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