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