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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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Sunday, 18 April 10
GOVT FORMS PANEL FOR RS 12,000-CR (US$ 2.711 BILLION) COAL INDIA IPO - ECONOMIC TIMES
Economic Times reported that, the government has formed an inter-ministerial panel to carry forward the proposed Rs 12,000-crore (US$ 2.711 billion) ...
Sunday, 18 April 10
THE FUTURES FOR THREE YEARS (2010-2012) FOR PANAMAX WAS AT AROUND US$ 21500 PER DAY - VISTAAR
COALspot.com: The BDI indices up by 3.30 pct and overall market continued to be firm except for India to Fareast.
“The cape index for the f ...
Saturday, 17 April 10
DRY BULK SHIPPING MARKET ANALYSIS - BIMCO
Strong Chinese steel market is set to cushion the flood of new Capesize vessels entering the dry bulk fleet Demand: The first quarter of 2010 saw up ...
Saturday, 17 April 10
DRY BULK MARKET EDGES HIGHER ON STRONGER DEMAND
The dry bulk market managed to inch higher by the end of the week as brokers indicated that stronger cargo demand pushed freight rates that much hig ...
Friday, 16 April 10
KRISHNAPATNAM PORT IS IRONING ITS WAY INTO RECORD BOOKS
COALspot.com: Krishnapatnam Port achieved a new benchmark by loading 60,021 MT of Iron Ore fines in just 24 hrs surpassing its previous record of 54 ...
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- SN Aboitiz Power Inc, Philippines
- IHS Mccloskey Coal Group - USA
- Commonwealth Bank - Australia
- Tata Chemicals Ltd - India
- Timah Investasi Mineral - Indoneisa
- Power Finance Corporation Ltd., India
- Kobexindo Tractors - Indoneisa
- Jorong Barutama Greston.PT - Indonesia
- Vizag Seaport Private Limited - India
- Bhushan Steel Limited - India
- Kideco Jaya Agung - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Central Java Power - Indonesia
- Cement Manufacturers Association - India
- Billiton Holdings Pty Ltd - Australia
- Port Waratah Coal Services - Australia
- Australian Coal Association
- Madhucon Powers Ltd - India
- GMR Energy Limited - India
- Anglo American - United Kingdom
- European Bulk Services B.V. - Netherlands
- Marubeni Corporation - India
- Gujarat Mineral Development Corp Ltd - India
- Eastern Energy - Thailand
- The University of Queensland
- Bahari Cakrawala Sebuku - Indonesia
- Singapore Mercantile Exchange
- Altura Mining Limited, Indonesia
- Simpson Spence & Young - Indonesia
- VISA Power Limited - India
- Deloitte Consulting - India
- Aditya Birla Group - India
- White Energy Company Limited
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Meenaskhi Energy Private Limited - India
- Central Electricity Authority - India
- Tamil Nadu electricity Board
- Coal and Oil Company - UAE
- Thiess Contractors Indonesia
- Semirara Mining Corp, Philippines
- Cigading International Bulk Terminal - Indonesia
- Bayan Resources Tbk. - Indonesia
- Rio Tinto Coal - Australia
- Vedanta Resources Plc - India
- Sojitz Corporation - Japan
- Indika Energy - Indonesia
- Borneo Indobara - Indonesia
- Attock Cement Pakistan Limited
- Barasentosa Lestari - Indonesia
- Parry Sugars Refinery, India
- Sinarmas Energy and Mining - Indonesia
- Independent Power Producers Association of India
- GN Power Mariveles Coal Plant, Philippines
- MS Steel International - UAE
- San Jose City I Power Corp, Philippines
- Xindia Steels Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Thai Mozambique Logistica
- Orica Australia Pty. Ltd.
