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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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Thursday, 22 March 12
ECI-CHINA HANDY RATES ARE AROUND US$ 8000 - FEARNLEYS
Handy
Another positive trend was seen last week with more cargoes entering the market. Skaw-Passero/US Gulf climbed slowly up to USD 3700, while US ...
Thursday, 22 March 12
DRY BULK MARKET KEEPS SURGING, CAPESIZES FALLING - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
In what seems to be an establishing pattern, the dry bulk market has kept its upward momentum, edging closer to the 900 point-mark, but the larger s ...
Wednesday, 21 March 12
BUMA HAS PRODUCED 2.3 MILLION TONS OF COAL IN FEBRUARY 2012
COALspot.com - PT. Delta Dunia Makmur's overburden removal in February 2012 has reached totaled 23.8 million bcm (+2.4% YoY) while coal production ...
Tuesday, 20 March 12
SMALLER DRY BULK VESSELS STILL LEADING DRY BULK MARKET TO HIGHER GROUND - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market has been growing during the past couple of weeks, but contrary to the usual practice, it’s not the larger Capesizes which ...
Monday, 19 March 12
WEEKLY DRY MARKET OVERVIEW: SMALLER VESSELS LEAD RATES HIGHER - MARIA BERTZELETOU, HELLENIC SHIPPING
The upward trend of the Baltic Dry Index persists strong from the end of February, spurred from the supramax market that offsets the weakness in the ...
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- Central Electricity Authority - India
- The Treasury - Australian Government
- Timah Investasi Mineral - Indoneisa
- International Coal Ventures Pvt Ltd - India
- Agrawal Coal Company - India
- Makarim & Taira - Indonesia
- Edison Trading Spa - Italy
- Medco Energi Mining Internasional
- Neyveli Lignite Corporation Ltd, - India
- Power Finance Corporation Ltd., India
- Aditya Birla Group - India
- Marubeni Corporation - India
- Attock Cement Pakistan Limited
- The State Trading Corporation of India Ltd
- Indonesian Coal Mining Association
- Commonwealth Bank - Australia
- Meenaskhi Energy Private Limited - India
- Kartika Selabumi Mining - Indonesia
- Globalindo Alam Lestari - Indonesia
- Metalloyd Limited - United Kingdom
- Kalimantan Lumbung Energi - Indonesia
- Coal and Oil Company - UAE
- Energy Link Ltd, New Zealand
- Thai Mozambique Logistica
- ASAPP Information Group - India
- Orica Australia Pty. Ltd.
- Eastern Energy - Thailand
- Tamil Nadu electricity Board
- TeaM Sual Corporation - Philippines
- Jaiprakash Power Ventures ltd
- Toyota Tsusho Corporation, Japan
- Sojitz Corporation - Japan
- Bhatia International Limited - India
- Straits Asia Resources Limited - Singapore
- Leighton Contractors Pty Ltd - Australia
- Baramulti Group, Indonesia
- Borneo Indobara - Indonesia
- London Commodity Brokers - England
- India Bulls Power Limited - India
- Krishnapatnam Port Company Ltd. - India
- Australian Commodity Traders Exchange
- Directorate General of MIneral and Coal - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Kideco Jaya Agung - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Chettinad Cement Corporation Ltd - India
- CNBM International Corporation - China
- Ambuja Cements Ltd - India
- Economic Council, Georgia
- Parliament of New Zealand
- Maheswari Brothers Coal Limited - India
- LBH Netherlands Bv - Netherlands
- OPG Power Generation Pvt Ltd - India
- Kepco SPC Power Corporation, Philippines
- Sakthi Sugars Limited - India
- SMC Global Power, Philippines
- Semirara Mining and Power Corporation, Philippines
- Kaltim Prima Coal - Indonesia
- White Energy Company Limited
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Alfred C Toepfer International GmbH - Germany
- Barasentosa Lestari - Indonesia
- Deloitte Consulting - India
- Bhushan Steel Limited - India
- Madhucon Powers Ltd - India
- Electricity Generating Authority of Thailand
- Bulk Trading Sa - Switzerland
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Ministry of Finance - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Oldendorff Carriers - Singapore
- PTC India Limited - India
- Renaissance Capital - South Africa
- Anglo American - United Kingdom
- Bhoruka Overseas - Indonesia
- Simpson Spence & Young - Indonesia
- Meralco Power Generation, Philippines
- The University of Queensland
- Bangladesh Power Developement Board
- Cement Manufacturers Association - India
- GAC Shipping (India) Pvt Ltd
- Samtan Co., Ltd - South Korea
- Tata Chemicals Ltd - India
- Sindya Power Generating Company Private Ltd
- Singapore Mercantile Exchange
- Siam City Cement - Thailand
- Sree Jayajothi Cements Limited - India
- IHS Mccloskey Coal Group - USA
