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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, 19 December 11
PLN WILL NO LONGER BUY COAL FROM TRADERS
COALspot.com - Indonesia's state electricity company PT Perusahaan Listrik Negara will no longer allow traders to become their suppliers, said, its ...
Saturday, 17 December 11
THE FREIGHT MARKET SEEMS TO HAVE ALMOST BOTTOMED OUT AND MAY REMAIN STEADY AT THESE LEVELS CAPT REDDY
COALspot.com - The BDI and Cape index closed lower this week with BDI closing at 1,888 points (down by 1.76 pct) and Cape index at 3,572 points (dow ...
Friday, 16 December 11
DRY BULK MARKET LOSES TRACK ON CAPESIZE LOSSES, SHIP FINANCING REMAINS TROUBLESOME - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market didn’t manage to sustain earlier gains, losing track yesterday, on reduced Capesize demand and persisting troubles in smal ...
Thursday, 15 December 11
BERAU SEES INDIA AS POTENTIAL MARKET FOR LOW-CALORIE COAL - THE JAKARTA POST
The Jakarta Post reported that, Publicly listed coal mining company PT Berau Coal Energy (BRAU), the fifth largest coal producer in Indonesia, sees ...
Thursday, 15 December 11
PANAMAX HARDLY AFFECTED BY THE RECENT FIRMER TENDENCY FOR THE BIG SISTERS - FEARNBULK
Handy
The rates are more or less the same as last week. Continent/US Gulf fixing at tick below USD 10k and Gulf/Continent levels at USD 25k. Trips ...
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- IHS Mccloskey Coal Group - USA
- Sindya Power Generating Company Private Ltd
- Ministry of Finance - Indonesia
- Sojitz Corporation - Japan
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Larsen & Toubro Limited - India
- Price Waterhouse Coopers - Russia
- Bukit Asam (Persero) Tbk - Indonesia
- Directorate Of Revenue Intelligence - India
- VISA Power Limited - India
- Intertek Mineral Services - Indonesia
- Meralco Power Generation, Philippines
- Eastern Energy - Thailand
- Kartika Selabumi Mining - Indonesia
- Indo Tambangraya Megah - Indonesia
- Mercuria Energy - Indonesia
- Timah Investasi Mineral - Indoneisa
- PetroVietnam Power Coal Import and Supply Company
- Neyveli Lignite Corporation Ltd, - India
- Iligan Light & Power Inc, Philippines
- Africa Commodities Group - South Africa
- Maharashtra Electricity Regulatory Commission - India
- Bangladesh Power Developement Board
- TNB Fuel Sdn Bhd - Malaysia
- Bukit Makmur.PT - Indonesia
- White Energy Company Limited
- Sinarmas Energy and Mining - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Georgia Ports Authority, United States
- CIMB Investment Bank - Malaysia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Bukit Baiduri Energy - Indonesia
- GAC Shipping (India) Pvt Ltd
- Energy Development Corp, Philippines
- SMG Consultants - Indonesia
- Malabar Cements Ltd - India
- Goldman Sachs - Singapore
- International Coal Ventures Pvt Ltd - India
- Wilmar Investment Holdings
- Indogreen Group - Indonesia
- Therma Luzon, Inc, Philippines
- Siam City Cement PLC, Thailand
- The State Trading Corporation of India Ltd
- Orica Australia Pty. Ltd.
