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