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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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- Lanco Infratech Ltd - India
- SMC Global Power, Philippines
- Coal and Oil Company - UAE
- White Energy Company Limited
- Timah Investasi Mineral - Indoneisa
- Mercator Lines Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Renaissance Capital - South Africa
- Asmin Koalindo Tuhup - Indonesia
- SMG Consultants - Indonesia
- Kumho Petrochemical, South Korea
- Pipit Mutiara Jaya. PT, Indonesia
- Goldman Sachs - Singapore
- Sindya Power Generating Company Private Ltd
- Binh Thuan Hamico - Vietnam
- Energy Development Corp, Philippines
- Sojitz Corporation - Japan
- TNB Fuel Sdn Bhd - Malaysia
- Australian Commodity Traders Exchange
- Ministry of Mines - Canada
- Central Java Power - Indonesia
- Larsen & Toubro Limited - India
- Kobexindo Tractors - Indoneisa
- GMR Energy Limited - India
- Oldendorff Carriers - Singapore
- Commonwealth Bank - Australia
- Heidelberg Cement - Germany
- GAC Shipping (India) Pvt Ltd
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Intertek Mineral Services - Indonesia
- Singapore Mercantile Exchange
- PTC India Limited - India
- Bangladesh Power Developement Board
- Aditya Birla Group - India
- New Zealand Coal & Carbon
- Therma Luzon, Inc, Philippines
- Kaltim Prima Coal - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Rashtriya Ispat Nigam Limited - India
- Indian Energy Exchange, India
- Formosa Plastics Group - Taiwan
- Economic Council, Georgia
- Edison Trading Spa - Italy
- Bukit Makmur.PT - Indonesia
- PowerSource Philippines DevCo
- The State Trading Corporation of India Ltd
- Toyota Tsusho Corporation, Japan
- Vedanta Resources Plc - India
- Romanian Commodities Exchange
- Price Waterhouse Coopers - Russia
- Ambuja Cements Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Directorate General of MIneral and Coal - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Manunggal Multi Energi - Indonesia
- Mjunction Services Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Barasentosa Lestari - Indonesia
- Bulk Trading Sa - Switzerland
- Xindia Steels Limited - India
- Aboitiz Power Corporation - Philippines
- IEA Clean Coal Centre - UK
- Sarangani Energy Corporation, Philippines
- Kideco Jaya Agung - Indonesia
- Siam City Cement - Thailand
- Mintek Dendrill Indonesia
- Siam City Cement PLC, Thailand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Meralco Power Generation, Philippines
- Thiess Contractors Indonesia
- Standard Chartered Bank - UAE
- Metalloyd Limited - United Kingdom
- Semirara Mining Corp, Philippines
- Semirara Mining and Power Corporation, Philippines
- Star Paper Mills Limited - India
- Orica Australia Pty. Ltd.
- Cigading International Bulk Terminal - Indonesia
- IHS Mccloskey Coal Group - USA
- Essar Steel Hazira Ltd - India
- Indonesian Coal Mining Association
- Tata Chemicals Ltd - India
- Indika Energy - Indonesia
- Grasim Industreis Ltd - India
- Tamil Nadu electricity Board
- Iligan Light & Power Inc, Philippines
- India Bulls Power Limited - India
- Bhoruka Overseas - Indonesia
- Uttam Galva Steels Limited - India
- Indogreen Group - Indonesia
- Gujarat Sidhee Cement - India
- Africa Commodities Group - South Africa
- Wilmar Investment Holdings
- Antam Resourcindo - Indonesia
- Jaiprakash Power Ventures ltd
- Jorong Barutama Greston.PT - Indonesia
- The University of Queensland
- Parliament of New Zealand
- Interocean Group of Companies - India
- AsiaOL BioFuels Corp., Philippines
- Sinarmas Energy and Mining - Indonesia
- Planning Commission, India
- Petron Corporation, Philippines
- Dalmia Cement Bharat India
- Carbofer General Trading SA - India
- Holcim Trading Pte Ltd - Singapore
- Electricity Authority, New Zealand
- Madhucon Powers Ltd - India
- Cement Manufacturers Association - India
- Bukit Asam (Persero) Tbk - Indonesia
- Wood Mackenzie - Singapore
