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