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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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Wednesday, 18 July 12
SHIP PRICES HAVE FALLEN RAPIDLY THIS YEAR, FAVORING INVESTORS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The price for a 5 year old Capesize dry bulk carrier of 172,000 dwt has fallen to about $33,4mil from $42.9 at the end of June 2011, while at end of ...
Saturday, 14 July 12
FREIGHT MARKET SEEMS TO BE QUITE VOLATILE - VISTAAR
COALspot.com - The market seems to be quite volatile with the trend changing almost every week. This week all the segments were down except for Pana ...
Friday, 13 July 12
TRANSCOAL MINERGY HAS RECEIVED PMA STATUS IN INDONESIA
COALspot.com - PT Transcoal Minergy (“TCM”) has received official foreign owned company status from the Capital Investment Coordinating ...
Thursday, 12 July 12
LACK OF CAPESIZE DEMAND DRAGS DRY BULK MARKET LOWER - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
A lack of demand for the larger Capesize dry bulk carriers had as a result the fall of the industry’s benchmark, the BDI (Baltic Dry Index), w ...
Thursday, 12 July 12
RIO TINTO'S SENIOR MANAGEMENT CHANGES
COALspot.com - Rio Tinto is making changes to its senior management team as chief financial officer (CFO) Guy Elliott has decided to retire at the e ...
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- Kapuas Tunggal Persada - Indonesia
- Aboitiz Power Corporation - Philippines
- Goldman Sachs - Singapore
- Jaiprakash Power Ventures ltd
- Africa Commodities Group - South Africa
- Bhoruka Overseas - Indonesia
- Directorate Of Revenue Intelligence - India
- IHS Mccloskey Coal Group - USA
- Asmin Koalindo Tuhup - Indonesia
- Bukit Baiduri Energy - Indonesia
- Antam Resourcindo - Indonesia
- The University of Queensland
- Tamil Nadu electricity Board
- Singapore Mercantile Exchange
- Dalmia Cement Bharat India
- Metalloyd Limited - United Kingdom
- Tata Chemicals Ltd - India
- San Jose City I Power Corp, Philippines
- Madhucon Powers Ltd - India
- Malabar Cements Ltd - India
- Central Electricity Authority - India
- VISA Power Limited - India
- Leighton Contractors Pty Ltd - Australia
- OPG Power Generation Pvt Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Toyota Tsusho Corporation, Japan
- SMC Global Power, Philippines
- Standard Chartered Bank - UAE
- Sojitz Corporation - Japan
- Ministry of Transport, Egypt
- Indogreen Group - Indonesia
- Bulk Trading Sa - Switzerland
- Anglo American - United Kingdom
- Sical Logistics Limited - India
- Indian Oil Corporation Limited
- European Bulk Services B.V. - Netherlands
- Minerals Council of Australia
- PNOC Exploration Corporation - Philippines
- Timah Investasi Mineral - Indoneisa
- Georgia Ports Authority, United States
- SMG Consultants - Indonesia
- Indonesian Coal Mining Association
- Merrill Lynch Commodities Europe
- Ind-Barath Power Infra Limited - India
- Marubeni Corporation - India
- Siam City Cement PLC, Thailand
- Aditya Birla Group - India
- Economic Council, Georgia
- Rashtriya Ispat Nigam Limited - India
- Posco Energy - South Korea
- Price Waterhouse Coopers - Russia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Gujarat Sidhee Cement - India
- Ambuja Cements Ltd - India
- Star Paper Mills Limited - India
- New Zealand Coal & Carbon
- London Commodity Brokers - England
- Indian Energy Exchange, India
- AsiaOL BioFuels Corp., Philippines
- Global Green Power PLC Corporation, Philippines
- International Coal Ventures Pvt Ltd - India
- PowerSource Philippines DevCo
- Rio Tinto Coal - Australia
- Sree Jayajothi Cements Limited - India
- Oldendorff Carriers - Singapore
- Kartika Selabumi Mining - Indonesia
- Intertek Mineral Services - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Latin American Coal - Colombia
- Videocon Industries ltd - India
- Siam City Cement - Thailand
- Interocean Group of Companies - India
- Australian Commodity Traders Exchange
- Altura Mining Limited, Indonesia
- Ministry of Mines - Canada
- Karbindo Abesyapradhi - Indoneisa
- Maheswari Brothers Coal Limited - India
- Alfred C Toepfer International GmbH - Germany
- Eastern Energy - Thailand
- Ministry of Finance - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Meenaskhi Energy Private Limited - India
- Jindal Steel & Power Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Bhatia International Limited - India
- Pendopo Energi Batubara - Indonesia
- Chamber of Mines of South Africa
- Energy Link Ltd, New Zealand
- Electricity Generating Authority of Thailand
- TeaM Sual Corporation - Philippines
