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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, 22 November 09
SHORT PERIOD RATES FOR SUPRAMAX WAS AT US$ 25,000/26,000 PER DAY FOR VESSELS OPENING FAR EAST / SE ASIA - VISTAAR ANALYSIS
COALspot.com (Singapore): Analyised by Capt. Radhakrishnan Reddy, Managing Director of Vistaar Shipping Services, Singapore.
BDI hits a new high ...
Friday, 20 November 09
INDONESIA UNITED TRACTORS PLANS $430 MLN CAPEX IN 2010
Reuters reported that, Indonesian heavy equipment distributor and mining contractor PT United Tractors Tbk plans capital expenditure of $430 million ...
Friday, 20 November 09
DRY BULK SHIP OWNERS HOPE RALLY WILL LAST
Boon times are still on the daily agenda of every dry bulk ship owner these days after one of the toughest year in the industry’s century-old ...
Friday, 20 November 09
NTPC LOOKING FOR LONG TERM CONTRACTS FOR COAL IMPORT
Business Standard of India reported that, State run power firm NTPC today said it is looking for long-term supply of coal from overseas market to me ...
Friday, 20 November 09
CHINESE COKING COAL SUPPLY TO BE 'TIGHT' IN 2010, KGI SAYS
Bloomberg Reported that, Stephen Wang, an analyst with KGI Securities in Taipei, comments on the outlook for Chinese steel production and demand for ...
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- TNB Fuel Sdn Bhd - Malaysia
- Energy Development Corp, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Electricity Generating Authority of Thailand
- Lanco Infratech Ltd - India
- Uttam Galva Steels Limited - India
- The Treasury - Australian Government
- Semirara Mining Corp, Philippines
- Planning Commission, India
- Minerals Council of Australia
- Cigading International Bulk Terminal - Indonesia
- Ambuja Cements Ltd - India
- Australian Commodity Traders Exchange
- Indika Energy - Indonesia
- Videocon Industries ltd - India
- South Luzon Thermal Energy Corporation
- Bhatia International Limited - India
- Kideco Jaya Agung - Indonesia
- Agrawal Coal Company - India
- Karaikal Port Pvt Ltd - India
- Port Waratah Coal Services - Australia
- Kepco SPC Power Corporation, Philippines
- McConnell Dowell - Australia
- Semirara Mining and Power Corporation, Philippines
- Ceylon Electricity Board - Sri Lanka
- Pendopo Energi Batubara - Indonesia
- Riau Bara Harum - Indonesia
- Indonesian Coal Mining Association
- Leighton Contractors Pty Ltd - Australia
- Metalloyd Limited - United Kingdom
- Trasteel International SA, Italy
- London Commodity Brokers - England
- GAC Shipping (India) Pvt Ltd
- Kartika Selabumi Mining - Indonesia
- Energy Link Ltd, New Zealand
- Sree Jayajothi Cements Limited - India
- White Energy Company Limited
- Sical Logistics Limited - India
- Commonwealth Bank - Australia
- Borneo Indobara - Indonesia
- Vedanta Resources Plc - India
- Banpu Public Company Limited - Thailand
- Chamber of Mines of South Africa
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kapuas Tunggal Persada - Indonesia
- European Bulk Services B.V. - Netherlands
- Makarim & Taira - Indonesia
- Bhushan Steel Limited - India
- Coastal Gujarat Power Limited - India
- Maheswari Brothers Coal Limited - India
- Samtan Co., Ltd - South Korea
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Indian Oil Corporation Limited
- Ministry of Mines - Canada
- Bahari Cakrawala Sebuku - Indonesia
- Mercuria Energy - Indonesia
- PNOC Exploration Corporation - Philippines
- Aditya Birla Group - India
- Electricity Authority, New Zealand
- Grasim Industreis Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- SMG Consultants - Indonesia
- Parliament of New Zealand
- Cement Manufacturers Association - India
- Attock Cement Pakistan Limited
- Renaissance Capital - South Africa
- Tamil Nadu electricity Board
- Barasentosa Lestari - Indonesia
- The University of Queensland
- Alfred C Toepfer International GmbH - Germany
- OPG Power Generation Pvt Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Meenaskhi Energy Private Limited - India
- Gujarat Mineral Development Corp Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Larsen & Toubro Limited - India
- Antam Resourcindo - Indonesia
- CNBM International Corporation - China
- Independent Power Producers Association of India
- Jindal Steel & Power Ltd - India
- Timah Investasi Mineral - Indoneisa
- Thai Mozambique Logistica
- Rashtriya Ispat Nigam Limited - India
- Parry Sugars Refinery, India
- GVK Power & Infra Limited - India
- Toyota Tsusho Corporation, Japan
- TeaM Sual Corporation - Philippines
- Formosa Plastics Group - Taiwan
