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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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Monday, 27 February 12
INDONESIAN COAL EXPORTS TO CHINA DROPS 39.76 PERCENT IN JANUARY 2012
COALspot.com: Indonesia, the world largest coal exporter, shipped 28.21* mln mt of coal in January 2012, slightly lower than its December 2011 ...
Monday, 27 February 12
WEEKLY DRY MARKET OVERVIEW - MARIA BERTZELETOU, HELLENIC SHIPPING
The pessimism in the dry market persists with the Baltic Dry Index still trying to find a steady pace of growth and average time charter earnings fo ...
Sunday, 26 February 12
THE FREIGHT RATES FOR INDONESIA TO INDIA IS LIKELY TO BE FIRM FOR NEXT 2/3 WEEKS - VISTAAR
COALspot.com – “There was not much change in the BDI and other indices this week except for the Panamax which was down by 11.91 pc ...
Friday, 24 February 12
DRY BULK MARKET POSTS FIRST REBOUND IN A WEEK - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
As was expected since mid-week, the dry bulk market's benchmark, the BDI (Baltic Dry Index) has managed to put a stop in a 6-day losing rally, endi ...
Thursday, 23 February 12
2.5 PANAMAX VESSELS PER AVAILABLE CARGO FOR MARCH DATES - FEARN BULK
Handy
Another depressing week for Supras in both basins. Lack of fresh business and over-supply of tonnage in the Atlantic pushed rates south. Cont ...
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- PNOC Exploration Corporation - Philippines
- South Luzon Thermal Energy Corporation
- Rio Tinto Coal - Australia
- Straits Asia Resources Limited - Singapore
- Larsen & Toubro Limited - India
- Madhucon Powers Ltd - India
- Sindya Power Generating Company Private Ltd
- Kartika Selabumi Mining - Indonesia
- Samtan Co., Ltd - South Korea
- Directorate Of Revenue Intelligence - India
- Formosa Plastics Group - Taiwan
- Independent Power Producers Association of India
- The University of Queensland
- SMC Global Power, Philippines
- San Jose City I Power Corp, Philippines
- Binh Thuan Hamico - Vietnam
- SMG Consultants - Indonesia
- Kobexindo Tractors - Indoneisa
- International Coal Ventures Pvt Ltd - India
- Pendopo Energi Batubara - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Intertek Mineral Services - Indonesia
- Latin American Coal - Colombia
- Global Coal Blending Company Limited - Australia
- Siam City Cement PLC, Thailand
- Bulk Trading Sa - Switzerland
- Mintek Dendrill Indonesia
- Coastal Gujarat Power Limited - India
- Globalindo Alam Lestari - Indonesia
- Orica Mining Services - Indonesia
- Tata Chemicals Ltd - India
- Altura Mining Limited, Indonesia
- Central Java Power - Indonesia
- VISA Power Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Marubeni Corporation - India
- Makarim & Taira - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Siam City Cement - Thailand
- Petrochimia International Co. Ltd.- Taiwan
- Chamber of Mines of South Africa
- India Bulls Power Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Thiess Contractors Indonesia
- Ceylon Electricity Board - Sri Lanka
- Renaissance Capital - South Africa
- GVK Power & Infra Limited - India
- Bhatia International Limited - India
- Commonwealth Bank - Australia
- Goldman Sachs - Singapore
- PowerSource Philippines DevCo
- Manunggal Multi Energi - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Carbofer General Trading SA - India
- Jorong Barutama Greston.PT - Indonesia
- OPG Power Generation Pvt Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Bangladesh Power Developement Board
- Karaikal Port Pvt Ltd - India
- CIMB Investment Bank - Malaysia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Gujarat Sidhee Cement - India
- Kideco Jaya Agung - Indonesia
- Antam Resourcindo - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Salva Resources Pvt Ltd - India
- Deloitte Consulting - India
- CNBM International Corporation - China
- Attock Cement Pakistan Limited
- Bhoruka Overseas - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Vedanta Resources Plc - India
- Asmin Koalindo Tuhup - Indonesia
- Riau Bara Harum - Indonesia
- IHS Mccloskey Coal Group - USA
- TeaM Sual Corporation - Philippines
- Cement Manufacturers Association - India
- Indonesian Coal Mining Association
- Planning Commission, India
- IEA Clean Coal Centre - UK
- Africa Commodities Group - South Africa
- Karbindo Abesyapradhi - Indoneisa
- London Commodity Brokers - England
- Directorate General of MIneral and Coal - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Eastern Coal Council - USA
- Agrawal Coal Company - India
