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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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- Therma Luzon, Inc, Philippines
- CNBM International Corporation - China
- Renaissance Capital - South Africa
- Parliament of New Zealand
- Mjunction Services Limited - India
- Central Java Power - Indonesia
- Mercuria Energy - Indonesia
- Rio Tinto Coal - Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Petron Corporation, Philippines
- Lanco Infratech Ltd - India
- Indian Energy Exchange, India
- Star Paper Mills Limited - India
- Commonwealth Bank - Australia
- Wilmar Investment Holdings
- Maharashtra Electricity Regulatory Commission - India
- Mercator Lines Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ceylon Electricity Board - Sri Lanka
- Medco Energi Mining Internasional
- Bhatia International Limited - India
- Latin American Coal - Colombia
- Madhucon Powers Ltd - India
- Makarim & Taira - Indonesia
- Aditya Birla Group - India
- Sindya Power Generating Company Private Ltd
- Thai Mozambique Logistica
- Neyveli Lignite Corporation Ltd, - India
- Heidelberg Cement - Germany
- India Bulls Power Limited - India
- Straits Asia Resources Limited - Singapore
- Bukit Baiduri Energy - Indonesia
- Aboitiz Power Corporation - Philippines
- TeaM Sual Corporation - Philippines
- Interocean Group of Companies - India
- Kartika Selabumi Mining - Indonesia
- Orica Australia Pty. Ltd.
- Sinarmas Energy and Mining - Indonesia
- Barasentosa Lestari - Indonesia
- Intertek Mineral Services - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Attock Cement Pakistan Limited
- Port Waratah Coal Services - Australia
- Global Green Power PLC Corporation, Philippines
- Kaltim Prima Coal - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Krishnapatnam Port Company Ltd. - India
- Borneo Indobara - Indonesia
- Power Finance Corporation Ltd., India
- Tamil Nadu electricity Board
- Romanian Commodities Exchange
- Minerals Council of Australia
- Maheswari Brothers Coal Limited - India
- IEA Clean Coal Centre - UK
- Cement Manufacturers Association - India
- Vizag Seaport Private Limited - India
- European Bulk Services B.V. - Netherlands
- Coastal Gujarat Power Limited - India
- Siam City Cement - Thailand
- Coalindo Energy - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Simpson Spence & Young - Indonesia
- Edison Trading Spa - Italy
- Indo Tambangraya Megah - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Jindal Steel & Power Ltd - India
- Chettinad Cement Corporation Ltd - India
- LBH Netherlands Bv - Netherlands
- PowerSource Philippines DevCo
- Grasim Industreis Ltd - India
- Bukit Makmur.PT - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Sojitz Corporation - Japan
- Sarangani Energy Corporation, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Altura Mining Limited, Indonesia
- Directorate Of Revenue Intelligence - India
- Kideco Jaya Agung - Indonesia
- Samtan Co., Ltd - South Korea
- Georgia Ports Authority, United States
- Billiton Holdings Pty Ltd - Australia
- Orica Mining Services - Indonesia
- International Coal Ventures Pvt Ltd - India
- Vedanta Resources Plc - India
- Bhushan Steel Limited - India
- Essar Steel Hazira Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Standard Chartered Bank - UAE
- Trasteel International SA, Italy
- Sical Logistics Limited - India
- Banpu Public Company Limited - Thailand
- Goldman Sachs - Singapore
- Chamber of Mines of South Africa
- GN Power Mariveles Coal Plant, Philippines
- Mintek Dendrill Indonesia
- Independent Power Producers Association of India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Riau Bara Harum - Indonesia
- Metalloyd Limited - United Kingdom
- Africa Commodities Group - South Africa
- Marubeni Corporation - India
- Antam Resourcindo - Indonesia
- Singapore Mercantile Exchange
- Sakthi Sugars Limited - India
- Pendopo Energi Batubara - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Savvy Resources Ltd - HongKong
