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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, 14 June 10
S. AFRICA BOOSTS COAL SALES TO INDIA 12%, TRADER SAYS
Bloomberg reported that, South Africa’s Richards Bay, the world’s second-biggest coal export harbor, boosted sales to India by 12 percen ...
Sunday, 13 June 10
THE FUTURES FOR THREE YEARS (2010-2012) WAS AT AROUND CAPE/US$ 29000 PER DAY & PANAMAX/US$ 20500 PER DAY - VISTAAR
COALspot.com: The market continue to soften in all sectors and the most affected was cape size which was down by 16.32 pct. The BDI was down by 14.4 ...
Saturday, 12 June 10
BALTIC EXCHANGE ESTABLISHES ASIA-PACIFIC OFFICE
The London-based Baltic Exchange has today announced it is setting up an Asia-Pacific Representative Office in Singapore, to ensure closer contact w ...
Saturday, 12 June 10
NALCO TO ROPE IN PARTNERS FOR INDONESIA PROJECT
Sify reported that, the public sector National Aluminium Company (Nalco) is set to finalise the terms of its joint venture (JV) agreement with two f ...
Thursday, 10 June 10
CHARTERERS ARE NOT WILLING TO PAY THE RATES AS MARKET SLIDES
DRY BULK
Handy
Atlantic markets are quieter (Posidonia?) with less activity. Nevertheless expect some fresh enquiries f ...
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- Thai Mozambique Logistica
- European Bulk Services B.V. - Netherlands
- South Luzon Thermal Energy Corporation
- TNB Fuel Sdn Bhd - Malaysia
- CIMB Investment Bank - Malaysia
- Indian Energy Exchange, India
- Binh Thuan Hamico - Vietnam
- Mercator Lines Limited - India
- Ministry of Transport, Egypt
- PetroVietnam Power Coal Import and Supply Company
- GMR Energy Limited - India
- Antam Resourcindo - Indonesia
- GVK Power & Infra Limited - India
- Coal and Oil Company - UAE
- Minerals Council of Australia
- White Energy Company Limited
- VISA Power Limited - India
- Indian Oil Corporation Limited
- IHS Mccloskey Coal Group - USA
- Ind-Barath Power Infra Limited - India
- Formosa Plastics Group - Taiwan
- Krishnapatnam Port Company Ltd. - India
- Sakthi Sugars Limited - India
- The Treasury - Australian Government
- AsiaOL BioFuels Corp., Philippines
- Mjunction Services Limited - India
- Global Coal Blending Company Limited - Australia
- Dalmia Cement Bharat India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Aditya Birla Group - India
- Carbofer General Trading SA - India
- Rashtriya Ispat Nigam Limited - India
- Indonesian Coal Mining Association
- Banpu Public Company Limited - Thailand
- Vizag Seaport Private Limited - India
- India Bulls Power Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Renaissance Capital - South Africa
- Economic Council, Georgia
- Intertek Mineral Services - Indonesia
- Semirara Mining Corp, Philippines
- Samtan Co., Ltd - South Korea
- Indogreen Group - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Larsen & Toubro Limited - India
- Makarim & Taira - Indonesia
- Barasentosa Lestari - Indonesia
- Bhushan Steel Limited - India
- Jindal Steel & Power Ltd - India
- Madhucon Powers Ltd - India
- Global Business Power Corporation, Philippines
- Romanian Commodities Exchange
- Parliament of New Zealand
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- McConnell Dowell - Australia
- Salva Resources Pvt Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Marubeni Corporation - India
- Siam City Cement PLC, Thailand
- Bhoruka Overseas - Indonesia
- Energy Development Corp, Philippines
- Global Green Power PLC Corporation, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Coalindo Energy - Indonesia
- Indo Tambangraya Megah - Indonesia
- Merrill Lynch Commodities Europe
- Cigading International Bulk Terminal - Indonesia
- Kaltim Prima Coal - Indonesia
- Bulk Trading Sa - Switzerland
- Kumho Petrochemical, South Korea
- Bank of Tokyo Mitsubishi UFJ Ltd
- Sojitz Corporation - Japan
- Wood Mackenzie - Singapore
- PTC India Limited - India
- Ambuja Cements Ltd - India
- Kobexindo Tractors - Indoneisa
- Australian Commodity Traders Exchange
- Georgia Ports Authority, United States
- Jaiprakash Power Ventures ltd
- Meenaskhi Energy Private Limited - India
- Deloitte Consulting - India
- ASAPP Information Group - India
- Oldendorff Carriers - Singapore
- TeaM Sual Corporation - Philippines
- Leighton Contractors Pty Ltd - Australia
- SMG Consultants - Indonesia
- Kartika Selabumi Mining - Indonesia
- Tata Chemicals Ltd - India
- PNOC Exploration Corporation - Philippines
- Electricity Authority, New Zealand
- IEA Clean Coal Centre - UK
