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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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Saturday, 25 September 10
PRESSURE ON S6 AND S7 ROUTES SEEMS TO BE CONTINUED NEXT WEEK CAPT. REDDY
COALspot.com: The freight market has been flat this week due to holidays in China and low activity saw all sectors down and soft.
The BDI was dow ...
Thursday, 23 September 10
CHURCHILL MINING SHARES JUMP ON EAST KUTAI COAL PROJECT FEASIBILITY RESULTS - STOCKOPEDIA
AIM listed mining group Churchill Mining (LON:CHL) and its Indonesian partners the Ridlatama Group, have completed a feasibility study on the 2.73bn ...
Thursday, 23 September 10
DRY BULK RATES EXPECTEDLY FALL TO ONE MONTH LOWS - HELLENIC SHIPPING
With of the Far East trade routes closed this week on various national holidays, demand for ocean transportation of raw materials has been significa ...
Wednesday, 22 September 10
INDIA TO BE BIGGEST BUYER OF INDONESIAN COAL BY 2011 - BUSINESS STANDARD
India will pass Japan to be the biggest buyer of Indonesian coal by 2011, said Bob Kamandanu, chairman of the Indonesian Coal Mining Association.
...
Wednesday, 22 September 10
DRY BULK MARKET SENTIMENT TURNS SOUTH AS IRON ORE DEMAND DECLINES
The dry bulk market has once again turned the tide, with the industry’s benchmark, the Baltic Dry Index (BDI) turning south during the previou ...
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- Therma Luzon, Inc, Philippines
- Price Waterhouse Coopers - Russia
- Meenaskhi Energy Private Limited - India
- Australian Commodity Traders Exchange
- White Energy Company Limited
- Ambuja Cements Ltd - India
- Cement Manufacturers Association - India
- Bukit Asam (Persero) Tbk - Indonesia
- Sojitz Corporation - Japan
- Global Green Power PLC Corporation, Philippines
- Global Business Power Corporation, Philippines
- Kideco Jaya Agung - Indonesia
- Manunggal Multi Energi - Indonesia
- Global Coal Blending Company Limited - Australia
- MS Steel International - UAE
- Tamil Nadu electricity Board
- Chamber of Mines of South Africa
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- Indonesian Coal Mining Association
- Asmin Koalindo Tuhup - Indonesia
- CNBM International Corporation - China
- Africa Commodities Group - South Africa
- Goldman Sachs - Singapore
- San Jose City I Power Corp, Philippines
- Antam Resourcindo - Indonesia
- Globalindo Alam Lestari - Indonesia
- Edison Trading Spa - Italy
- Mercuria Energy - Indonesia
- Gujarat Sidhee Cement - India
- Power Finance Corporation Ltd., India
- SMC Global Power, Philippines
- Semirara Mining Corp, Philippines
- Larsen & Toubro Limited - India
- Gujarat Mineral Development Corp Ltd - India
- LBH Netherlands Bv - Netherlands
- Maharashtra Electricity Regulatory Commission - India
- Cigading International Bulk Terminal - Indonesia
- Bharathi Cement Corporation - India
- Mjunction Services Limited - India
- Ministry of Transport, Egypt
- Borneo Indobara - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- IHS Mccloskey Coal Group - USA
- Planning Commission, India
- Vijayanagar Sugar Pvt Ltd - India
- CIMB Investment Bank - Malaysia
- European Bulk Services B.V. - Netherlands
- Sindya Power Generating Company Private Ltd
- Singapore Mercantile Exchange
- Renaissance Capital - South Africa
- GN Power Mariveles Coal Plant, Philippines
- Alfred C Toepfer International GmbH - Germany
- Miang Besar Coal Terminal - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Romanian Commodities Exchange
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- Attock Cement Pakistan Limited
- Binh Thuan Hamico - Vietnam
- Agrawal Coal Company - India
- Uttam Galva Steels Limited - India
- Sical Logistics Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Independent Power Producers Association of India
- Petron Corporation, Philippines
- The State Trading Corporation of India Ltd
- Videocon Industries ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Altura Mining Limited, Indonesia
- Central Electricity Authority - India
- Kepco SPC Power Corporation, Philippines
- The University of Queensland
- Merrill Lynch Commodities Europe
- Sinarmas Energy and Mining - Indonesia
- Pendopo Energi Batubara - Indonesia
- Eastern Coal Council - USA
- Posco Energy - South Korea
- London Commodity Brokers - England
- Minerals Council of Australia
- Wood Mackenzie - Singapore
- Maheswari Brothers Coal Limited - India
- Marubeni Corporation - India
- Leighton Contractors Pty Ltd - Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Semirara Mining and Power Corporation, Philippines
