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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, 16 January 12
BUMA MINED 2.7 MILLION TONS COAL LAST MONTH
COALspot.com - BUMA has mined 2.7 million tons (-14.1% YoY) coal last month and removed 25.8 million bcm (-5.6% YoY) overburden, according to compan ...
Sunday, 15 January 12
THE FREIGHT MARKET CONTINUED TO BLEED - VISTAAR
COALspot.com - "The markets continued to bleed with BDI touching almost 1000 points , almost reaching the collapse of 2008 levels," said C ...
Saturday, 14 January 12
GOLDEN MINES TO SUPPLY 4 MIO TONS - INSIDER STORIES
Insider Stories reported that, Coal miner under Sinarmas Group PT Golden Energy Mines Tbk (GEMS), a subsidiary of PT Dian Swastatika Sentosa Tbk (DS ...
Friday, 13 January 12
DIFFICULT START OF 2012 FOR DRY BULK MARKET SEEN HARD TO CHANGE IN THE COURSE OF THE YEAR, UNLESS DEMOLITION PICKS UP
The dry bulk market has been on a freefall this week after a rocky start to the new year. Yesterday, the BDI (Baltic Dry Index) the industry's benc ...
Thursday, 12 January 12
DRY BULK MARKET CRASHING AT START OF THE YEAR - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market has kept being on freefall mode yesterday, with the industry's benchmark, the BDI (Baltic Dry Index) losing a massive 5.17% on ...
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- Central Electricity Authority - India
- Medco Energi Mining Internasional
- Vedanta Resources Plc - India
- Coalindo Energy - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Posco Energy - South Korea
- Latin American Coal - Colombia
- Chettinad Cement Corporation Ltd - India
- Bukit Makmur.PT - Indonesia
- Kartika Selabumi Mining - Indonesia
- IEA Clean Coal Centre - UK
- Georgia Ports Authority, United States
- Madhucon Powers Ltd - India
- Sindya Power Generating Company Private Ltd
- Bhoruka Overseas - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- AsiaOL BioFuels Corp., Philippines
- Edison Trading Spa - Italy
- Samtan Co., Ltd - South Korea
- Global Business Power Corporation, Philippines
- Karaikal Port Pvt Ltd - India
- London Commodity Brokers - England
- SN Aboitiz Power Inc, Philippines
- Electricity Authority, New Zealand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Commonwealth Bank - Australia
- Riau Bara Harum - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- GN Power Mariveles Coal Plant, Philippines
- Heidelberg Cement - Germany
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Rio Tinto Coal - Australia
- Bangladesh Power Developement Board
- Indo Tambangraya Megah - Indonesia
- Metalloyd Limited - United Kingdom
- ICICI Bank Limited - India
- Thai Mozambique Logistica
- Miang Besar Coal Terminal - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Attock Cement Pakistan Limited
- International Coal Ventures Pvt Ltd - India
- Sree Jayajothi Cements Limited - India
- Global Coal Blending Company Limited - Australia
- Larsen & Toubro Limited - India
- Trasteel International SA, Italy
- Grasim Industreis Ltd - India
- The University of Queensland
- Pendopo Energi Batubara - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Indian Energy Exchange, India
- Mercuria Energy - Indonesia
- Baramulti Group, Indonesia
- Neyveli Lignite Corporation Ltd, - India
- LBH Netherlands Bv - Netherlands
- Singapore Mercantile Exchange
- Billiton Holdings Pty Ltd - Australia
- Mercator Lines Limited - India
- ASAPP Information Group - India
- Bhatia International Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Price Waterhouse Coopers - Russia
- Malabar Cements Ltd - India
- GMR Energy Limited - India
- India Bulls Power Limited - India
- Kepco SPC Power Corporation, Philippines
- Ceylon Electricity Board - Sri Lanka
- Deloitte Consulting - India
- Straits Asia Resources Limited - Singapore
- Xindia Steels Limited - India
- OPG Power Generation Pvt Ltd - India
- Global Green Power PLC Corporation, Philippines
- Ministry of Transport, Egypt
- Jorong Barutama Greston.PT - Indonesia
- Central Java Power - Indonesia
- Sojitz Corporation - Japan
- Indogreen Group - Indonesia
- Merrill Lynch Commodities Europe
- Globalindo Alam Lestari - Indonesia
- Kobexindo Tractors - Indoneisa
- TNB Fuel Sdn Bhd - Malaysia
- Vizag Seaport Private Limited - India
- Indika Energy - Indonesia
- Planning Commission, India
- Essar Steel Hazira Ltd - India
- Ministry of Finance - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Tata Chemicals Ltd - India
- Mintek Dendrill Indonesia
- Indian Oil Corporation Limited
- Binh Thuan Hamico - Vietnam
- Bharathi Cement Corporation - India
- CIMB Investment Bank - Malaysia
- Agrawal Coal Company - India
- Petrochimia International Co. Ltd.- Taiwan
- Aboitiz Power Corporation - Philippines
- Meralco Power Generation, Philippines
- Orica Australia Pty. Ltd.
