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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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Thursday, 31 July 14
RIO TINTO SELLS MOZAMBIQUE COAL ASSETS FOR US$ 50 MILLION TO INDIA'S ICVL
COALspot.com: Rio Tinto has agreed to sell its Mozambique coal assets for just US$ 50 million to International coal ventures Private limited of Ind ...
Wednesday, 30 July 14
CAPES SEEMED TO BE STRANDED AT THE SAME LEVELS; PANAMAXES MANAGED TO SLIGHTLY REVIVE - INTERMODAL
COALspot.com: The Dry Bulk market took a breath this past week, as both Panamaxes and Supras started to see a small influx of activity, which was j ...
Tuesday, 29 July 14
TOTAL SELLS ITS SOUTH AFRICAN COAL MINING ASSETS TO EXXARO
Total has signed an agreement with Exxaro Resources Ltd for the sale of its 100% stake in Total Coal South Africa (TCSA), its coal-producing affili ...
Tuesday, 29 July 14
GENCO: DRY BULK SHIPPING VALUATIONS NO LONGER ANCHORED TO DISCOUNTED CASH FLOW METHOD - WEIL
KNOWLEDGE TO ELEVATE
Discounted cash flow analysis is a mainstay among the valuation methodologies used by restructuring professionals and bank ...
Tuesday, 29 July 14
SHIP OWNERS' DEMAND OF NEW VESSELS DENTED AS A RESULT OF LOWER FREIGHT RATES - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The sharp downward direction of dry bulk freight rates has had a negative impact on investors’ secondhand buying appetite that wait to see th ...
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- Siam City Cement PLC, Thailand
- IEA Clean Coal Centre - UK
- New Zealand Coal & Carbon
- Sindya Power Generating Company Private Ltd
- Star Paper Mills Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Maharashtra Electricity Regulatory Commission - India
- Globalindo Alam Lestari - Indonesia
- Sical Logistics Limited - India
- Banpu Public Company Limited - Thailand
- Indonesian Coal Mining Association
- Krishnapatnam Port Company Ltd. - India
- ASAPP Information Group - India
- Straits Asia Resources Limited - Singapore
- OPG Power Generation Pvt Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Lanco Infratech Ltd - India
- Africa Commodities Group - South Africa
- Petrochimia International Co. Ltd.- Taiwan
- Offshore Bulk Terminal Pte Ltd, Singapore
- Heidelberg Cement - Germany
- Jaiprakash Power Ventures ltd
- Mercator Lines Limited - India
- Electricity Generating Authority of Thailand
- Planning Commission, India
- Aboitiz Power Corporation - Philippines
- Parliament of New Zealand
- Australian Commodity Traders Exchange
- Karaikal Port Pvt Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Mintek Dendrill Indonesia
- Rashtriya Ispat Nigam Limited - India
- PTC India Limited - India
- Kapuas Tunggal Persada - Indonesia
- Orica Mining Services - Indonesia
- The Treasury - Australian Government
- Xindia Steels Limited - India
- Kobexindo Tractors - Indoneisa
- Port Waratah Coal Services - Australia
- Interocean Group of Companies - India
- Binh Thuan Hamico - Vietnam
- Wilmar Investment Holdings
- Leighton Contractors Pty Ltd - Australia
- ICICI Bank Limited - India
- Wood Mackenzie - Singapore
- Madhucon Powers Ltd - India
- Central Java Power - Indonesia
- Coastal Gujarat Power Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Posco Energy - South Korea
- Sinarmas Energy and Mining - Indonesia
- Salva Resources Pvt Ltd - India
- Essar Steel Hazira Ltd - India
- London Commodity Brokers - England
- Borneo Indobara - Indonesia
- Malabar Cements Ltd - India
- Thai Mozambique Logistica
- Bhoruka Overseas - Indonesia
- White Energy Company Limited
- IHS Mccloskey Coal Group - USA
- Savvy Resources Ltd - HongKong
- Iligan Light & Power Inc, Philippines
- Ceylon Electricity Board - Sri Lanka
- Kepco SPC Power Corporation, Philippines
- Merrill Lynch Commodities Europe
- Independent Power Producers Association of India
- Therma Luzon, Inc, Philippines
- Global Business Power Corporation, Philippines
- Electricity Authority, New Zealand
- Neyveli Lignite Corporation Ltd, - India
- Tata Chemicals Ltd - India
- The State Trading Corporation of India Ltd
- Economic Council, Georgia
- Agrawal Coal Company - India
- Pipit Mutiara Jaya. PT, Indonesia
- Edison Trading Spa - Italy
- Cement Manufacturers Association - India
- Minerals Council of Australia
- Renaissance Capital - South Africa
- Baramulti Group, Indonesia
- Sakthi Sugars Limited - India
- Trasteel International SA, Italy
- Indogreen Group - Indonesia
- Rio Tinto Coal - Australia
- Carbofer General Trading SA - India
- Bharathi Cement Corporation - India
