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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, 07 September 14
FREIGHT MARKET CONTINUED TO BE FIRM IN SPITE OF CAPE'S THIS WEEK'S WEAK PERFORMANCE
COALspot.com: BDI up by 0.7 pct week on week and closed at 1155 points this week. The Baltic Dry Index is a composite of three sub-indexes that mea ...
Sunday, 07 September 14
SHIPMANAGERS SUPERVISION CONTRACT FOR NEWBUILDS - BIMCO
Shipmanagers are frequently called upon by their owner clients to supervise newbuilding projects on their behalf. The scope of the manager’s ...
Saturday, 06 September 14
SLOW COAL EXPORT REGISTRATION RAISES CONCERNS - THE JAKARTA POST
Several coal mining companies have yet to receive the go-ahead from the Energy and Mineral Resources Ministry to obtain exporting licenses, leading ...
Saturday, 06 September 14
DRY BULK MARKET'S PROSPECTS ARE IMPROVING, DESPITE WEAK SECOND QUARTER - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The dry bulk market has been rebounding during the past month, with the Baltic Dry Index (BDI) ended the week on a high note, reaching 1,155 points ...
Saturday, 06 September 14
INDONESIA WANTS TO REGULATE COAL DEALS - THE TELEGRAPH INDIA
Indonesia has raised concerns about suspected coal deals struck between overseas buyers and its unregistered domestic miners, the telegraph India r ...
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- Indian Energy Exchange, India
- SMC Global Power, Philippines
- Riau Bara Harum - Indonesia
- Parliament of New Zealand
- GVK Power & Infra Limited - India
- IHS Mccloskey Coal Group - USA
- Baramulti Group, Indonesia
- SN Aboitiz Power Inc, Philippines
- Energy Development Corp, Philippines
- Port Waratah Coal Services - Australia
- Coastal Gujarat Power Limited - India
- Chamber of Mines of South Africa
- Renaissance Capital - South Africa
- Mercator Lines Limited - India
- Wood Mackenzie - Singapore
- Holcim Trading Pte Ltd - Singapore
- Essar Steel Hazira Ltd - India
- Indian Oil Corporation Limited
- GAC Shipping (India) Pvt Ltd
- OPG Power Generation Pvt Ltd - India
- Antam Resourcindo - Indonesia
- CNBM International Corporation - China
- SMG Consultants - Indonesia
- Simpson Spence & Young - Indonesia
- Indika Energy - Indonesia
- Ministry of Finance - Indonesia
- New Zealand Coal & Carbon
- Minerals Council of Australia
- GN Power Mariveles Coal Plant, Philippines
- Larsen & Toubro Limited - India
- Toyota Tsusho Corporation, Japan
- Semirara Mining and Power Corporation, Philippines
- Tamil Nadu electricity Board
- The Treasury - Australian Government
- CIMB Investment Bank - Malaysia
- Karbindo Abesyapradhi - Indoneisa
- Ambuja Cements Ltd - India
- Central Java Power - Indonesia
- Ministry of Mines - Canada
- Formosa Plastics Group - Taiwan
- Mjunction Services Limited - India
- Sojitz Corporation - Japan
- Kohat Cement Company Ltd. - Pakistan
- Commonwealth Bank - Australia
- Vizag Seaport Private Limited - India
- Gujarat Sidhee Cement - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Manunggal Multi Energi - Indonesia
- Borneo Indobara - Indonesia
- Medco Energi Mining Internasional
- PTC India Limited - India
- Krishnapatnam Port Company Ltd. - India
- PNOC Exploration Corporation - Philippines
- Cement Manufacturers Association - India
- Orica Mining Services - Indonesia
- London Commodity Brokers - England
- Grasim Industreis Ltd - India
- Makarim & Taira - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Sinarmas Energy and Mining - Indonesia
- Heidelberg Cement - Germany
- Miang Besar Coal Terminal - Indonesia
- Malabar Cements Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kapuas Tunggal Persada - Indonesia
- Semirara Mining Corp, Philippines
- Ministry of Transport, Egypt
- Deloitte Consulting - India
- Kobexindo Tractors - Indoneisa
- Pipit Mutiara Jaya. PT, Indonesia
- Australian Coal Association
- International Coal Ventures Pvt Ltd - India
- Aboitiz Power Corporation - Philippines
- Directorate Of Revenue Intelligence - India
- Attock Cement Pakistan Limited
- Kumho Petrochemical, South Korea
- Global Green Power PLC Corporation, Philippines
- Bukit Makmur.PT - Indonesia
- European Bulk Services B.V. - Netherlands
- Tata Chemicals Ltd - India
- Kideco Jaya Agung - Indonesia
- Indonesian Coal Mining Association
- PowerSource Philippines DevCo
- Videocon Industries ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Chettinad Cement Corporation Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Bukit Baiduri Energy - Indonesia
- Singapore Mercantile Exchange
- Siam City Cement - Thailand
- Meralco Power Generation, Philippines
- Bayan Resources Tbk. - Indonesia
- Interocean Group of Companies - India
- Indogreen Group - Indonesia
- Orica Australia Pty. Ltd.
