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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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Friday, 30 November 12
IS INDONESIAN COAL INDUSTRY DEPENDS HEAVILY ON INDIA AND CHINA?
COALspot.com: Indonesia, the world largest multi grade coal exporter, shipped 35,143,587* tons of coal in October 2012. October exports are 19 ...
Thursday, 29 November 12
BUMI TO PRODUCE 100 MILLION TONS OF COAL BY 2014
COALspot.com - Expansions on both BUMI’ s subsidiaries, PT Kaltim Prima Coal (KPC) and PT Arutmin Indonesia ( Arutmin) , are ...
Thursday, 29 November 12
PANAMAX : A FAIRLY STEADY MARKET WITH USD 8.5-9K/DAY FOR 2 LADEN LEGS IN ATLANTIC - FEARNLEYS
Handy
The Atlantic market continues to remain quiet due to more supply of ships. Rates from USG to Far East were around USD 18k and Black Sea to Fa ...
Thursday, 29 November 12
DRY BULK MARKET SLIGHTLY HIGHER DESPITE LULL ACTIVITY - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The dry bulk market was marginally higher yesterday, according to the industry's benchmark, the Baltic Dry Index (BDI), which rose by 7 points to 1 ...
Wednesday, 28 November 12
NEWBUILDING ORDERING PICKS UP AS SHIP OWNERS LOOK TO CLOSE DEALS BEFORE THE END OF THE YEAR - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
Ship owners are active once again in the newbuilding ordering market, as they look to clinch deals ahead of the end of the year. Once again their fo ...
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- South Luzon Thermal Energy Corporation
- Therma Luzon, Inc, Philippines
- Mercuria Energy - Indonesia
- Meralco Power Generation, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Mintek Dendrill Indonesia
- OPG Power Generation Pvt Ltd - India
- Price Waterhouse Coopers - Russia
- Kartika Selabumi Mining - Indonesia
- Anglo American - United Kingdom
- Deloitte Consulting - India
- Vizag Seaport Private Limited - India
- Coal and Oil Company - UAE
- CIMB Investment Bank - Malaysia
- Thiess Contractors Indonesia
- Interocean Group of Companies - India
- Semirara Mining and Power Corporation, Philippines
- Wilmar Investment Holdings
- Manunggal Multi Energi - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Sojitz Corporation - Japan
- Minerals Council of Australia
- Sree Jayajothi Cements Limited - India
- Independent Power Producers Association of India
- Mercator Lines Limited - India
- Aboitiz Power Corporation - Philippines
- Bayan Resources Tbk. - Indonesia
- Sindya Power Generating Company Private Ltd
- Riau Bara Harum - Indonesia
- LBH Netherlands Bv - Netherlands
- Iligan Light & Power Inc, Philippines
- SMC Global Power, Philippines
- Dalmia Cement Bharat India
- Kohat Cement Company Ltd. - Pakistan
- Sakthi Sugars Limited - India
- Petron Corporation, Philippines
- Wood Mackenzie - Singapore
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Georgia Ports Authority, United States
- Straits Asia Resources Limited - Singapore
- Cigading International Bulk Terminal - Indonesia
- Orica Mining Services - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Africa Commodities Group - South Africa
- Timah Investasi Mineral - Indoneisa
- Vijayanagar Sugar Pvt Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Central Electricity Authority - India
- Kepco SPC Power Corporation, Philippines
- Barasentosa Lestari - Indonesia
- Rio Tinto Coal - Australia
- Parliament of New Zealand
- Bharathi Cement Corporation - India
- Toyota Tsusho Corporation, Japan
- Offshore Bulk Terminal Pte Ltd, Singapore
- Heidelberg Cement - Germany
- Standard Chartered Bank - UAE
- Bulk Trading Sa - Switzerland
- Siam City Cement PLC, Thailand
- Cement Manufacturers Association - India
- Salva Resources Pvt Ltd - India
- Chettinad Cement Corporation Ltd - India
- Eastern Energy - Thailand
- Kideco Jaya Agung - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Alfred C Toepfer International GmbH - Germany
- McConnell Dowell - Australia
- Indonesian Coal Mining Association
- Global Business Power Corporation, Philippines
- Ministry of Finance - Indonesia
- Savvy Resources Ltd - HongKong
- Central Java Power - Indonesia
- Pendopo Energi Batubara - Indonesia
- Formosa Plastics Group - Taiwan
- PowerSource Philippines DevCo
- The University of Queensland
- The State Trading Corporation of India Ltd
- Trasteel International SA, Italy
- Thai Mozambique Logistica
- Rashtriya Ispat Nigam Limited - India
- Kaltim Prima Coal - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Indogreen Group - Indonesia
- Jaiprakash Power Ventures ltd
- Global Green Power PLC Corporation, Philippines
- Singapore Mercantile Exchange