- Neyveli Lignite Corporation Ltd, - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Orica Mining Services - Indonesia
- Jaiprakash Power Ventures ltd
- Essar Steel Hazira Ltd - India
- Goldman Sachs - Singapore
- Banpu Public Company Limited - Thailand
- Mintek Dendrill Indonesia
- Price Waterhouse Coopers - Russia
- Kaltim Prima Coal - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Chettinad Cement Corporation Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Global Coal Blending Company Limited - Australia
- Agrawal Coal Company - India
- Chamber of Mines of South Africa
- Offshore Bulk Terminal Pte Ltd, Singapore
- Trasteel International SA, Italy
- ASAPP Information Group - India
- Indo Tambangraya Megah - Indonesia
- Edison Trading Spa - Italy
- London Commodity Brokers - England
- Romanian Commodities Exchange
- Coalindo Energy - Indonesia
- Riau Bara Harum - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Coastal Gujarat Power Limited - India
- International Coal Ventures Pvt Ltd - India
- India Bulls Power Limited - India
- Ministry of Mines - Canada
- Bangladesh Power Developement Board
- Mercuria Energy - Indonesia
- PTC India Limited - India
- Eastern Coal Council - USA
- Pipit Mutiara Jaya. PT, Indonesia
- Rashtriya Ispat Nigam Limited - India
- Interocean Group of Companies - India
- Ministry of Finance - Indonesia
- Therma Luzon, Inc, Philippines
- Latin American Coal - Colombia
- Gujarat Electricity Regulatory Commission - India
- Heidelberg Cement - Germany
- Indonesian Coal Mining Association
- Mercator Lines Limited - India
- Siam City Cement PLC, Thailand
- LBH Netherlands Bv - Netherlands
- Karaikal Port Pvt Ltd - India
- Directorate Of Revenue Intelligence - India
- Electricity Generating Authority of Thailand
- Iligan Light & Power Inc, Philippines
- Sindya Power Generating Company Private Ltd
- Malabar Cements Ltd - India
- Sree Jayajothi Cements Limited - India
- Indian Energy Exchange, India
- Bukit Makmur.PT - Indonesia
- Bukit Baiduri Energy - Indonesia
- TeaM Sual Corporation - Philippines
- Videocon Industries ltd - India
- Wood Mackenzie - Singapore
- Mjunction Services Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Formosa Plastics Group - Taiwan
- Indogreen Group - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- New Zealand Coal & Carbon
- Directorate General of MIneral and Coal - Indonesia
- Aboitiz Power Corporation - Philippines
- Dalmia Cement Bharat India
- Georgia Ports Authority, United States
- Economic Council, Georgia
- Siam City Cement - Thailand
- Merrill Lynch Commodities Europe
- Grasim Industreis Ltd - India
- Toyota Tsusho Corporation, Japan
- Vijayanagar Sugar Pvt Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- OPG Power Generation Pvt Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Oldendorff Carriers - Singapore
- Bulk Trading Sa - Switzerland
- Intertek Mineral Services - Indonesia
- Carbofer General Trading SA - India
- Jindal Steel & Power Ltd - India
- Star Paper Mills Limited - India
- Sakthi Sugars Limited - India
- GAC Shipping (India) Pvt Ltd
- Manunggal Multi Energi - Indonesia
- Bhoruka Overseas - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Ind-Barath Power Infra Limited - India
- Planning Commission, India
- Sarangani Energy Corporation, Philippines
- Ministry of Transport, Egypt
- PNOC Exploration Corporation - Philippines
- Global Green Power PLC Corporation, Philippines
- Salva Resources Pvt Ltd - India
- Bharathi Cement Corporation - India
- Gujarat Sidhee Cement - India
- Globalindo Alam Lestari - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- SMG Consultants - Indonesia
- Straits Asia Resources Limited - Singapore
- Savvy Resources Ltd - HongKong
- Samtan Co., Ltd - South Korea
- Kepco SPC Power Corporation, Philippines
- Bhatia International Limited - India
- Australian Commodity Traders Exchange
- Pendopo Energi Batubara - Indonesia
- CNBM International Corporation - China
- Binh Thuan Hamico - Vietnam
- Antam Resourcindo - Indonesia
- Maheswari Brothers Coal Limited - India
- Petron Corporation, Philippines
- IEA Clean Coal Centre - UK
- Parliament of New Zealand
- Larsen & Toubro Limited - India
- Kartika Selabumi Mining - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- The Treasury - Australian Government
- Uttam Galva Steels Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Holcim Trading Pte Ltd - Singapore
- Lanco Infratech Ltd - India
- Ceylon Electricity Board - Sri Lanka
- PetroVietnam Power Coal Import and Supply Company
- Miang Besar Coal Terminal - Indonesia
- Baramulti Group, Indonesia
- Indian Oil Corporation Limited
- South Luzon Thermal Energy Corporation
- Standard Chartered Bank - UAE
- PowerSource Philippines DevCo
- Meralco Power Generation, Philippines
- GVK Power & Infra Limited - India
- Renaissance Capital - South Africa
- CIMB Investment Bank - Malaysia
- Kapuas Tunggal Persada - Indonesia
- Ambuja Cements Ltd - India
- Energy Development Corp, Philippines
- Krishnapatnam Port Company Ltd. - India
- Electricity Authority, New Zealand
- Metalloyd Limited - United Kingdom
- Energy Link Ltd, New Zealand
- Kumho Petrochemical, South Korea
- Global Business Power Corporation, Philippines
- Leighton Contractors Pty Ltd - Australia
- The State Trading Corporation of India Ltd
- Posco Energy - South Korea
- Minerals Council of Australia
- Africa Commodities Group - South Africa
- ICICI Bank Limited - India
- Wilmar Investment Holdings
- Medco Energi Mining Internasional
- Makarim & Taira - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Sical Logistics Limited - India
- SMC Global Power, Philippines
- McConnell Dowell - Australia
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