- Interocean Group of Companies - India
- Savvy Resources Ltd - HongKong
- Jaiprakash Power Ventures ltd
- Singapore Mercantile Exchange
- Semirara Mining and Power Corporation, Philippines
- Malabar Cements Ltd - India
- Essar Steel Hazira Ltd - India
- Central Electricity Authority - India
- Energy Development Corp, Philippines
- Power Finance Corporation Ltd., India
- Sarangani Energy Corporation, Philippines
- GAC Shipping (India) Pvt Ltd
- GN Power Mariveles Coal Plant, Philippines
- Trasteel International SA, Italy
- Videocon Industries ltd - India
- Merrill Lynch Commodities Europe
- Miang Besar Coal Terminal - Indonesia
- Timah Investasi Mineral - Indoneisa
- Barasentosa Lestari - Indonesia
- Jindal Steel & Power Ltd - India
- Australian Coal Association
- Meralco Power Generation, Philippines
- Maheswari Brothers Coal Limited - India
- Tamil Nadu electricity Board
- Indo Tambangraya Megah - Indonesia
- Aditya Birla Group - India
- Parliament of New Zealand
- Indian Oil Corporation Limited
- Medco Energi Mining Internasional
- Georgia Ports Authority, United States
- New Zealand Coal & Carbon
- Sical Logistics Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Vizag Seaport Private Limited - India
- Sakthi Sugars Limited - India
- Oldendorff Carriers - Singapore
- LBH Netherlands Bv - Netherlands
- Chettinad Cement Corporation Ltd - India
- Edison Trading Spa - Italy
- Australian Commodity Traders Exchange
- Bayan Resources Tbk. - Indonesia
- Grasim Industreis Ltd - India
- Lanco Infratech Ltd - India
- Posco Energy - South Korea
- Electricity Authority, New Zealand
- Sree Jayajothi Cements Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- SN Aboitiz Power Inc, Philippines
- AsiaOL BioFuels Corp., Philippines
- Semirara Mining Corp, Philippines
- Therma Luzon, Inc, Philippines
- Mjunction Services Limited - India
- Mercuria Energy - Indonesia
- Bharathi Cement Corporation - India
- Sojitz Corporation - Japan
- Anglo American - United Kingdom
- Coalindo Energy - Indonesia
- European Bulk Services B.V. - Netherlands
- Rashtriya Ispat Nigam Limited - India
- Petron Corporation, Philippines
- Heidelberg Cement - Germany
- White Energy Company Limited
- TNB Fuel Sdn Bhd - Malaysia
- Indika Energy - Indonesia
- ICICI Bank Limited - India
- Energy Link Ltd, New Zealand
- Ministry of Mines - Canada
- Gujarat Electricity Regulatory Commission - India
- Bahari Cakrawala Sebuku - Indonesia
- Aboitiz Power Corporation - Philippines
- ASAPP Information Group - India
- Uttam Galva Steels Limited - India
- McConnell Dowell - Australia
- Standard Chartered Bank - UAE
- Metalloyd Limited - United Kingdom
- Ministry of Finance - Indonesia
- Meenaskhi Energy Private Limited - India
- Dalmia Cement Bharat India
- Orica Australia Pty. Ltd.
- Global Green Power PLC Corporation, Philippines
- Kaltim Prima Coal - Indonesia
- Baramulti Group, Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kumho Petrochemical, South Korea
- Port Waratah Coal Services - Australia
- Ambuja Cements Ltd - India
- GMR Energy Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Economic Council, Georgia
- Bukit Baiduri Energy - Indonesia
- Mercator Lines Limited - India
- Holcim Trading Pte Ltd - Singapore
- Iligan Light & Power Inc, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kalimantan Lumbung Energi - Indonesia
- Ministry of Transport, Egypt
- Bukit Makmur.PT - Indonesia
- Ind-Barath Power Infra Limited - India
- Star Paper Mills Limited - India
- The State Trading Corporation of India Ltd
- MS Steel International - UAE
- Bhushan Steel Limited - India
- Global Business Power Corporation, Philippines
- Parry Sugars Refinery, India
- Minerals Council of Australia
- Billiton Holdings Pty Ltd - Australia
- Price Waterhouse Coopers - Russia
- Sinarmas Energy and Mining - Indonesia
- Romanian Commodities Exchange
- Thai Mozambique Logistica
- Xindia Steels Limited - India
- Simpson Spence & Young - Indonesia
- Kepco SPC Power Corporation, Philippines
- Banpu Public Company Limited - Thailand
- Neyveli Lignite Corporation Ltd, - India
- Eastern Energy - Thailand
- Indian Energy Exchange, India
- Wood Mackenzie - Singapore
- Bukit Asam (Persero) Tbk - Indonesia
- The Treasury - Australian Government
- Toyota Tsusho Corporation, Japan
- PTC India Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Borneo Indobara - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Wilmar Investment Holdings
- Indogreen Group - Indonesia
- Electricity Generating Authority of Thailand
- Coal and Oil Company - UAE
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