- Bhatia International Limited - India
- Aditya Birla Group - India
- Australian Coal Association
- Bhoruka Overseas - Indonesia
- Krishnapatnam Port Company Ltd. - India
- GVK Power & Infra Limited - India
- Ministry of Mines - Canada
- Romanian Commodities Exchange
- Kalimantan Lumbung Energi - Indonesia
- Renaissance Capital - South Africa
- India Bulls Power Limited - India
- Energy Development Corp, Philippines
- Larsen & Toubro Limited - India
- Parry Sugars Refinery, India
- Directorate General of MIneral and Coal - Indonesia
- Vedanta Resources Plc - India
- Bukit Baiduri Energy - Indonesia
- Goldman Sachs - Singapore
- VISA Power Limited - India
- International Coal Ventures Pvt Ltd - India
- Attock Cement Pakistan Limited
- Commonwealth Bank - Australia
- PTC India Limited - India
- Makarim & Taira - Indonesia
- Samtan Co., Ltd - South Korea
- Medco Energi Mining Internasional
- Directorate Of Revenue Intelligence - India
- Sical Logistics Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Kumho Petrochemical, South Korea
- Xindia Steels Limited - India
- IEA Clean Coal Centre - UK
- Semirara Mining Corp, Philippines
- Port Waratah Coal Services - Australia
- IHS Mccloskey Coal Group - USA
- Bahari Cakrawala Sebuku - Indonesia
- Globalindo Alam Lestari - Indonesia
- ICICI Bank Limited - India
- Siam City Cement - Thailand
- Essar Steel Hazira Ltd - India
- PNOC Exploration Corporation - Philippines
- Kapuas Tunggal Persada - Indonesia
- Indian Energy Exchange, India
- Baramulti Group, Indonesia
- MS Steel International - UAE
- Ambuja Cements Ltd - India
- Maheswari Brothers Coal Limited - India
- ASAPP Information Group - India
- Posco Energy - South Korea
- New Zealand Coal & Carbon
- Orica Australia Pty. Ltd.
- Australian Commodity Traders Exchange
- Ministry of Transport, Egypt
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- TeaM Sual Corporation - Philippines
- London Commodity Brokers - England
- Edison Trading Spa - Italy
- Ind-Barath Power Infra Limited - India
- Bangladesh Power Developement Board
- Agrawal Coal Company - India
- Electricity Generating Authority of Thailand
- Kobexindo Tractors - Indoneisa
- Global Coal Blending Company Limited - Australia
- GN Power Mariveles Coal Plant, Philippines
- San Jose City I Power Corp, Philippines
- GAC Shipping (India) Pvt Ltd
- Sarangani Energy Corporation, Philippines
- Energy Link Ltd, New Zealand
- Billiton Holdings Pty Ltd - Australia
- Power Finance Corporation Ltd., India
- Bukit Asam (Persero) Tbk - Indonesia
- Malabar Cements Ltd - India
- Karaikal Port Pvt Ltd - India
- SN Aboitiz Power Inc, Philippines
- Intertek Mineral Services - Indonesia
- SMG Consultants - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Madhucon Powers Ltd - India
- Lanco Infratech Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Gujarat Sidhee Cement - India
- Planning Commission, India
- Merrill Lynch Commodities Europe
- Coalindo Energy - Indonesia
- Chamber of Mines of South Africa
- Indo Tambangraya Megah - Indonesia
- Videocon Industries ltd - India
- Mjunction Services Limited - India
- Borneo Indobara - Indonesia
- Meenaskhi Energy Private Limited - India
- Indian Oil Corporation Limited
- Metalloyd Limited - United Kingdom
- Carbofer General Trading SA - India
- Karbindo Abesyapradhi - Indoneisa
- AsiaOL BioFuels Corp., Philippines
- Holcim Trading Pte Ltd - Singapore
- Neyveli Lignite Corporation Ltd, - India
- Oldendorff Carriers - Singapore
- Simpson Spence & Young - Indonesia
- Binh Thuan Hamico - Vietnam
- Grasim Industreis Ltd - India
- Uttam Galva Steels Limited - India
- Altura Mining Limited, Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Antam Resourcindo - Indonesia
- Bukit Makmur.PT - Indonesia
- Gujarat Electricity Regulatory Commission - India
- White Energy Company Limited
- Eastern Coal Council - USA
- CNBM International Corporation - China
- GMR Energy Limited - India
- Coastal Gujarat Power Limited - India
- Latin American Coal - Colombia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Economic Council, Georgia
- Bhushan Steel Limited - India
- Tata Chemicals Ltd - India
- The Treasury - Australian Government
- Asmin Koalindo Tuhup - Indonesia
- Marubeni Corporation - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Tamil Nadu electricity Board
- Sinarmas Energy and Mining - Indonesia
- Electricity Authority, New Zealand
- Jindal Steel & Power Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Banpu Public Company Limited - Thailand
- Star Paper Mills Limited - India
- European Bulk Services B.V. - Netherlands
- Indika Energy - Indonesia
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