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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, 07 July 12
EXCESS SUPPLY & WEAK DEMAND KEEP COAL PRICES LOW
COALspot.com - SGX AsiaClear OTC Coal Swaps for August and Q4 deliveries slipped slightly this week. SGX’s Indonesian sub-bituminous coal swap ...
Saturday, 07 July 12
BALTIC INDEX UP ON STRONG CAPE, PANAMAX RATES - VISTAAR
COALspot.com - This week all the segments were firmed up with BDI up by 15.23 pct (up by 153 points) closing at 1,157 points.
The cape index also ...
Saturday, 07 July 12
DRY BULK MARKET NOT ABLE TO FIND SOLID GROUND SAY EXPERTS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
With the second half of each, traditionally looking the most active one, especially in terms of newbuildings being delivered, it's highly unlikely ...
Thursday, 05 July 12
GOVT GETS READY FOR $1.8B SUIT - THE JAKARTA POST
The Jakarta Post, one of the leading Indonesian English new papers reported that, several ministries and the Attorney General’s Office held a ...
Thursday, 05 July 12
DRY BULK MARKET MOVES FURTHER UP THE HILL - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market has kept its growth momentum by the middle of the week, as the BDI (Baltic Dry Index) rose by an additional 40 points to 1,103 p ...
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- CIMB Investment Bank - Malaysia
- Parliament of New Zealand
- Savvy Resources Ltd - HongKong
- Asmin Koalindo Tuhup - Indonesia
- International Coal Ventures Pvt Ltd - India
- Australian Coal Association
- Directorate Of Revenue Intelligence - India
- The State Trading Corporation of India Ltd
- GAC Shipping (India) Pvt Ltd
- Electricity Generating Authority of Thailand
- Kobexindo Tractors - Indoneisa
- Ministry of Transport, Egypt
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Manunggal Multi Energi - Indonesia
- Orica Mining Services - Indonesia
- Central Java Power - Indonesia
- Indian Oil Corporation Limited
- Eastern Energy - Thailand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- The Treasury - Australian Government
- Tamil Nadu electricity Board
- New Zealand Coal & Carbon
- GMR Energy Limited - India
- Bharathi Cement Corporation - India
- PNOC Exploration Corporation - Philippines
- Sinarmas Energy and Mining - Indonesia
- Energy Link Ltd, New Zealand
- Latin American Coal - Colombia
- Madhucon Powers Ltd - India
- Power Finance Corporation Ltd., India
- AsiaOL BioFuels Corp., Philippines
- Meenaskhi Energy Private Limited - India
- Meralco Power Generation, Philippines
- Iligan Light & Power Inc, Philippines
- Trasteel International SA, Italy
- Pipit Mutiara Jaya. PT, Indonesia
- Globalindo Alam Lestari - Indonesia
- Formosa Plastics Group - Taiwan
- Aboitiz Power Corporation - Philippines
- Goldman Sachs - Singapore
- India Bulls Power Limited - India
- White Energy Company Limited
- Heidelberg Cement - Germany
- Barasentosa Lestari - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Thai Mozambique Logistica
- Global Coal Blending Company Limited - Australia
- Bulk Trading Sa - Switzerland
- Vedanta Resources Plc - India
- Bhoruka Overseas - Indonesia
- Karaikal Port Pvt Ltd - India
- The University of Queensland
- Bayan Resources Tbk. - Indonesia
- Mercator Lines Limited - India
- Mjunction Services Limited - India
- Coastal Gujarat Power Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Kideco Jaya Agung - Indonesia
- Parry Sugars Refinery, India
- Siam City Cement - Thailand
- Siam City Cement PLC, Thailand
- Semirara Mining Corp, Philippines
- Kapuas Tunggal Persada - Indonesia
- SMC Global Power, Philippines
- GVK Power & Infra Limited - India
- Bangladesh Power Developement Board
- Antam Resourcindo - Indonesia
- Samtan Co., Ltd - South Korea
- Independent Power Producers Association of India
- Deloitte Consulting - India
- Carbofer General Trading SA - India
- Karbindo Abesyapradhi - Indoneisa
- Bhushan Steel Limited - India
- Videocon Industries ltd - India
- Borneo Indobara - Indonesia
- Coalindo Energy - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Ministry of Mines - Canada
- OPG Power Generation Pvt Ltd - India
- McConnell Dowell - Australia
- Bukit Makmur.PT - Indonesia
- San Jose City I Power Corp, Philippines
- Posco Energy - South Korea
- Central Electricity Authority - India
- Gujarat Sidhee Cement - India
- Kaltim Prima Coal - Indonesia
- Merrill Lynch Commodities Europe
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Vizag Seaport Private Limited - India
- Riau Bara Harum - Indonesia
- Baramulti Group, Indonesia
