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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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Saturday, 08 September 12
INDO INDIA ROUTE FREIGHT FOR SUPRAMAX REMAINS STRONG - CAPT. REDDY
COALspot.com - The freight market overall remained weak and except for cape index all other sectors were down. The biggest drop was in the Panamax s ...
Saturday, 08 September 12
RIO TINTO COMPLETES ACQUISITION OF BHP BILLITON'S INTERESTS IN RICHARDS BAY MINERALS
Rio Tinto has doubled its holding in Richards Bay Minerals (RBM) following the completion of its acquisition of BHP Billiton’s entire inte ...
Friday, 07 September 12
HBA GAINS $ 1.56 PER MT IN SEPTEMBER
COALspot.com - The Indonesian government’s declared coal reference price has gained US$ 1.56 per MT M-o-M. This is the first gain ...
Thursday, 06 September 12
SOME ANCHORED PANAMAX VESSELS WAITING FOR CARGOS TO COME
Handy
According to Fearnleys weekly report, in the smaller segments Fearnleys sees little to no changes since last week. There are still entering s ...
Thursday, 06 September 12
DRY BULK CARRIERS STILL IN HIGH DEMAND AMONG SHIP OWNERS, BUT NEWBUILDING ACTIVITY SLIDES IN AUGUST - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The slide of the dry bulk market this year hasn't abated ship owners' appetite for dry bulk carriers, as evidenced by the steady interest expresse ...
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- Manunggal Multi Energi - Indonesia
- Agrawal Coal Company - India
- SMG Consultants - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kohat Cement Company Ltd. - Pakistan
- Indogreen Group - Indonesia
- Sical Logistics Limited - India
- Coalindo Energy - Indonesia
- Carbofer General Trading SA - India
- Parliament of New Zealand
- Leighton Contractors Pty Ltd - Australia
- Standard Chartered Bank - UAE
- Indian Oil Corporation Limited
- OPG Power Generation Pvt Ltd - India
- San Jose City I Power Corp, Philippines
- Bulk Trading Sa - Switzerland
- Jaiprakash Power Ventures ltd
- Timah Investasi Mineral - Indoneisa
- Savvy Resources Ltd - HongKong
- Bangladesh Power Developement Board
- Gujarat Electricity Regulatory Commission - India
- Karbindo Abesyapradhi - Indoneisa
- Independent Power Producers Association of India
- Alfred C Toepfer International GmbH - Germany
- Gujarat Mineral Development Corp Ltd - India
- Posco Energy - South Korea
- Salva Resources Pvt Ltd - India
- Bayan Resources Tbk. - Indonesia
- Power Finance Corporation Ltd., India
- Georgia Ports Authority, United States
- Siam City Cement PLC, Thailand
- Energy Development Corp, Philippines
- Kepco SPC Power Corporation, Philippines
- Indonesian Coal Mining Association
- Bhatia International Limited - India
- PTC India Limited - India
- Borneo Indobara - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Kideco Jaya Agung - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Sojitz Corporation - Japan
- Aboitiz Power Corporation - Philippines
- SMC Global Power, Philippines
- Energy Link Ltd, New Zealand
- Meralco Power Generation, Philippines
- Lanco Infratech Ltd - India
- GAC Shipping (India) Pvt Ltd
- Riau Bara Harum - Indonesia
- Eastern Energy - Thailand
- Neyveli Lignite Corporation Ltd, - India
- White Energy Company Limited
- Global Green Power PLC Corporation, Philippines
- European Bulk Services B.V. - Netherlands
- CNBM International Corporation - China
- Pendopo Energi Batubara - Indonesia
- Mercuria Energy - Indonesia
- Thai Mozambique Logistica
- Gujarat Sidhee Cement - India
- Heidelberg Cement - Germany
- IHS Mccloskey Coal Group - USA
- Edison Trading Spa - Italy
- Globalindo Alam Lestari - Indonesia
- Mercator Lines Limited - India
- Jindal Steel & Power Ltd - India
- Vizag Seaport Private Limited - India
- Indo Tambangraya Megah - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Thiess Contractors Indonesia
- Straits Asia Resources Limited - Singapore
- International Coal Ventures Pvt Ltd - India
- Kaltim Prima Coal - Indonesia
- Toyota Tsusho Corporation, Japan
- Barasentosa Lestari - Indonesia
- VISA Power Limited - India
- Minerals Council of Australia
- McConnell Dowell - Australia
- Goldman Sachs - Singapore
- Vedanta Resources Plc - India
- Indika Energy - Indonesia
- New Zealand Coal & Carbon
- Bukit Asam (Persero) Tbk - Indonesia
- Holcim Trading Pte Ltd - Singapore
- IEA Clean Coal Centre - UK
- Ministry of Mines - Canada
- Tata Chemicals Ltd - India
- South Luzon Thermal Energy Corporation
- Bhoruka Overseas - Indonesia
- Medco Energi Mining Internasional
- TNB Fuel Sdn Bhd - Malaysia
