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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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Tuesday, 20 July 10
DRY BULK SHIPPING MARKET FINDING SOME SUPPORT, AS OWNERS TAKE CAPE SIZES OFF THE MARKET
With the Baltic Dry Index finally having reached bottom, at least according to market analysts, the dry bulk industry is looking to begin its long r ...
Monday, 19 July 10
INDONESIA EXPORTS 24.49 MILLION TONNES OF COAL IN JUNE 2010
COALspot.com: Indonesia, the world largest coal exporter, exported 141.249 million tons of coal in the first half of this year. In June 2010, Indone ...
Monday, 19 July 10
CHINA ONCE AGAIN DOMINATING SHIPPING FREIGHT RATES, WHILE OVERSUPPLY OF TONNAGE RAISES CONCERN
The ending of the week brought a cheerful note among dry bulk ship owners, as the sinking benchmark of the industry, the Baltic Dry Index (BDI) fina ...
Saturday, 17 July 10
THE DRY BULK MARKET CONTINUED THE DOWNWARD TREND - VISTAAR
COALspot.com: The indices continued the downward trend this week also with BDI at 1,720 points and cape size index at 1676 points and the charter ra ...
Saturday, 17 July 10
BULLISH OUTLOOK FOR COKING COAL - MINING MX & HELLENIC SHIPPING
Mining Mx reported that, the coking coal market has better long-term fundamentals than the iron ore market, according to a recent research rep ...
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- Iligan Light & Power Inc, Philippines
- Carbofer General Trading SA - India
- IEA Clean Coal Centre - UK
- Vedanta Resources Plc - India
- Petrochimia International Co. Ltd.- Taiwan
- Coal and Oil Company - UAE
- Intertek Mineral Services - Indonesia
- Bayan Resources Tbk. - Indonesia
- Indika Energy - Indonesia
- Petron Corporation, Philippines
- The Treasury - Australian Government
- GN Power Mariveles Coal Plant, Philippines
- Indian Oil Corporation Limited
- OPG Power Generation Pvt Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Georgia Ports Authority, United States
- Aditya Birla Group - India
- Parry Sugars Refinery, India
- Indian Energy Exchange, India
- Agrawal Coal Company - India
- Samtan Co., Ltd - South Korea
- Offshore Bulk Terminal Pte Ltd, Singapore
- Pendopo Energi Batubara - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Economic Council, Georgia
- International Coal Ventures Pvt Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Marubeni Corporation - India
- Pipit Mutiara Jaya. PT, Indonesia
- Vizag Seaport Private Limited - India
- Romanian Commodities Exchange
- Latin American Coal - Colombia
- IHS Mccloskey Coal Group - USA
- VISA Power Limited - India
- Barasentosa Lestari - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Salva Resources Pvt Ltd - India
- Interocean Group of Companies - India
- Bukit Baiduri Energy - Indonesia
- Central Electricity Authority - India
- Meralco Power Generation, Philippines
- Simpson Spence & Young - Indonesia
- Malabar Cements Ltd - India
- Sree Jayajothi Cements Limited - India
- Gujarat Electricity Regulatory Commission - India
- Lanco Infratech Ltd - India
- SMG Consultants - Indonesia
- Renaissance Capital - South Africa
- Leighton Contractors Pty Ltd - Australia
- Toyota Tsusho Corporation, Japan
- Sical Logistics Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Wilmar Investment Holdings
- Edison Trading Spa - Italy
- Karbindo Abesyapradhi - Indoneisa
- Maharashtra Electricity Regulatory Commission - India
- GVK Power & Infra Limited - India
- Riau Bara Harum - Indonesia
- GAC Shipping (India) Pvt Ltd
- Kumho Petrochemical, South Korea
- Cement Manufacturers Association - India
- Metalloyd Limited - United Kingdom
- Maheswari Brothers Coal Limited - India
- Larsen & Toubro Limited - India
- Energy Link Ltd, New Zealand
- Xindia Steels Limited - India
- India Bulls Power Limited - India
- Karaikal Port Pvt Ltd - India
- Bhatia International Limited - India
- Port Waratah Coal Services - Australia
- Indo Tambangraya Megah - Indonesia
- Global Green Power PLC Corporation, Philippines
- Kartika Selabumi Mining - Indonesia
- Bhoruka Overseas - Indonesia
- Mjunction Services Limited - India
- Global Coal Blending Company Limited - Australia
- Bukit Makmur.PT - Indonesia
- Tamil Nadu electricity Board
- Independent Power Producers Association of India
- Ministry of Transport, Egypt
- SN Aboitiz Power Inc, Philippines
- Goldman Sachs - Singapore
- Ministry of Finance - Indonesia
- MS Steel International - UAE
- Timah Investasi Mineral - Indoneisa
- AsiaOL BioFuels Corp., Philippines