- Posco Energy - South Korea
- Kaltim Prima Coal - Indonesia
- Sindya Power Generating Company Private Ltd
- Power Finance Corporation Ltd., India
- Price Waterhouse Coopers - Russia
- Cigading International Bulk Terminal - Indonesia
- Sical Logistics Limited - India
- Intertek Mineral Services - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Metalloyd Limited - United Kingdom
- Savvy Resources Ltd - HongKong
- Carbofer General Trading SA - India
- Globalindo Alam Lestari - Indonesia
- Bhoruka Overseas - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Therma Luzon, Inc, Philippines
- Petron Corporation, Philippines
- Leighton Contractors Pty Ltd - Australia
- Banpu Public Company Limited - Thailand
- Africa Commodities Group - South Africa
- ASAPP Information Group - India
- Global Business Power Corporation, Philippines
- Goldman Sachs - Singapore
- Economic Council, Georgia
- White Energy Company Limited
- Coal and Oil Company - UAE
- Asmin Koalindo Tuhup - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Maharashtra Electricity Regulatory Commission - India
- PetroVietnam Power Coal Import and Supply Company
- Gujarat Mineral Development Corp Ltd - India
- Mercuria Energy - Indonesia
- Barasentosa Lestari - Indonesia
- Indo Tambangraya Megah - Indonesia
- Bharathi Cement Corporation - India
- Mintek Dendrill Indonesia
- Alfred C Toepfer International GmbH - Germany
- Edison Trading Spa - Italy
- Thai Mozambique Logistica
- South Luzon Thermal Energy Corporation
- Vijayanagar Sugar Pvt Ltd - India
- Jindal Steel & Power Ltd - India
- The University of Queensland
- Eastern Coal Council - USA
- Dalmia Cement Bharat India
- Maheswari Brothers Coal Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Jaiprakash Power Ventures ltd
- The State Trading Corporation of India Ltd
- Standard Chartered Bank - UAE
- Jorong Barutama Greston.PT - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Electricity Generating Authority of Thailand
- VISA Power Limited - India
- Trasteel International SA, Italy
- San Jose City I Power Corp, Philippines
- Wilmar Investment Holdings
- Independent Power Producers Association of India
- Marubeni Corporation - India
- Meenaskhi Energy Private Limited - India
- Timah Investasi Mineral - Indoneisa
- TNB Fuel Sdn Bhd - Malaysia
- Eastern Energy - Thailand
- Anglo American - United Kingdom
- Ceylon Electricity Board - Sri Lanka
- Global Coal Blending Company Limited - Australia
- MS Steel International - UAE
- Sarangani Energy Corporation, Philippines
- Agrawal Coal Company - India
- Kartika Selabumi Mining - Indonesia
- Bulk Trading Sa - Switzerland
- Star Paper Mills Limited - India
- Sree Jayajothi Cements Limited - India
- Xindia Steels Limited - India
- IEA Clean Coal Centre - UK
- Straits Asia Resources Limited - Singapore
- Bangladesh Power Developement Board
- Vedanta Resources Plc - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- LBH Netherlands Bv - Netherlands
- Bukit Asam (Persero) Tbk - Indonesia
- India Bulls Power Limited - India
- Iligan Light & Power Inc, Philippines
- Altura Mining Limited, Indonesia
- TeaM Sual Corporation - Philippines
- Madhucon Powers Ltd - India
- Kepco SPC Power Corporation, Philippines
- Merrill Lynch Commodities Europe
- Uttam Galva Steels Limited - India
- Siam City Cement PLC, Thailand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Sakthi Sugars Limited - India
- Coalindo Energy - Indonesia
- ICICI Bank Limited - India
- McConnell Dowell - Australia
- GMR Energy Limited - India
- Bhatia International Limited - India
- Pendopo Energi Batubara - Indonesia
- Romanian Commodities Exchange
- Georgia Ports Authority, United States
- Gujarat Electricity Regulatory Commission - India
- Rio Tinto Coal - Australia
- Binh Thuan Hamico - Vietnam
- Australian Commodity Traders Exchange
- Central Electricity Authority - India
- Samtan Co., Ltd - South Korea
- Latin American Coal - Colombia
- Electricity Authority, New Zealand
- Thiess Contractors Indonesia
- Lanco Infratech Ltd - India
- Aditya Birla Group - India
- Bhushan Steel Limited - India
- Rashtriya Ispat Nigam Limited - India
- Salva Resources Pvt Ltd - India
- Planning Commission, India
- Ind-Barath Power Infra Limited - India
- Oldendorff Carriers - Singapore
- Parry Sugars Refinery, India
- Energy Link Ltd, New Zealand
- Karaikal Port Pvt Ltd - India
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