- Offshore Bulk Terminal Pte Ltd, Singapore
- Orica Mining Services - Indonesia
- CIMB Investment Bank - Malaysia
- Ceylon Electricity Board - Sri Lanka
- Altura Mining Limited, Indonesia
- Rio Tinto Coal - Australia
- Jindal Steel & Power Ltd - India
- Indo Tambangraya Megah - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- GVK Power & Infra Limited - India
- San Jose City I Power Corp, Philippines
- Bharathi Cement Corporation - India
- Sarangani Energy Corporation, Philippines
- Intertek Mineral Services - Indonesia
- Indika Energy - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Chamber of Mines of South Africa
- Indian Energy Exchange, India
- ICICI Bank Limited - India
- Malabar Cements Ltd - India
- Uttam Galva Steels Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Bukit Baiduri Energy - Indonesia
- Gujarat Sidhee Cement - India
- Minerals Council of Australia
- Formosa Plastics Group - Taiwan
- Grasim Industreis Ltd - India
- PNOC Exploration Corporation - Philippines
- Eastern Coal Council - USA
- Iligan Light & Power Inc, Philippines
- Mercator Lines Limited - India
- Wilmar Investment Holdings
- TNB Fuel Sdn Bhd - Malaysia
- New Zealand Coal & Carbon
- Aboitiz Power Corporation - Philippines
- Directorate Of Revenue Intelligence - India
- Georgia Ports Authority, United States
- Semirara Mining Corp, Philippines
- Cigading International Bulk Terminal - Indonesia
- Latin American Coal - Colombia
- Wood Mackenzie - Singapore
- Essar Steel Hazira Ltd - India
- Larsen & Toubro Limited - India
- Africa Commodities Group - South Africa
- SMG Consultants - Indonesia
- SN Aboitiz Power Inc, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Holcim Trading Pte Ltd - Singapore
- Vedanta Resources Plc - India
- Petrochimia International Co. Ltd.- Taiwan
- Coalindo Energy - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Ind-Barath Power Infra Limited - India
- Coastal Gujarat Power Limited - India
- Savvy Resources Ltd - HongKong
- Asmin Koalindo Tuhup - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Sical Logistics Limited - India
- Mercuria Energy - Indonesia
- Interocean Group of Companies - India
- Star Paper Mills Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Salva Resources Pvt Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Pendopo Energi Batubara - Indonesia
- Ministry of Transport, Egypt
- GMR Energy Limited - India
- Videocon Industries ltd - India
- Mjunction Services Limited - India
- IEA Clean Coal Centre - UK
- AsiaOL BioFuels Corp., Philippines
- MS Steel International - UAE
- Mintek Dendrill Indonesia
- McConnell Dowell - Australia
- Indogreen Group - Indonesia
- Xindia Steels Limited - India
- Posco Energy - South Korea
- Global Business Power Corporation, Philippines
- Heidelberg Cement - Germany
- Price Waterhouse Coopers - Russia
- Ministry of Mines - Canada
- Australian Coal Association
- VISA Power Limited - India
- Planning Commission, India
- Vizag Seaport Private Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Thiess Contractors Indonesia
- Standard Chartered Bank - UAE
- Gujarat Mineral Development Corp Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Indian Oil Corporation Limited
- Bayan Resources Tbk. - Indonesia
- Siam City Cement PLC, Thailand
- Trasteel International SA, Italy
- Energy Development Corp, Philippines
- Banpu Public Company Limited - Thailand
- Vijayanagar Sugar Pvt Ltd - India
- Global Green Power PLC Corporation, Philippines
- Karaikal Port Pvt Ltd - India
- PowerSource Philippines DevCo
- Electricity Authority, New Zealand
- Therma Luzon, Inc, Philippines
- Gujarat Electricity Regulatory Commission - India
- Riau Bara Harum - Indonesia
- Port Waratah Coal Services - Australia
- Kumho Petrochemical, South Korea
- Kobexindo Tractors - Indoneisa
- PetroVietnam Power Coal Import and Supply Company
- Merrill Lynch Commodities Europe
- Bukit Makmur.PT - Indonesia
- Petron Corporation, Philippines
- European Bulk Services B.V. - Netherlands
- South Luzon Thermal Energy Corporation
- Rashtriya Ispat Nigam Limited - India
- Independent Power Producers Association of India
- Kapuas Tunggal Persada - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Central Java Power - Indonesia
- Parry Sugars Refinery, India
- Global Coal Blending Company Limited - Australia
- Romanian Commodities Exchange
- Carbofer General Trading SA - India
- Binh Thuan Hamico - Vietnam
- Manunggal Multi Energi - Indonesia
- Goldman Sachs - Singapore
- Sinarmas Energy and Mining - Indonesia
- Lanco Infratech Ltd - India
- Antam Resourcindo - Indonesia
- Dalmia Cement Bharat India
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