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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, 05 April 10
RI TO SET REFERENCE FOR COMMODITIES - THE JAKARTA POST
The Jakarta Post reported that, Indonesia is set to help establish global reference prices for mining and agricultural commodities, with the establi ...
Monday, 05 April 10
MARCO POLO MARINE SECURES US$20 MILLION 4-YEAR COAL TRANSSHIPMENT CONTRACT
COALspot.com: Accordign to Mraco Polo Marine website, Singapore Exchange Mainboard-listed Marco Polo Marine Ltd, a growing integrated marine logisti ...
Saturday, 03 April 10
SHIPS OPENING FAREAST CONTINUE TO BE STRUGGLING FOR CARGOES - VISTAAR
COALspot.com: The dry bulk freight market continues to be under pressure and all the indices were down this week except for Cape size index which wa ...
Friday, 02 April 10
XSTRATA RAISES BENCHMARK COAL PRICE AS MUCH AS 40% - BLOOMBERG
Bloomberg reported that, Xstrata Plc, the world’s largest exporter of coal used for power, raised benchmark prices for the fuel to an unidenti ...
Thursday, 01 April 10
OWNERS WERE STILL BULLISH ON SHORT PERIOD NUMBERS, BUT CHARTERERS IN GENERAL WERE NOT READY TO PAY - BRS
SUPRA / HANDY
After several weeks of a rising market, the BSI lost 9% last week to close on Friday at US$ 27,677 per day for the TC routes. ...
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- Wilmar Investment Holdings
- Kumho Petrochemical, South Korea
- Mjunction Services Limited - India
- Thai Mozambique Logistica
- Coastal Gujarat Power Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Posco Energy - South Korea
- Dalmia Cement Bharat India
- Savvy Resources Ltd - HongKong
- Baramulti Group, Indonesia
- Central Electricity Authority - India
- Bhatia International Limited - India
- Ceylon Electricity Board - Sri Lanka
- Australian Commodity Traders Exchange
- Uttam Galva Steels Limited - India
- London Commodity Brokers - England
- Jaiprakash Power Ventures ltd
- Sree Jayajothi Cements Limited - India
- Salva Resources Pvt Ltd - India
- Heidelberg Cement - Germany
- Indian Energy Exchange, India
- Standard Chartered Bank - UAE
- ASAPP Information Group - India
- Economic Council, Georgia
- PetroVietnam Power Coal Import and Supply Company
- Larsen & Toubro Limited - India
- Bharathi Cement Corporation - India
- Holcim Trading Pte Ltd - Singapore
- GN Power Mariveles Coal Plant, Philippines
- Ministry of Mines - Canada
- Rashtriya Ispat Nigam Limited - India
- Kapuas Tunggal Persada - Indonesia
- Parry Sugars Refinery, India
- Bukit Baiduri Energy - Indonesia
- Gujarat Sidhee Cement - India
- CNBM International Corporation - China
- Ministry of Finance - Indonesia
- GMR Energy Limited - India
- Eastern Coal Council - USA
- OPG Power Generation Pvt Ltd - India
- Binh Thuan Hamico - Vietnam
- Sindya Power Generating Company Private Ltd
- Banpu Public Company Limited - Thailand
- Madhucon Powers Ltd - India
- Petron Corporation, Philippines
- Planning Commission, India
- Asmin Koalindo Tuhup - Indonesia
- TeaM Sual Corporation - Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Gujarat Electricity Regulatory Commission - India
- India Bulls Power Limited - India
- IHS Mccloskey Coal Group - USA
- Central Java Power - Indonesia
- Indo Tambangraya Megah - Indonesia
- Vizag Seaport Private Limited - India
- Semirara Mining and Power Corporation, Philippines
- Sarangani Energy Corporation, Philippines
- Bulk Trading Sa - Switzerland
- Videocon Industries ltd - India
- Bangladesh Power Developement Board
- Indonesian Coal Mining Association
- Makarim & Taira - Indonesia
- Eastern Energy - Thailand
- Kideco Jaya Agung - Indonesia
- Borneo Indobara - Indonesia
- Price Waterhouse Coopers - Russia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Intertek Mineral Services - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Meralco Power Generation, Philippines
- Indika Energy - Indonesia
- Commonwealth Bank - Australia
- Sical Logistics Limited - India
- ICICI Bank Limited - India
- Timah Investasi Mineral - Indoneisa
- Therma Luzon, Inc, Philippines
- Orica Mining Services - Indonesia
- Star Paper Mills Limited - India
- Riau Bara Harum - Indonesia
- Medco Energi Mining Internasional
- Ind-Barath Power Infra Limited - India
- McConnell Dowell - Australia
- International Coal Ventures Pvt Ltd - India
- Sojitz Corporation - Japan
- PTC India Limited - India
- Bhushan Steel Limited - India
- SMC Global Power, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Kartika Selabumi Mining - Indonesia
- Rio Tinto Coal - Australia
- Tamil Nadu electricity Board
