
- Pipit Mutiara Jaya. PT, Indonesia
- Ministry of Transport, Egypt
- Rio Tinto Coal - Australia
- Thai Mozambique Logistica
- Globalindo Alam Lestari - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Global Business Power Corporation, Philippines
- Xindia Steels Limited - India
- South Luzon Thermal Energy Corporation
- CNBM International Corporation - China
- Binh Thuan Hamico - Vietnam
- Anglo American - United Kingdom
- Ministry of Finance - Indonesia
- Orica Mining Services - Indonesia
- Mercator Lines Limited - India
- Sree Jayajothi Cements Limited - India
- Kaltim Prima Coal - Indonesia
- Price Waterhouse Coopers - Russia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- SMC Global Power, Philippines
- Commonwealth Bank - Australia
- Orica Australia Pty. Ltd.
- Grasim Industreis Ltd - India
- Trasteel International SA, Italy
- Jindal Steel & Power Ltd - India
- SN Aboitiz Power Inc, Philippines
- Indogreen Group - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Manunggal Multi Energi - Indonesia
- New Zealand Coal & Carbon
- Ambuja Cements Ltd - India
- Antam Resourcindo - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Mercuria Energy - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Borneo Indobara - Indonesia
- Savvy Resources Ltd - HongKong
- Uttam Galva Steels Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Meenaskhi Energy Private Limited - India
- OPG Power Generation Pvt Ltd - India
- Central Electricity Authority - India
- Lanco Infratech Ltd - India
- Carbofer General Trading SA - India
- Essar Steel Hazira Ltd - India
- Medco Energi Mining Internasional
- Altura Mining Limited, Indonesia
- Metalloyd Limited - United Kingdom
- Coal and Oil Company - UAE
- Timah Investasi Mineral - Indoneisa
- GMR Energy Limited - India
- Standard Chartered Bank - UAE
- PTC India Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Dalmia Cement Bharat India
- Sindya Power Generating Company Private Ltd
- Simpson Spence & Young - Indonesia
- Aditya Birla Group - India
- Leighton Contractors Pty Ltd - Australia
- IHS Mccloskey Coal Group - USA
- Indian Energy Exchange, India
- Energy Link Ltd, New Zealand
- Bukit Makmur.PT - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Eastern Energy - Thailand
- Agrawal Coal Company - India
- London Commodity Brokers - England
- Australian Coal Association
- Toyota Tsusho Corporation, Japan
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Iligan Light & Power Inc, Philippines
- Meralco Power Generation, Philippines
- International Coal Ventures Pvt Ltd - India
- Indian Oil Corporation Limited
- Interocean Group of Companies - India
- Neyveli Lignite Corporation Ltd, - India
- Chamber of Mines of South Africa
- Australian Commodity Traders Exchange
- ICICI Bank Limited - India
- Central Java Power - Indonesia
- Bukit Baiduri Energy - Indonesia
- Electricity Generating Authority of Thailand
- Barasentosa Lestari - Indonesia
- Heidelberg Cement - Germany
- Indo Tambangraya Megah - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- IEA Clean Coal Centre - UK
- Riau Bara Harum - Indonesia
- Bharathi Cement Corporation - India
- Oldendorff Carriers - Singapore
- Petron Corporation, Philippines
- Bhoruka Overseas - Indonesia
- Intertek Mineral Services - Indonesia
- Vedanta Resources Plc - India
- Vijayanagar Sugar Pvt Ltd - India
- Bhushan Steel Limited - India
- The State Trading Corporation of India Ltd
- Singapore Mercantile Exchange
- Maheswari Brothers Coal Limited - India
- Kepco SPC Power Corporation, Philippines
- Alfred C Toepfer International GmbH - Germany
- Semirara Mining and Power Corporation, Philippines
- CIMB Investment Bank - Malaysia
- White Energy Company Limited
- Energy Development Corp, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Kobexindo Tractors - Indoneisa
- Electricity Authority, New Zealand
- Cement Manufacturers Association - India
- Ind-Barath Power Infra Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Indonesian Coal Mining Association
- Rashtriya Ispat Nigam Limited - India
- Siam City Cement PLC, Thailand
- Planning Commission, India
- Sojitz Corporation - Japan
- Makarim & Taira - Indonesia
- TeaM Sual Corporation - Philippines
- Mintek Dendrill Indonesia
- Africa Commodities Group - South Africa
- Tamil Nadu electricity Board
- Latin American Coal - Colombia
- Global Coal Blending Company Limited - Australia
- Madhucon Powers Ltd - India
- MS Steel International - UAE
- Marubeni Corporation - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Power Finance Corporation Ltd., India
- Indika Energy - Indonesia
- SMG Consultants - Indonesia
- Romanian Commodities Exchange
- Edison Trading Spa - Italy
- PowerSource Philippines DevCo
- Kalimantan Lumbung Energi - Indonesia
- San Jose City I Power Corp, Philippines
- Ministry of Mines - Canada
- VISA Power Limited - India
- Bhatia International Limited - India
- Krishnapatnam Port Company Ltd. - India
- Karaikal Port Pvt Ltd - India
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