- Directorate Of Revenue Intelligence - India
- Videocon Industries ltd - India
- Thiess Contractors Indonesia
- LBH Netherlands Bv - Netherlands
- Pipit Mutiara Jaya. PT, Indonesia
- Sical Logistics Limited - India
- Wilmar Investment Holdings
- Agrawal Coal Company - India
- Electricity Generating Authority of Thailand
- Maheswari Brothers Coal Limited - India
- Price Waterhouse Coopers - Russia
- Medco Energi Mining Internasional
- Cement Manufacturers Association - India
- Timah Investasi Mineral - Indoneisa
- MS Steel International - UAE
- Metalloyd Limited - United Kingdom
- Uttam Galva Steels Limited - India
- Altura Mining Limited, Indonesia
- Sindya Power Generating Company Private Ltd
- Riau Bara Harum - Indonesia
- Star Paper Mills Limited - India
- GAC Shipping (India) Pvt Ltd
- Standard Chartered Bank - UAE
- Siam City Cement - Thailand
- The State Trading Corporation of India Ltd
- Gujarat Electricity Regulatory Commission - India
- Gujarat Mineral Development Corp Ltd - India
- Simpson Spence & Young - Indonesia
- Iligan Light & Power Inc, Philippines
- Grasim Industreis Ltd - India
- Posco Energy - South Korea
- SN Aboitiz Power Inc, Philippines
- Africa Commodities Group - South Africa
- Semirara Mining and Power Corporation, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Bayan Resources Tbk. - Indonesia
- Kideco Jaya Agung - Indonesia
- Essar Steel Hazira Ltd - India
- Mintek Dendrill Indonesia
- Globalindo Alam Lestari - Indonesia
- Parry Sugars Refinery, India
- Central Java Power - Indonesia
- Alfred C Toepfer International GmbH - Germany
- SMC Global Power, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Eastern Coal Council - USA
- Energy Link Ltd, New Zealand
- Tamil Nadu electricity Board
- Trasteel International SA, Italy
- Central Electricity Authority - India
- Meralco Power Generation, Philippines
- Bhatia International Limited - India
- Commonwealth Bank - Australia
- London Commodity Brokers - England
- The University of Queensland
- Planning Commission, India
- ICICI Bank Limited - India
- Baramulti Group, Indonesia
- Latin American Coal - Colombia
- Ministry of Mines - Canada
- Bharathi Cement Corporation - India
- Malabar Cements Ltd - India
- PowerSource Philippines DevCo
- Holcim Trading Pte Ltd - Singapore
- Goldman Sachs - Singapore
- Petrochimia International Co. Ltd.- Taiwan
- Interocean Group of Companies - India
- Coastal Gujarat Power Limited - India
- Indika Energy - Indonesia
- Heidelberg Cement - Germany
- Toyota Tsusho Corporation, Japan
- Sarangani Energy Corporation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Borneo Indobara - Indonesia
- Bukit Baiduri Energy - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Pendopo Energi Batubara - Indonesia
- Sree Jayajothi Cements Limited - India
- Miang Besar Coal Terminal - Indonesia
- Chettinad Cement Corporation Ltd - India
- OPG Power Generation Pvt Ltd - India
- Petron Corporation, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Australian Coal Association
- Savvy Resources Ltd - HongKong
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Power Finance Corporation Ltd., India
- Bahari Cakrawala Sebuku - Indonesia
- San Jose City I Power Corp, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Bangladesh Power Developement Board
- Vijayanagar Sugar Pvt Ltd - India
- Independent Power Producers Association of India
- Lanco Infratech Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- New Zealand Coal & Carbon
- Mercuria Energy - Indonesia
- Xindia Steels Limited - India
- Manunggal Multi Energi - Indonesia
- International Coal Ventures Pvt Ltd - India
- Kepco SPC Power Corporation, Philippines
- Billiton Holdings Pty Ltd - Australia
- Neyveli Lignite Corporation Ltd, - India
- Sinarmas Energy and Mining - Indonesia
- Port Waratah Coal Services - Australia
- Edison Trading Spa - Italy
- Anglo American - United Kingdom
- Ministry of Finance - Indonesia
- CNBM International Corporation - China
- Rio Tinto Coal - Australia
- Gujarat Sidhee Cement - India
- Orica Mining Services - Indonesia
- Vedanta Resources Plc - India
- Karaikal Port Pvt Ltd - India
- Aboitiz Power Corporation - Philippines
- Singapore Mercantile Exchange
- Attock Cement Pakistan Limited
- Ceylon Electricity Board - Sri Lanka
- Straits Asia Resources Limited - Singapore
- Eastern Energy - Thailand
- Kapuas Tunggal Persada - Indonesia
- Therma Luzon, Inc, Philippines
- Chamber of Mines of South Africa
- Bukit Makmur.PT - Indonesia
- Orica Australia Pty. Ltd.
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