- Semirara Mining Corp, Philippines
- Bukit Baiduri Energy - Indonesia
- Grasim Industreis Ltd - India
- Coastal Gujarat Power Limited - India
- Coal and Oil Company - UAE
- Economic Council, Georgia
- Aditya Birla Group - India
- Ceylon Electricity Board - Sri Lanka
- Africa Commodities Group - South Africa
- London Commodity Brokers - England
- Binh Thuan Hamico - Vietnam
- Metalloyd Limited - United Kingdom
- Bahari Cakrawala Sebuku - Indonesia
- Singapore Mercantile Exchange
- Sree Jayajothi Cements Limited - India
- Merrill Lynch Commodities Europe
- Petron Corporation, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Electricity Generating Authority of Thailand
- PowerSource Philippines DevCo
- Videocon Industries ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Tamil Nadu electricity Board
- Malabar Cements Ltd - India
- Wood Mackenzie - Singapore
- Wilmar Investment Holdings
- PNOC Exploration Corporation - Philippines
- Ministry of Finance - Indonesia
- Parry Sugars Refinery, India
- The State Trading Corporation of India Ltd
- Meenaskhi Energy Private Limited - India
- Trasteel International SA, Italy
- PetroVietnam Power Coal Import and Supply Company
- Banpu Public Company Limited - Thailand
- Ambuja Cements Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Sindya Power Generating Company Private Ltd
- GN Power Mariveles Coal Plant, Philippines
- ICICI Bank Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Therma Luzon, Inc, Philippines
- Sarangani Energy Corporation, Philippines
- LBH Netherlands Bv - Netherlands
- Simpson Spence & Young - Indonesia
- Formosa Plastics Group - Taiwan
- Price Waterhouse Coopers - Russia
- Ministry of Transport, Egypt
- Makarim & Taira - Indonesia
- Mjunction Services Limited - India
- Port Waratah Coal Services - Australia
- Petrochimia International Co. Ltd.- Taiwan
- Rio Tinto Coal - Australia
- MS Steel International - UAE
- Miang Besar Coal Terminal - Indonesia
- Larsen & Toubro Limited - India
- Sakthi Sugars Limited - India
- Australian Coal Association
- Asmin Koalindo Tuhup - Indonesia
- Directorate Of Revenue Intelligence - India
- India Bulls Power Limited - India
- Kobexindo Tractors - Indoneisa
- Madhucon Powers Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Eastern Coal Council - USA
- Xindia Steels Limited - India
- Star Paper Mills Limited - India
- Anglo American - United Kingdom
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bhushan Steel Limited - India
- Commonwealth Bank - Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Rashtriya Ispat Nigam Limited - India
- Baramulti Group, Indonesia
- Antam Resourcindo - Indonesia
- Cement Manufacturers Association - India
- Altura Mining Limited, Indonesia
- GVK Power & Infra Limited - India
- Central Electricity Authority - India
- Deloitte Consulting - India
- ASAPP Information Group - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Romanian Commodities Exchange
- Intertek Mineral Services - Indonesia
- TeaM Sual Corporation - Philippines
- CIMB Investment Bank - Malaysia
- Attock Cement Pakistan Limited
- Kartika Selabumi Mining - Indonesia
- Marubeni Corporation - India
- Oldendorff Carriers - Singapore
- Global Coal Blending Company Limited - Australia
- Billiton Holdings Pty Ltd - Australia
- Bharathi Cement Corporation - India
- Uttam Galva Steels Limited - India
- Siam City Cement - Thailand
- Orica Mining Services - Indonesia
- The University of Queensland
- Chamber of Mines of South Africa
- Kalimantan Lumbung Energi - Indonesia
- Samtan Co., Ltd - South Korea
- Indian Energy Exchange, India
- Chettinad Cement Corporation Ltd - India
- Electricity Authority, New Zealand
- Maheswari Brothers Coal Limited - India
- Cigading International Bulk Terminal - Indonesia
- Planning Commission, India
- SN Aboitiz Power Inc, Philippines
- Kumho Petrochemical, South Korea
- Central Java Power - Indonesia
- Global Business Power Corporation, Philippines
- Renaissance Capital - South Africa
- Dalmia Cement Bharat India
- Bukit Makmur.PT - Indonesia
- The Treasury - Australian Government
- Essar Steel Hazira Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Ind-Barath Power Infra Limited - India
- Iligan Light & Power Inc, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Karaikal Port Pvt Ltd - India
- Orica Australia Pty. Ltd.
- GMR Energy Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Mintek Dendrill Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Australian Commodity Traders Exchange
- Latin American Coal - Colombia
- Interocean Group of Companies - India
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