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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, 05 January 12
DRY BULK MARKET TAKES A PLUNGE OF LOW ACTIVITY - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
As was widely expected the first days of the new year are characterized by significantly low chartering across the board of the dry bulk market, pus ...
Wednesday, 04 January 12
NEWBUILDING ORDERS PICKED UP IN 2011, BUT 2012 EXPECTED TO BE A DIFFERENT STORY - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
With the BDI (Baltic Dry Index) starting the year on a sour note, losing 114 points and ending yesterday’s session, the first of the new year, ...
Wednesday, 04 January 12
MAHAGENCO TO IMPORT LOW MOISTURE COAL
COALspot.com - Maharashtra State Power Generation Co. Ltd. is the state power generation utility owned by Government of Maharashtra, intends to proc ...
Tuesday, 03 January 12
INDONESIA COAL REFERENCE PRICE FELL AGAIN
COALspot.com - Ministry of Energy and Mineral Resources of Indonesia has sets the January 2012 coal reference price at US$ 109.29 per ton or US$ 3.3 ...
Tuesday, 03 January 12
WHICH WAY WILL THE DRY BULK MARKET HEAD ON FIRST WEEK OF THE YEAR? - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
Dry bulk ship owners will be wondering which way will the BDI (Baltic Dry Index), the industry’s benchmark, will head during the first days of ...
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- Global Business Power Corporation, Philippines
- Directorate Of Revenue Intelligence - India
- Toyota Tsusho Corporation, Japan
- Singapore Mercantile Exchange
- Borneo Indobara - Indonesia
- Meralco Power Generation, Philippines
- Makarim & Taira - Indonesia
- Alfred C Toepfer International GmbH - Germany
- McConnell Dowell - Australia
- Rio Tinto Coal - Australia
- Vizag Seaport Private Limited - India
- PowerSource Philippines DevCo
- San Jose City I Power Corp, Philippines
- Indonesian Coal Mining Association
- Coastal Gujarat Power Limited - India
- Semirara Mining Corp, Philippines
- IEA Clean Coal Centre - UK
- Samtan Co., Ltd - South Korea
- Aboitiz Power Corporation - Philippines
- London Commodity Brokers - England
- Bhatia International Limited - India
- Global Coal Blending Company Limited - Australia
- Australian Commodity Traders Exchange
- Edison Trading Spa - Italy
- GVK Power & Infra Limited - India
- Anglo American - United Kingdom
- Vijayanagar Sugar Pvt Ltd - India
- Sree Jayajothi Cements Limited - India
- White Energy Company Limited
- Mercuria Energy - Indonesia
- Globalindo Alam Lestari - Indonesia
- Kumho Petrochemical, South Korea
- Timah Investasi Mineral - Indoneisa
- Dalmia Cement Bharat India
- Manunggal Multi Energi - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Merrill Lynch Commodities Europe
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- IHS Mccloskey Coal Group - USA
- Semirara Mining and Power Corporation, Philippines
- Meenaskhi Energy Private Limited - India
- Bayan Resources Tbk. - Indonesia
- Xindia Steels Limited - India
- Heidelberg Cement - Germany
- Bukit Baiduri Energy - Indonesia
- Indika Energy - Indonesia
- Bukit Makmur.PT - Indonesia
- Binh Thuan Hamico - Vietnam
- Straits Asia Resources Limited - Singapore
- Sakthi Sugars Limited - India
- Africa Commodities Group - South Africa
- GN Power Mariveles Coal Plant, Philippines
- Gujarat Sidhee Cement - India
- Bangladesh Power Developement Board
- Baramulti Group, Indonesia
- Rashtriya Ispat Nigam Limited - India
- New Zealand Coal & Carbon
- Goldman Sachs - Singapore
- South Luzon Thermal Energy Corporation
- TeaM Sual Corporation - Philippines
- GAC Shipping (India) Pvt Ltd
- Essar Steel Hazira Ltd - India
- Carbofer General Trading SA - India
- The State Trading Corporation of India Ltd
- PNOC Exploration Corporation - Philippines
- Videocon Industries ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Cement Manufacturers Association - India
- Kobexindo Tractors - Indoneisa
- Petrochimia International Co. Ltd.- Taiwan
- Indian Oil Corporation Limited
- Ceylon Electricity Board - Sri Lanka
- Attock Cement Pakistan Limited
- Grasim Industreis Ltd - India
- Formosa Plastics Group - Taiwan
- Leighton Contractors Pty Ltd - Australia
- Antam Resourcindo - Indonesia
- Coal and Oil Company - UAE
- Chamber of Mines of South Africa
- Uttam Galva Steels Limited - India
- Indo Tambangraya Megah - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Oldendorff Carriers - Singapore
- Riau Bara Harum - Indonesia
- Sical Logistics Limited - India
- Latin American Coal - Colombia
- Aditya Birla Group - India
- Ministry of Mines - Canada