- Deloitte Consulting - India
- LBH Netherlands Bv - Netherlands
- Therma Luzon, Inc, Philippines
- Eastern Coal Council - USA
- Miang Besar Coal Terminal - Indonesia
- Binh Thuan Hamico - Vietnam
- Thai Mozambique Logistica
- Kobexindo Tractors - Indoneisa
- Barasentosa Lestari - Indonesia
- Coalindo Energy - Indonesia
- Edison Trading Spa - Italy
- Agrawal Coal Company - India
- Karaikal Port Pvt Ltd - India
- Renaissance Capital - South Africa
- Coastal Gujarat Power Limited - India
- Samtan Co., Ltd - South Korea
- Pipit Mutiara Jaya. PT, Indonesia
- Cigading International Bulk Terminal - Indonesia
- Kaltim Prima Coal - Indonesia
- Globalindo Alam Lestari - Indonesia
- Salva Resources Pvt Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- MS Steel International - UAE
- Central Java Power - Indonesia
- Medco Energi Mining Internasional
- Xindia Steels Limited - India
- Sinarmas Energy and Mining - Indonesia
- Riau Bara Harum - Indonesia
- SN Aboitiz Power Inc, Philippines
- Formosa Plastics Group - Taiwan
- Bahari Cakrawala Sebuku - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- GN Power Mariveles Coal Plant, Philippines
- Holcim Trading Pte Ltd - Singapore
- Petrochimia International Co. Ltd.- Taiwan
- McConnell Dowell - Australia
- Uttam Galva Steels Limited - India
- CNBM International Corporation - China
- South Luzon Thermal Energy Corporation
- Offshore Bulk Terminal Pte Ltd, Singapore
- The State Trading Corporation of India Ltd
- Vizag Seaport Private Limited - India
- Kepco SPC Power Corporation, Philippines
- Semirara Mining Corp, Philippines
- Romanian Commodities Exchange
- Planning Commission, India
- Makarim & Taira - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- The Treasury - Australian Government
- Lanco Infratech Ltd - India
- Bharathi Cement Corporation - India
- Borneo Indobara - Indonesia
- Cement Manufacturers Association - India
- Larsen & Toubro Limited - India
- Carbofer General Trading SA - India
- Bukit Makmur.PT - Indonesia
- Global Business Power Corporation, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Attock Cement Pakistan Limited
- Mercator Lines Limited - India
- Coal and Oil Company - UAE
- Bangladesh Power Developement Board
- ASAPP Information Group - India
- Power Finance Corporation Ltd., India
- Manunggal Multi Energi - Indonesia
- Orica Australia Pty. Ltd.
- GMR Energy Limited - India
- Independent Power Producers Association of India
- Mintek Dendrill Indonesia
- GVK Power & Infra Limited - India
- Krishnapatnam Port Company Ltd. - India
- ICICI Bank Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Global Coal Blending Company Limited - Australia
- Port Waratah Coal Services - Australia
- Essar Steel Hazira Ltd - India
- Energy Development Corp, Philippines
- Parry Sugars Refinery, India
- Mjunction Services Limited - India
- Sakthi Sugars Limited - India
- Bayan Resources Tbk. - Indonesia
- Thiess Contractors Indonesia
- Vedanta Resources Plc - India
- Petron Corporation, Philippines
- Indika Energy - Indonesia
- Trasteel International SA, Italy
- White Energy Company Limited
- GAC Shipping (India) Pvt Ltd
- Directorate General of MIneral and Coal - Indonesia
- Banpu Public Company Limited - Thailand
- Meralco Power Generation, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Gujarat Mineral Development Corp Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Wilmar Investment Holdings
- Billiton Holdings Pty Ltd - Australia
- IEA Clean Coal Centre - UK
- Mercuria Energy - Indonesia
- Gujarat Electricity Regulatory Commission - India
- PTC India Limited - India
- Savvy Resources Ltd - HongKong
- Straits Asia Resources Limited - Singapore
- Chettinad Cement Corporation Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Orica Mining Services - Indonesia
- Baramulti Group, Indonesia
- Australian Coal Association
- Asia Pacific Energy Resources Ventures Inc, Philippines
- India Bulls Power Limited - India
- CIMB Investment Bank - Malaysia
- Kideco Jaya Agung - Indonesia
- Simpson Spence & Young - Indonesia
- Bhushan Steel Limited - India
- Semirara Mining and Power Corporation, Philippines
- Commonwealth Bank - Australia
- Kumho Petrochemical, South Korea
- Sindya Power Generating Company Private Ltd
- Indo Tambangraya Megah - Indonesia
- Grasim Industreis Ltd - India
- Heidelberg Cement - Germany
- Parliament of New Zealand
- Wood Mackenzie - Singapore
- Iligan Light & Power Inc, Philippines
- Ceylon Electricity Board - Sri Lanka
- Sarangani Energy Corporation, Philippines
- Electricity Authority, New Zealand
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