- IEA Clean Coal Centre - UK
- Altura Mining Limited, Indonesia
- CIMB Investment Bank - Malaysia
- Savvy Resources Ltd - HongKong
- International Coal Ventures Pvt Ltd - India
- Binh Thuan Hamico - Vietnam
- Eastern Energy - Thailand
- Malabar Cements Ltd - India
- Jaiprakash Power Ventures ltd
- Eastern Coal Council - USA
- Madhucon Powers Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Dalmia Cement Bharat India
- Central Java Power - Indonesia
- Interocean Group of Companies - India
- AsiaOL BioFuels Corp., Philippines
- Coal and Oil Company - UAE
- Central Electricity Authority - India
- Asmin Koalindo Tuhup - Indonesia
- Wood Mackenzie - Singapore
- Essar Steel Hazira Ltd - India
- Bharathi Cement Corporation - India
- PetroVietnam Power Coal Import and Supply Company
- Star Paper Mills Limited - India
- Tata Chemicals Ltd - India
- Global Green Power PLC Corporation, Philippines
- Australian Coal Association
- Mercator Lines Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Simpson Spence & Young - Indonesia
- Directorate Of Revenue Intelligence - India
- Romanian Commodities Exchange
- Chettinad Cement Corporation Ltd - India
- Singapore Mercantile Exchange
- Indo Tambangraya Megah - Indonesia
- Meralco Power Generation, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Siam City Cement PLC, Thailand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Iligan Light & Power Inc, Philippines
- Coalindo Energy - Indonesia
- Orica Mining Services - Indonesia
- New Zealand Coal & Carbon
- VISA Power Limited - India
- Carbofer General Trading SA - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Therma Luzon, Inc, Philippines
- Price Waterhouse Coopers - Russia
- Mintek Dendrill Indonesia
- Indian Energy Exchange, India
- San Jose City I Power Corp, Philippines
- Oldendorff Carriers - Singapore
- Gujarat Electricity Regulatory Commission - India
- SMC Global Power, Philippines
- Power Finance Corporation Ltd., India
- Karbindo Abesyapradhi - Indoneisa
- Bhoruka Overseas - Indonesia
- ICICI Bank Limited - India
- Rio Tinto Coal - Australia
- Bukit Makmur.PT - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Mjunction Services Limited - India
- Goldman Sachs - Singapore
- Bukit Baiduri Energy - Indonesia
- Kaltim Prima Coal - Indonesia
- Merrill Lynch Commodities Europe
- Ministry of Finance - Indonesia
- Xindia Steels Limited - India
- Sarangani Energy Corporation, Philippines
- Baramulti Group, Indonesia
- Global Coal Blending Company Limited - Australia
- India Bulls Power Limited - India
- Miang Besar Coal Terminal - Indonesia
- Orica Australia Pty. Ltd.
- Bulk Trading Sa - Switzerland
- Kobexindo Tractors - Indoneisa
- Bangladesh Power Developement Board
- Georgia Ports Authority, United States
- Aboitiz Power Corporation - Philippines
- Sojitz Corporation - Japan
- Petron Corporation, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Africa Commodities Group - South Africa
- Economic Council, Georgia
- Siam City Cement - Thailand
- Manunggal Multi Energi - Indonesia
- Heidelberg Cement - Germany
- Sinarmas Energy and Mining - Indonesia
- Globalindo Alam Lestari - Indonesia
- Anglo American - United Kingdom
- Edison Trading Spa - Italy
- IHS Mccloskey Coal Group - USA
- Indogreen Group - Indonesia
- Straits Asia Resources Limited - Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- Ind-Barath Power Infra Limited - India
- Medco Energi Mining Internasional
- LBH Netherlands Bv - Netherlands
- The State Trading Corporation of India Ltd
- Holcim Trading Pte Ltd - Singapore
- Billiton Holdings Pty Ltd - Australia
- ASAPP Information Group - India
- Global Business Power Corporation, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Gujarat Sidhee Cement - India
- Sakthi Sugars Limited - India
- Sindya Power Generating Company Private Ltd
- Salva Resources Pvt Ltd - India
- GMR Energy Limited - India
- Wilmar Investment Holdings
- Kumho Petrochemical, South Korea
- Ministry of Transport, Egypt
- Krishnapatnam Port Company Ltd. - India
- Deloitte Consulting - India
- MS Steel International - UAE
- PTC India Limited - India
- Intertek Mineral Services - Indonesia
- Posco Energy - South Korea
- SN Aboitiz Power Inc, Philippines
- Standard Chartered Bank - UAE
- PowerSource Philippines DevCo
- Marubeni Corporation - India
- Vizag Seaport Private Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Bayan Resources Tbk. - Indonesia
- Latin American Coal - Colombia
- Thiess Contractors Indonesia
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