- Rashtriya Ispat Nigam Limited - India
- Bangladesh Power Developement Board
- Economic Council, Georgia
- GMR Energy Limited - India
- The State Trading Corporation of India Ltd
- GVK Power & Infra Limited - India
- Meralco Power Generation, Philippines
- Larsen & Toubro Limited - India
- Kobexindo Tractors - Indoneisa
- San Jose City I Power Corp, Philippines
- London Commodity Brokers - England
- Bhoruka Overseas - Indonesia
- Jaiprakash Power Ventures ltd
- Indian Oil Corporation Limited
- The Treasury - Australian Government
- CIMB Investment Bank - Malaysia
- Eastern Coal Council - USA
- AsiaOL BioFuels Corp., Philippines
- Semirara Mining Corp, Philippines
- Kepco SPC Power Corporation, Philippines
- Globalindo Alam Lestari - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Videocon Industries ltd - India
- Posco Energy - South Korea
- Toyota Tsusho Corporation, Japan
- Wood Mackenzie - Singapore
- Energy Link Ltd, New Zealand
- Meenaskhi Energy Private Limited - India
- Bayan Resources Tbk. - Indonesia
- Parry Sugars Refinery, India
- Australian Coal Association
- Bharathi Cement Corporation - India
- Carbofer General Trading SA - India
- Uttam Galva Steels Limited - India
- Cigading International Bulk Terminal - Indonesia
- IHS Mccloskey Coal Group - USA
- Xindia Steels Limited - India
- Ambuja Cements Ltd - India
- Electricity Generating Authority of Thailand
- Price Waterhouse Coopers - Russia
- Sree Jayajothi Cements Limited - India
- PNOC Exploration Corporation - Philippines
- Salva Resources Pvt Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- South Luzon Thermal Energy Corporation
- SN Aboitiz Power Inc, Philippines
- Formosa Plastics Group - Taiwan
- SMC Global Power, Philippines
- Semirara Mining and Power Corporation, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Planning Commission, India
- Eastern Energy - Thailand
- Kumho Petrochemical, South Korea
- Agrawal Coal Company - India
- Central Electricity Authority - India
- White Energy Company Limited
- Deloitte Consulting - India
- Iligan Light & Power Inc, Philippines
- MS Steel International - UAE
- Ministry of Finance - Indonesia
- Bulk Trading Sa - Switzerland
- Energy Development Corp, Philippines
- Siam City Cement PLC, Thailand
- Ind-Barath Power Infra Limited - India
- Miang Besar Coal Terminal - Indonesia
- Global Coal Blending Company Limited - Australia
- Baramulti Group, Indonesia
- ICICI Bank Limited - India
- McConnell Dowell - Australia
- Leighton Contractors Pty Ltd - Australia
- Thiess Contractors Indonesia
- Indogreen Group - Indonesia
- Ministry of Mines - Canada
- Kapuas Tunggal Persada - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Karaikal Port Pvt Ltd - India
- Manunggal Multi Energi - Indonesia
- Electricity Authority, New Zealand
- Holcim Trading Pte Ltd - Singapore
- Coal and Oil Company - UAE
- ASAPP Information Group - India
- Timah Investasi Mineral - Indoneisa
- Indonesian Coal Mining Association
- Directorate General of MIneral and Coal - Indonesia
- PTC India Limited - India
- Indika Energy - Indonesia
- Tata Chemicals Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- The University of Queensland
- Oldendorff Carriers - Singapore
- New Zealand Coal & Carbon
- Kohat Cement Company Ltd. - Pakistan
- Australian Commodity Traders Exchange
- GAC Shipping (India) Pvt Ltd
- Asmin Koalindo Tuhup - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Dalmia Cement Bharat India
- Binh Thuan Hamico - Vietnam
- Global Business Power Corporation, Philippines
- Anglo American - United Kingdom
- Malabar Cements Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Merrill Lynch Commodities Europe
- OPG Power Generation Pvt Ltd - India
- SMG Consultants - Indonesia
- VISA Power Limited - India
- Gujarat Sidhee Cement - India
- Ministry of Transport, Egypt
- Truba Alam Manunggal Engineering.Tbk - Indonesia
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