- Baramulti Group, Indonesia
- Chettinad Cement Corporation Ltd - India
- PowerSource Philippines DevCo
- Cigading International Bulk Terminal - Indonesia
- Formosa Plastics Group - Taiwan
- Ambuja Cements Ltd - India
- Electricity Authority, New Zealand
- Antam Resourcindo - Indonesia
- Thiess Contractors Indonesia
- Kapuas Tunggal Persada - Indonesia
- Star Paper Mills Limited - India
- Sindya Power Generating Company Private Ltd
- Globalindo Alam Lestari - Indonesia
- Merrill Lynch Commodities Europe
- SMC Global Power, Philippines
- Alfred C Toepfer International GmbH - Germany
- ASAPP Information Group - India
- Sakthi Sugars Limited - India
- Dalmia Cement Bharat India
- Directorate Of Revenue Intelligence - India
- Therma Luzon, Inc, Philippines
- Orica Mining Services - Indonesia
- Ministry of Mines - Canada
- Posco Energy - South Korea
- Sojitz Corporation - Japan
- The University of Queensland
- Kalimantan Lumbung Energi - Indonesia
- Eastern Coal Council - USA
- Semirara Mining and Power Corporation, Philippines
- Bulk Trading Sa - Switzerland
- Semirara Mining Corp, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Billiton Holdings Pty Ltd - Australia
- South Luzon Thermal Energy Corporation
- Anglo American - United Kingdom
- Banpu Public Company Limited - Thailand
- Mercator Lines Limited - India
- Attock Cement Pakistan Limited
- Minerals Council of Australia
- Mintek Dendrill Indonesia
- Thai Mozambique Logistica
- London Commodity Brokers - England
- Deloitte Consulting - India
- Borneo Indobara - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Kaltim Prima Coal - Indonesia
- Price Waterhouse Coopers - Russia
- Jaiprakash Power Ventures ltd
- Siam City Cement - Thailand
- San Jose City I Power Corp, Philippines
- PNOC Exploration Corporation - Philippines
- Bhushan Steel Limited - India
- Madhucon Powers Ltd - India
- Africa Commodities Group - South Africa
- TeaM Sual Corporation - Philippines
- Holcim Trading Pte Ltd - Singapore
- Commonwealth Bank - Australia
- Coastal Gujarat Power Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Sarangani Energy Corporation, Philippines
- Rio Tinto Coal - Australia
- Central Java Power - Indonesia
- Energy Development Corp, Philippines
- Power Finance Corporation Ltd., India
- Bangladesh Power Developement Board
- Bharathi Cement Corporation - India
- Neyveli Lignite Corporation Ltd, - India
- Wood Mackenzie - Singapore
- Trasteel International SA, Italy
- McConnell Dowell - Australia
- Siam City Cement PLC, Thailand
- Ind-Barath Power Infra Limited - India
- Chamber of Mines of South Africa
- Straits Asia Resources Limited - Singapore
- CIMB Investment Bank - Malaysia
- White Energy Company Limited
- Uttam Galva Steels Limited - India
- Australian Coal Association
- Planning Commission, India
- Manunggal Multi Energi - Indonesia
- European Bulk Services B.V. - Netherlands
- Binh Thuan Hamico - Vietnam
- Standard Chartered Bank - UAE
- CNBM International Corporation - China
- Bukit Asam (Persero) Tbk - Indonesia
- Grasim Industreis Ltd - India
- ICICI Bank Limited - India
- New Zealand Coal & Carbon
- Makarim & Taira - Indonesia
- Oldendorff Carriers - Singapore
- Gujarat Sidhee Cement - India
- LBH Netherlands Bv - Netherlands
- Kobexindo Tractors - Indoneisa
- Mercuria Energy - Indonesia
- Indogreen Group - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Orica Australia Pty. Ltd.
- Videocon Industries ltd - India
- GMR Energy Limited - India
- Altura Mining Limited, Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Tata Chemicals Ltd - India
- Indonesian Coal Mining Association
- The State Trading Corporation of India Ltd
- Heidelberg Cement - Germany
- Australian Commodity Traders Exchange
- Aboitiz Power Corporation - Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Global Business Power Corporation, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kepco SPC Power Corporation, Philippines
- Rashtriya Ispat Nigam Limited - India
- Eastern Energy - Thailand
- Asmin Koalindo Tuhup - Indonesia
- Essar Steel Hazira Ltd - India
- Jindal Steel & Power Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Savvy Resources Ltd - HongKong
- Meenaskhi Energy Private Limited - India
- Medco Energi Mining Internasional
- Singapore Mercantile Exchange
- Kideco Jaya Agung - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- PTC India Limited - India
- Coalindo Energy - Indonesia
- Parliament of New Zealand
- Electricity Generating Authority of Thailand
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