- Thai Mozambique Logistica
- VISA Power Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Lanco Infratech Ltd - India
- Mintek Dendrill Indonesia
- Madhucon Powers Ltd - India
- Miang Besar Coal Terminal - Indonesia
- CNBM International Corporation - China
- Australian Coal Association
- Ministry of Finance - Indonesia
- Electricity Generating Authority of Thailand
- Pendopo Energi Batubara - Indonesia
- Central Electricity Authority - India
- Global Green Power PLC Corporation, Philippines
- Medco Energi Mining Internasional
- Sinarmas Energy and Mining - Indonesia
- Parliament of New Zealand
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bhoruka Overseas - Indonesia
- Ind-Barath Power Infra Limited - India
- Siam City Cement PLC, Thailand
- PetroVietnam Power Coal Import and Supply Company
- Planning Commission, India
- Mercator Lines Limited - India
- European Bulk Services B.V. - Netherlands
- Offshore Bulk Terminal Pte Ltd, Singapore
- Karbindo Abesyapradhi - Indoneisa
- Altura Mining Limited, Indonesia
- Romanian Commodities Exchange
- Malabar Cements Ltd - India
- Energy Link Ltd, New Zealand
- Star Paper Mills Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Central Java Power - Indonesia
- Maheswari Brothers Coal Limited - India
- Mjunction Services Limited - India
- Kartika Selabumi Mining - Indonesia
- Commonwealth Bank - Australia
- Jindal Steel & Power Ltd - India
- Wood Mackenzie - Singapore
- Thiess Contractors Indonesia
- Larsen & Toubro Limited - India
- CIMB Investment Bank - Malaysia
- Kaltim Prima Coal - Indonesia
- GMR Energy Limited - India
- AsiaOL BioFuels Corp., Philippines
- Ministry of Transport, Egypt
- Petron Corporation, Philippines
- Georgia Ports Authority, United States
- Salva Resources Pvt Ltd - India
- Power Finance Corporation Ltd., India
- Marubeni Corporation - India
- Orica Mining Services - Indonesia
- ASAPP Information Group - India
- Trasteel International SA, Italy
- Bukit Asam (Persero) Tbk - Indonesia
- Vedanta Resources Plc - India
- Bahari Cakrawala Sebuku - Indonesia
- Iligan Light & Power Inc, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Sindya Power Generating Company Private Ltd
- Bharathi Cement Corporation - India
- Electricity Authority, New Zealand
- Directorate General of MIneral and Coal - Indonesia
- Deloitte Consulting - India
- SMC Global Power, Philippines
- Intertek Mineral Services - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Maharashtra Electricity Regulatory Commission - India
- ICICI Bank Limited - India
- Minerals Council of Australia
- International Coal Ventures Pvt Ltd - India
- Parry Sugars Refinery, India
- Eastern Coal Council - USA
- PTC India Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Jaiprakash Power Ventures ltd
- Simpson Spence & Young - Indonesia
- MS Steel International - UAE
- Asmin Koalindo Tuhup - Indonesia
- Therma Luzon, Inc, Philippines
- Economic Council, Georgia
- Krishnapatnam Port Company Ltd. - India
- Barasentosa Lestari - Indonesia
- Indian Energy Exchange, India
- Sarangani Energy Corporation, Philippines
- Kepco SPC Power Corporation, Philippines
- Wilmar Investment Holdings
- LBH Netherlands Bv - Netherlands
- Gujarat Mineral Development Corp Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Standard Chartered Bank - UAE
- SN Aboitiz Power Inc, Philippines
- India Bulls Power Limited - India
- Energy Development Corp, Philippines
- Coalindo Energy - Indonesia
- SMG Consultants - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Tamil Nadu electricity Board
- Savvy Resources Ltd - HongKong
- Sojitz Corporation - Japan
- The University of Queensland
- Orica Australia Pty. Ltd.
- Eastern Energy - Thailand
- Indogreen Group - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Renaissance Capital - South Africa
- Agrawal Coal Company - India
- Cigading International Bulk Terminal - Indonesia
- Tata Chemicals Ltd - India
- Price Waterhouse Coopers - Russia
- Ambuja Cements Ltd - India
- Posco Energy - South Korea
- Holcim Trading Pte Ltd - Singapore
- Port Waratah Coal Services - Australia
- Metalloyd Limited - United Kingdom
- Banpu Public Company Limited - Thailand
- Bulk Trading Sa - Switzerland
- TNB Fuel Sdn Bhd - Malaysia
- The Treasury - Australian Government
- Interocean Group of Companies - India
- Chettinad Cement Corporation Ltd - India
- OPG Power Generation Pvt Ltd - India
- Kideco Jaya Agung - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Siam City Cement - Thailand
- Independent Power Producers Association of India
- Karaikal Port Pvt Ltd - India
- Bhushan Steel Limited - India
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