- Australian Commodity Traders Exchange
- Wilmar Investment Holdings
- Maheswari Brothers Coal Limited - India
- PowerSource Philippines DevCo
- TNB Fuel Sdn Bhd - Malaysia
- Standard Chartered Bank - UAE
- Bahari Cakrawala Sebuku - Indonesia
- Coal and Oil Company - UAE
- Sarangani Energy Corporation, Philippines
- Tata Chemicals Ltd - India
- LBH Netherlands Bv - Netherlands
- Binh Thuan Hamico - Vietnam
- Ambuja Cements Ltd - India
- Sical Logistics Limited - India
- Indogreen Group - Indonesia
- PTC India Limited - India
- Leighton Contractors Pty Ltd - Australia
- Simpson Spence & Young - Indonesia
- Sojitz Corporation - Japan
- Chettinad Cement Corporation Ltd - India
- Price Waterhouse Coopers - Russia
- Grasim Industreis Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Attock Cement Pakistan Limited
- Jindal Steel & Power Ltd - India
- Eastern Coal Council - USA
- Medco Energi Mining Internasional
- Commonwealth Bank - Australia
- TeaM Sual Corporation - Philippines
- Krishnapatnam Port Company Ltd. - India
- IEA Clean Coal Centre - UK
- Salva Resources Pvt Ltd - India
- Timah Investasi Mineral - Indoneisa
- Jorong Barutama Greston.PT - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Indonesian Coal Mining Association
- Rio Tinto Coal - Australia
- Larsen & Toubro Limited - India
- Makarim & Taira - Indonesia
- Mintek Dendrill Indonesia
- Bukit Baiduri Energy - Indonesia
- Agrawal Coal Company - India
- Star Paper Mills Limited - India
- Mercuria Energy - Indonesia
- Singapore Mercantile Exchange
- Global Green Power PLC Corporation, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Intertek Mineral Services - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Dalmia Cement Bharat India
- Anglo American - United Kingdom
- Economic Council, Georgia
- ICICI Bank Limited - India
- European Bulk Services B.V. - Netherlands
- Orica Australia Pty. Ltd.
- Malabar Cements Ltd - India
- Jaiprakash Power Ventures ltd
- Cement Manufacturers Association - India
- Petrochimia International Co. Ltd.- Taiwan
- Altura Mining Limited, Indonesia
- Indika Energy - Indonesia
- Romanian Commodities Exchange
- ASAPP Information Group - India
- Planning Commission, India
- Pendopo Energi Batubara - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Global Business Power Corporation, Philippines
- Holcim Trading Pte Ltd - Singapore
- Marubeni Corporation - India
- Ministry of Finance - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Thiess Contractors Indonesia
- Indian Energy Exchange, India
- MS Steel International - UAE
- Renaissance Capital - South Africa
- Wood Mackenzie - Singapore
- Kartika Selabumi Mining - Indonesia
- SN Aboitiz Power Inc, Philippines
- Interocean Group of Companies - India
- Lanco Infratech Ltd - India
- Therma Luzon, Inc, Philippines
- Semirara Mining and Power Corporation, Philippines
- Kumho Petrochemical, South Korea
- Sindya Power Generating Company Private Ltd
- Directorate General of MIneral and Coal - Indonesia
- Straits Asia Resources Limited - Singapore
- Chamber of Mines of South Africa
- GN Power Mariveles Coal Plant, Philippines
- Africa Commodities Group - South Africa
- VISA Power Limited - India
- Essar Steel Hazira Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Sree Jayajothi Cements Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Banpu Public Company Limited - Thailand
- Cigading International Bulk Terminal - Indonesia
- Aditya Birla Group - India
- Bukit Asam (Persero) Tbk - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- IHS Mccloskey Coal Group - USA
- Petron Corporation, Philippines
- Xindia Steels Limited - India
- Toyota Tsusho Corporation, Japan
- Uttam Galva Steels Limited - India
- Energy Development Corp, Philippines
- South Luzon Thermal Energy Corporation
- Bhatia International Limited - India
- PetroVietnam Power Coal Import and Supply Company
- CNBM International Corporation - China
- Kepco SPC Power Corporation, Philippines
- Miang Besar Coal Terminal - Indonesia
- Minerals Council of Australia
- Georgia Ports Authority, United States
- Sakthi Sugars Limited - India
- London Commodity Brokers - England
- Gujarat Mineral Development Corp Ltd - India
- Port Waratah Coal Services - Australia
- Edison Trading Spa - Italy
- Electricity Authority, New Zealand
- SMG Consultants - Indonesia
- Ind-Barath Power Infra Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Alfred C Toepfer International GmbH - Germany
- Indo Tambangraya Megah - Indonesia
- Oldendorff Carriers - Singapore
- Metalloyd Limited - United Kingdom
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