- Essar Steel Hazira Ltd - India
- Wood Mackenzie - Singapore
- Ambuja Cements Ltd - India
- Electricity Generating Authority of Thailand
- Formosa Plastics Group - Taiwan
- Kaltim Prima Coal - Indonesia
- Karaikal Port Pvt Ltd - India
- Thiess Contractors Indonesia
- Krishnapatnam Port Company Ltd. - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Straits Asia Resources Limited - Singapore
- GVK Power & Infra Limited - India
- Samtan Co., Ltd - South Korea
- SN Aboitiz Power Inc, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Mintek Dendrill Indonesia
- Globalindo Alam Lestari - Indonesia
- Directorate Of Revenue Intelligence - India
- Deloitte Consulting - India
- Barasentosa Lestari - Indonesia
- Ministry of Transport, Egypt
- Bukit Asam (Persero) Tbk - Indonesia
- Global Coal Blending Company Limited - Australia
- Toyota Tsusho Corporation, Japan
- CIMB Investment Bank - Malaysia
- Meenaskhi Energy Private Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Electricity Authority, New Zealand
- Latin American Coal - Colombia
- Marubeni Corporation - India
- Petrochimia International Co. Ltd.- Taiwan
- Lanco Infratech Ltd - India
- Malabar Cements Ltd - India
- Mercuria Energy - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Metalloyd Limited - United Kingdom
- Vijayanagar Sugar Pvt Ltd - India
- Parliament of New Zealand
- Maheswari Brothers Coal Limited - India
- VISA Power Limited - India
- PowerSource Philippines DevCo
- The State Trading Corporation of India Ltd
- Cement Manufacturers Association - India
- Minerals Council of Australia
- Jindal Steel & Power Ltd - India
- Goldman Sachs - Singapore
- Aditya Birla Group - India
- Manunggal Multi Energi - Indonesia
- Chettinad Cement Corporation Ltd - India
- Orica Australia Pty. Ltd.
- South Luzon Thermal Energy Corporation
- Kalimantan Lumbung Energi - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Indogreen Group - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Iligan Light & Power Inc, Philippines
- Singapore Mercantile Exchange
- Indian Oil Corporation Limited
- Merrill Lynch Commodities Europe
- Chamber of Mines of South Africa
- Energy Link Ltd, New Zealand
- GAC Shipping (India) Pvt Ltd
- Oldendorff Carriers - Singapore
- Siam City Cement PLC, Thailand
- Mercator Lines Limited - India
- Independent Power Producers Association of India
- Karbindo Abesyapradhi - Indoneisa
- Romanian Commodities Exchange
- Global Business Power Corporation, Philippines
- Miang Besar Coal Terminal - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Aboitiz Power Corporation - Philippines
- Georgia Ports Authority, United States
- Africa Commodities Group - South Africa
- Tata Chemicals Ltd - India
- Carbofer General Trading SA - India
- MS Steel International - UAE
- Pendopo Energi Batubara - Indonesia
- Trasteel International SA, Italy
- Renaissance Capital - South Africa
- Simpson Spence & Young - Indonesia
- Anglo American - United Kingdom
- Gujarat Mineral Development Corp Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Semirara Mining Corp, Philippines
- Kepco SPC Power Corporation, Philippines
- Global Green Power PLC Corporation, Philippines
- Altura Mining Limited, Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Edison Trading Spa - Italy
- Antam Resourcindo - Indonesia
- Power Finance Corporation Ltd., India
- LBH Netherlands Bv - Netherlands
- Kobexindo Tractors - Indoneisa
- Australian Coal Association
- The University of Queensland
- Sinarmas Energy and Mining - Indonesia
- Energy Development Corp, Philippines
- Sakthi Sugars Limited - India
- Vedanta Resources Plc - India
- PNOC Exploration Corporation - Philippines
- IEA Clean Coal Centre - UK
- Pipit Mutiara Jaya. PT, Indonesia
- Cigading International Bulk Terminal - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Bhoruka Overseas - Indonesia
- New Zealand Coal & Carbon
- Bukit Makmur.PT - Indonesia
- White Energy Company Limited
- Leighton Contractors Pty Ltd - Australia
- Bayan Resources Tbk. - Indonesia
- Attock Cement Pakistan Limited
- European Bulk Services B.V. - Netherlands
- Grasim Industreis Ltd - India
- SMG Consultants - Indonesia
- Agrawal Coal Company - India
- The Treasury - Australian Government
- Siam City Cement - Thailand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Coal and Oil Company - UAE
- San Jose City I Power Corp, Philippines
- Interocean Group of Companies - India
- Coalindo Energy - Indonesia
- Port Waratah Coal Services - Australia
- Xindia Steels Limited - India
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