- Minerals Council of Australia
- Independent Power Producers Association of India
- Asmin Koalindo Tuhup - Indonesia
- Eastern Coal Council - USA
- Jindal Steel & Power Ltd - India
- Thiess Contractors Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Electricity Generating Authority of Thailand
- GAC Shipping (India) Pvt Ltd
- Bulk Trading Sa - Switzerland
- Aditya Birla Group - India
- Manunggal Multi Energi - Indonesia
- Meenaskhi Energy Private Limited - India
- Energy Link Ltd, New Zealand
- PTC India Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bukit Asam (Persero) Tbk - Indonesia
- Australian Commodity Traders Exchange
- Bhushan Steel Limited - India
- The State Trading Corporation of India Ltd
- Directorate Of Revenue Intelligence - India
- South Luzon Thermal Energy Corporation
- Parliament of New Zealand
- Chamber of Mines of South Africa
- Wilmar Investment Holdings
- Leighton Contractors Pty Ltd - Australia
- Siam City Cement - Thailand
- The Treasury - Australian Government
- Parry Sugars Refinery, India
- Sinarmas Energy and Mining - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Antam Resourcindo - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Orica Mining Services - Indonesia
- Cement Manufacturers Association - India
- Power Finance Corporation Ltd., India
- Borneo Indobara - Indonesia
- Carbofer General Trading SA - India
- Petron Corporation, Philippines
- Ministry of Mines - Canada
- Bukit Baiduri Energy - Indonesia
- Barasentosa Lestari - Indonesia
- PNOC Exploration Corporation - Philippines
- Coal and Oil Company - UAE
- Directorate General of MIneral and Coal - Indonesia
- Port Waratah Coal Services - Australia
- GVK Power & Infra Limited - India
- Maheswari Brothers Coal Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Semirara Mining and Power Corporation, Philippines
- Simpson Spence & Young - Indonesia
- SMG Consultants - Indonesia
- Interocean Group of Companies - India
- Indonesian Coal Mining Association
- Savvy Resources Ltd - HongKong
- Uttam Galva Steels Limited - India
- Sakthi Sugars Limited - India
- Marubeni Corporation - India
- Coastal Gujarat Power Limited - India
- Oldendorff Carriers - Singapore
- Salva Resources Pvt Ltd - India
- TeaM Sual Corporation - Philippines
- Altura Mining Limited, Indonesia
- Siam City Cement PLC, Thailand
- Intertek Mineral Services - Indonesia
- White Energy Company Limited
- Anglo American - United Kingdom
- Bayan Resources Tbk. - Indonesia
- Timah Investasi Mineral - Indoneisa
- McConnell Dowell - Australia
- Banpu Public Company Limited - Thailand
- European Bulk Services B.V. - Netherlands
- Gujarat Sidhee Cement - India
- Australian Coal Association
- CNBM International Corporation - China
- Jaiprakash Power Ventures ltd
- New Zealand Coal & Carbon
- Africa Commodities Group - South Africa
- Pipit Mutiara Jaya. PT, Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Romanian Commodities Exchange
- Ambuja Cements Ltd - India
- Standard Chartered Bank - UAE
- Therma Luzon, Inc, Philippines
- Ind-Barath Power Infra Limited - India
- Renaissance Capital - South Africa
- Kumho Petrochemical, South Korea
- Iligan Light & Power Inc, Philippines
- Toyota Tsusho Corporation, Japan
- Tamil Nadu electricity Board
- Makarim & Taira - Indonesia
- Goldman Sachs - Singapore
- Maharashtra Electricity Regulatory Commission - India
- VISA Power Limited - India
- Sical Logistics Limited - India
- Rashtriya Ispat Nigam Limited - India
- PowerSource Philippines DevCo
- Alfred C Toepfer International GmbH - Germany
- Eastern Energy - Thailand
- Semirara Mining Corp, Philippines
- Kideco Jaya Agung - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Formosa Plastics Group - Taiwan
- Dalmia Cement Bharat India
- Lanco Infratech Ltd - India
- Economic Council, Georgia
- MS Steel International - UAE
- IHS Mccloskey Coal Group - USA
- Sarangani Energy Corporation, Philippines
- Star Paper Mills Limited - India
- Energy Development Corp, Philippines
- Kaltim Prima Coal - Indonesia
- Mjunction Services Limited - India
- SMC Global Power, Philippines
- Videocon Industries ltd - India
- San Jose City I Power Corp, Philippines
- Wood Mackenzie - Singapore
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