- SMC Global Power, Philippines
- Sojitz Corporation - Japan
- Bukit Baiduri Energy - Indonesia
- Toyota Tsusho Corporation, Japan
- European Bulk Services B.V. - Netherlands
- Bayan Resources Tbk. - Indonesia
- Sarangani Energy Corporation, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- McConnell Dowell - Australia
- SN Aboitiz Power Inc, Philippines
- Siam City Cement - Thailand
- Meenaskhi Energy Private Limited - India
- Medco Energi Mining Internasional
- Makarim & Taira - Indonesia
- PNOC Exploration Corporation - Philippines
- Oldendorff Carriers - Singapore
- Asmin Koalindo Tuhup - Indonesia
- Barasentosa Lestari - Indonesia
- SMG Consultants - Indonesia
- MS Steel International - UAE
- Chamber of Mines of South Africa
- Petron Corporation, Philippines
- Riau Bara Harum - Indonesia
- Mjunction Services Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- GMR Energy Limited - India
- Price Waterhouse Coopers - Russia
- Directorate General of MIneral and Coal - Indonesia
- GVK Power & Infra Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Ministry of Transport, Egypt
- Timah Investasi Mineral - Indoneisa
- Eastern Energy - Thailand
- Gujarat Electricity Regulatory Commission - India
- Commonwealth Bank - Australia
- Latin American Coal - Colombia
- Kalimantan Lumbung Energi - Indonesia
- Kaltim Prima Coal - Indonesia
- Deloitte Consulting - India
- Directorate Of Revenue Intelligence - India
- LBH Netherlands Bv - Netherlands
- Metalloyd Limited - United Kingdom
- Aditya Birla Group - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Indika Energy - Indonesia
- Coal and Oil Company - UAE
- Anglo American - United Kingdom
- Standard Chartered Bank - UAE
- TeaM Sual Corporation - Philippines
- Kideco Jaya Agung - Indonesia
- Ministry of Mines - Canada
- San Jose City I Power Corp, Philippines
- Coalindo Energy - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Grasim Industreis Ltd - India
- Parry Sugars Refinery, India
- Antam Resourcindo - Indonesia
- Bhushan Steel Limited - India
- Indian Energy Exchange, India
- Power Finance Corporation Ltd., India
- Simpson Spence & Young - Indonesia
- Maheswari Brothers Coal Limited - India
- Pendopo Energi Batubara - Indonesia
- Gujarat Sidhee Cement - India
- Georgia Ports Authority, United States
- Bukit Makmur.PT - Indonesia
- VISA Power Limited - India
- International Coal Ventures Pvt Ltd - India
- Central Electricity Authority - India
- Marubeni Corporation - India
- Orica Australia Pty. Ltd.
- Ind-Barath Power Infra Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Energy Development Corp, Philippines
- Billiton Holdings Pty Ltd - Australia
- PowerSource Philippines DevCo
- GAC Shipping (India) Pvt Ltd
- Jindal Steel & Power Ltd - India
- Intertek Mineral Services - Indonesia
- Kartika Selabumi Mining - Indonesia
- Kumho Petrochemical, South Korea
- Samtan Co., Ltd - South Korea
- CNBM International Corporation - China
- Indian Oil Corporation Limited
- GN Power Mariveles Coal Plant, Philippines
- Altura Mining Limited, Indonesia
- CIMB Investment Bank - Malaysia
- Meralco Power Generation, Philippines
- Romanian Commodities Exchange
- Ambuja Cements Ltd - India
- Eastern Coal Council - USA
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Dalmia Cement Bharat India
- Chettinad Cement Corporation Ltd - India
- Semirara Mining Corp, Philippines
- The University of Queensland
- Bangladesh Power Developement Board
- Global Coal Blending Company Limited - Australia
- Energy Link Ltd, New Zealand
- Cigading International Bulk Terminal - Indonesia
- India Bulls Power Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Vizag Seaport Private Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Sree Jayajothi Cements Limited - India
- Mercuria Energy - Indonesia
- Singapore Mercantile Exchange
- Bhatia International Limited - India
- Attock Cement Pakistan Limited
- Indo Tambangraya Megah - Indonesia
- Videocon Industries ltd - India
- South Luzon Thermal Energy Corporation
- Manunggal Multi Energi - Indonesia
- Thiess Contractors Indonesia
- Global Green Power PLC Corporation, Philippines
- Australian Coal Association
- Larsen & Toubro Limited - India
- Tamil Nadu electricity Board
- Holcim Trading Pte Ltd - Singapore
- Miang Besar Coal Terminal - Indonesia
- Vedanta Resources Plc - India
- Ministry of Finance - Indonesia
- Goldman Sachs - Singapore
- Uttam Galva Steels Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Alfred C Toepfer International GmbH - Germany
- Formosa Plastics Group - Taiwan
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