- Heidelberg Cement - Germany
- Standard Chartered Bank - UAE
- Petrochimia International Co. Ltd.- Taiwan
- International Coal Ventures Pvt Ltd - India
- Bhatia International Limited - India
- Ind-Barath Power Infra Limited - India
- Toyota Tsusho Corporation, Japan
- Vizag Seaport Private Limited - India
- Jaiprakash Power Ventures ltd
- GMR Energy Limited - India
- Bayan Resources Tbk. - Indonesia
- The Treasury - Australian Government
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Australian Coal Association
- Sree Jayajothi Cements Limited - India
- Kaltim Prima Coal - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Thai Mozambique Logistica
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sakthi Sugars Limited - India
- Iligan Light & Power Inc, Philippines
- Banpu Public Company Limited - Thailand
- Directorate Of Revenue Intelligence - India
- Bangladesh Power Developement Board
- India Bulls Power Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Savvy Resources Ltd - HongKong
- Meralco Power Generation, Philippines
- Bhushan Steel Limited - India
- Latin American Coal - Colombia
- Central Java Power - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- ASAPP Information Group - India
- Mintek Dendrill Indonesia
- Gujarat Electricity Regulatory Commission - India
- Lanco Infratech Ltd - India
- Bhoruka Overseas - Indonesia
- Thiess Contractors Indonesia
- Essar Steel Hazira Ltd - India
- Siam City Cement - Thailand
- Chettinad Cement Corporation Ltd - India
- Xindia Steels Limited - India
- GAC Shipping (India) Pvt Ltd
- Barasentosa Lestari - Indonesia
- Baramulti Group, Indonesia
- Oldendorff Carriers - Singapore
- Formosa Plastics Group - Taiwan
- Energy Link Ltd, New Zealand
- Medco Energi Mining Internasional
- Indian Energy Exchange, India
- Siam City Cement PLC, Thailand
- SMG Consultants - Indonesia
- Vedanta Resources Plc - India
- Indika Energy - Indonesia
- Ceylon Electricity Board - Sri Lanka
- SN Aboitiz Power Inc, Philippines
- Anglo American - United Kingdom
- Kohat Cement Company Ltd. - Pakistan
- Ministry of Finance - Indonesia
- Aboitiz Power Corporation - Philippines
- TeaM Sual Corporation - Philippines
- VISA Power Limited - India
- Kumho Petrochemical, South Korea
- GVK Power & Infra Limited - India
- Port Waratah Coal Services - Australia
- Kobexindo Tractors - Indoneisa
- Simpson Spence & Young - Indonesia
- Riau Bara Harum - Indonesia
- Madhucon Powers Ltd - India
- Samtan Co., Ltd - South Korea
- South Luzon Thermal Energy Corporation
- Jindal Steel & Power Ltd - India
- Orica Mining Services - Indonesia
- Wilmar Investment Holdings
- OPG Power Generation Pvt Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Energy Development Corp, Philippines
- ICICI Bank Limited - India
- Holcim Trading Pte Ltd - Singapore
- PowerSource Philippines DevCo
- Sarangani Energy Corporation, Philippines
- Rio Tinto Coal - Australia
- Aditya Birla Group - India
- Indogreen Group - Indonesia
- New Zealand Coal & Carbon
- Parry Sugars Refinery, India
- Coalindo Energy - Indonesia
- IEA Clean Coal Centre - UK
- Makarim & Taira - Indonesia
- Ministry of Mines - Canada
- Mercator Lines Limited - India
- Parliament of New Zealand
- Orica Australia Pty. Ltd.
- PNOC Exploration Corporation - Philippines
- Malabar Cements Ltd - India
- Karaikal Port Pvt Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Star Paper Mills Limited - India
- Economic Council, Georgia
- AsiaOL BioFuels Corp., Philippines
- Commonwealth Bank - Australia
- Eastern Energy - Thailand
- Indo Tambangraya Megah - Indonesia
- Deloitte Consulting - India
- Bukit Baiduri Energy - Indonesia
- Bukit Makmur.PT - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Electricity Generating Authority of Thailand
- Salva Resources Pvt Ltd - India
- Georgia Ports Authority, United States
- Timah Investasi Mineral - Indoneisa
- Coal and Oil Company - UAE
- Coastal Gujarat Power Limited - India
- Electricity Authority, New Zealand
- PetroVietnam Power Coal Import and Supply Company
- Grasim Industreis Ltd - India
- Trasteel International SA, Italy
- Indian Oil Corporation Limited
- Tata Chemicals Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Metalloyd Limited - United Kingdom
- Straits Asia Resources Limited - Singapore
- Carbofer General Trading SA - India
- Intertek Mineral Services - Indonesia
- Krishnapatnam Port Company Ltd. - India
- McConnell Dowell - Australia
- Dalmia Cement Bharat India
- PTC India Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Interocean Group of Companies - India
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