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