- McConnell Dowell - Australia
- Global Business Power Corporation, Philippines
- Bukit Baiduri Energy - Indonesia
- TeaM Sual Corporation - Philippines
- Independent Power Producers Association of India
- Electricity Generating Authority of Thailand
- Vizag Seaport Private Limited - India
- Ministry of Transport, Egypt
- Posco Energy - South Korea
- ICICI Bank Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Rio Tinto Coal - Australia
- Bahari Cakrawala Sebuku - Indonesia
- VISA Power Limited - India
- Orica Mining Services - Indonesia
- Bhushan Steel Limited - India
- International Coal Ventures Pvt Ltd - India
- Anglo American - United Kingdom
- Attock Cement Pakistan Limited
- Salva Resources Pvt Ltd - India
- LBH Netherlands Bv - Netherlands
- Power Finance Corporation Ltd., India
- Savvy Resources Ltd - HongKong
- European Bulk Services B.V. - Netherlands
- Makarim & Taira - Indonesia
- Coastal Gujarat Power Limited - India
- Global Coal Blending Company Limited - Australia
- Port Waratah Coal Services - Australia
- Marubeni Corporation - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- ASAPP Information Group - India
- CIMB Investment Bank - Malaysia
- Malabar Cements Ltd - India
- Thai Mozambique Logistica
- Kalimantan Lumbung Energi - Indonesia
- Latin American Coal - Colombia
- Central Electricity Authority - India
- Agrawal Coal Company - India
- Kohat Cement Company Ltd. - Pakistan
- Petrochimia International Co. Ltd.- Taiwan
- Chettinad Cement Corporation Ltd - India
- PNOC Exploration Corporation - Philippines
- Gujarat Mineral Development Corp Ltd - India
- Directorate Of Revenue Intelligence - India
- Eastern Coal Council - USA
- Parry Sugars Refinery, India
- Altura Mining Limited, Indonesia
- Karaikal Port Pvt Ltd - India
- Simpson Spence & Young - Indonesia
- Jindal Steel & Power Ltd - India
- Medco Energi Mining Internasional
- Mercuria Energy - Indonesia
- MS Steel International - UAE
- Ceylon Electricity Board - Sri Lanka
- Indian Oil Corporation Limited
- Global Green Power PLC Corporation, Philippines
- Bayan Resources Tbk. - Indonesia
- Samtan Co., Ltd - South Korea
- Deloitte Consulting - India
- Kepco SPC Power Corporation, Philippines
- CNBM International Corporation - China
- Straits Asia Resources Limited - Singapore
- London Commodity Brokers - England
- Banpu Public Company Limited - Thailand
- Ministry of Finance - Indonesia
- Bhatia International Limited - India
- Sree Jayajothi Cements Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Australian Coal Association
- South Luzon Thermal Energy Corporation
- Energy Link Ltd, New Zealand
- Borneo Indobara - Indonesia
- Merrill Lynch Commodities Europe
- Indo Tambangraya Megah - Indonesia
- Videocon Industries ltd - India
- San Jose City I Power Corp, Philippines
- SN Aboitiz Power Inc, Philippines
- Kapuas Tunggal Persada - Indonesia
- Chamber of Mines of South Africa
- GN Power Mariveles Coal Plant, Philippines
- Coalindo Energy - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Neyveli Lignite Corporation Ltd, - India
- Eastern Energy - Thailand
- Maharashtra Electricity Regulatory Commission - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Maheswari Brothers Coal Limited - India
- Sakthi Sugars Limited - India
- The Treasury - Australian Government
- Ind-Barath Power Infra Limited - India
- Pendopo Energi Batubara - Indonesia
- Bharathi Cement Corporation - India
- Minerals Council of Australia
- Sical Logistics Limited - India
- Baramulti Group, Indonesia
- GVK Power & Infra Limited - India
- OPG Power Generation Pvt Ltd - India
- Trasteel International SA, Italy
- Riau Bara Harum - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Billiton Holdings Pty Ltd - Australia
- Georgia Ports Authority, United States
- Kartika Selabumi Mining - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Globalindo Alam Lestari - Indonesia
- Meenaskhi Energy Private Limited - India
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