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