- Gujarat Sidhee Cement - India
- Economic Council, Georgia
- Australian Commodity Traders Exchange
- Sarangani Energy Corporation, Philippines
- Ministry of Transport, Egypt
- ASAPP Information Group - India
- Antam Resourcindo - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Parliament of New Zealand
- Electricity Generating Authority of Thailand
- Heidelberg Cement - Germany
- Xindia Steels Limited - India
- Ambuja Cements Ltd - India
- Coastal Gujarat Power Limited - India
- Krishnapatnam Port Company Ltd. - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- South Luzon Thermal Energy Corporation
- Singapore Mercantile Exchange
- GVK Power & Infra Limited - India
- Posco Energy - South Korea
- McConnell Dowell - Australia
- CNBM International Corporation - China
- Baramulti Group, Indonesia
- Indika Energy - Indonesia
- Kumho Petrochemical, South Korea
- Uttam Galva Steels Limited - India
- Madhucon Powers Ltd - India
- Jindal Steel & Power Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- SN Aboitiz Power Inc, Philippines
- Electricity Authority, New Zealand
- Orica Mining Services - Indonesia
- Energy Link Ltd, New Zealand
- Siam City Cement - Thailand
- Bank of Tokyo Mitsubishi UFJ Ltd
- Vedanta Resources Plc - India
- PTC India Limited - India
- Kapuas Tunggal Persada - Indonesia
- Indian Energy Exchange, India
- Toyota Tsusho Corporation, Japan
- SMC Global Power, Philippines
- Bhushan Steel Limited - India
- Alfred C Toepfer International GmbH - Germany
- Bharathi Cement Corporation - India
- Aboitiz Power Corporation - Philippines
- Samtan Co., Ltd - South Korea
- India Bulls Power Limited - India
- San Jose City I Power Corp, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bhoruka Overseas - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Cement Manufacturers Association - India
- Chettinad Cement Corporation Ltd - India
- Formosa Plastics Group - Taiwan
- Eastern Coal Council - USA
- Marubeni Corporation - India
- Grasim Industreis Ltd - India
- Ind-Barath Power Infra Limited - India
- Leighton Contractors Pty Ltd - Australia
- Tata Chemicals Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Agrawal Coal Company - India
- The Treasury - Australian Government
- Bahari Cakrawala Sebuku - Indonesia
- PNOC Exploration Corporation - Philippines
- LBH Netherlands Bv - Netherlands
- Savvy Resources Ltd - HongKong
- Meenaskhi Energy Private Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Lanco Infratech Ltd - India
- MS Steel International - UAE
- Interocean Group of Companies - India
- Australian Coal Association
- Merrill Lynch Commodities Europe
- Kideco Jaya Agung - Indonesia
- Trasteel International SA, Italy
- Altura Mining Limited, Indonesia
- Global Coal Blending Company Limited - Australia
- Power Finance Corporation Ltd., India
- Standard Chartered Bank - UAE
- Billiton Holdings Pty Ltd - Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Simpson Spence & Young - Indonesia
- Straits Asia Resources Limited - Singapore
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Indonesian Coal Mining Association
- Ministry of Mines - Canada
- ICICI Bank Limited - India
- Mjunction Services Limited - India
- Jaiprakash Power Ventures ltd
- Sakthi Sugars Limited - India
- Aditya Birla Group - India
- Globalindo Alam Lestari - Indonesia
- Oldendorff Carriers - Singapore
- Tamil Nadu electricity Board
- Anglo American - United Kingdom
- Bulk Trading Sa - Switzerland
- Kaltim Prima Coal - Indonesia
- GMR Energy Limited - India
- Coalindo Energy - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Vizag Seaport Private Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Gujarat Electricity Regulatory Commission - India
- Independent Power Producers Association of India
- Makarim & Taira - Indonesia
- Thiess Contractors Indonesia
- Rio Tinto Coal - Australia
- TeaM Sual Corporation - Philippines
- New Zealand Coal & Carbon
- IEA Clean Coal Centre - UK
- Metalloyd Limited - United Kingdom
- Semirara Mining Corp, Philippines
- Global Business Power Corporation, Philippines
- Manunggal Multi Energi - Indonesia
- Edison Trading Spa - Italy
- Bayan Resources Tbk. - Indonesia
- Maheswari Brothers Coal Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Salva Resources Pvt Ltd - India
- Minerals Council of Australia
- Central Java Power - Indonesia
- Chamber of Mines of South Africa
- Videocon Industries ltd - India
- Medco Energi Mining Internasional
- OPG Power Generation Pvt Ltd - India
- Renaissance Capital - South Africa
- Dalmia Cement Bharat India
- Karaikal Port Pvt Ltd - India
- European Bulk Services B.V. - Netherlands
- Attock Cement Pakistan Limited
- Kobexindo Tractors - Indoneisa
- Riau Bara Harum - Indonesia
- Star Paper Mills Limited - India
- Planning Commission, India
- Central Electricity Authority - India
- Romanian Commodities Exchange
- Banpu Public Company Limited - Thailand
- Essar Steel Hazira Ltd - India
- Barasentosa Lestari - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Carbofer General Trading SA - India
- Latin American Coal - Colombia
- Mintek Dendrill Indonesia
- Deloitte Consulting - India
- Port Waratah Coal Services - Australia
- Commonwealth Bank - Australia
- Mercator Lines Limited - India
- London Commodity Brokers - England
- The University of Queensland
- Gujarat Mineral Development Corp Ltd - India
- Bhatia International Limited - India
- Kepco SPC Power Corporation, Philippines
- Sical Logistics Limited - India
- Binh Thuan Hamico - Vietnam
- PowerSource Philippines DevCo
- Wood Mackenzie - Singapore
- Parry Sugars Refinery, India
- Sree Jayajothi Cements Limited - India
- Global Green Power PLC Corporation, Philippines
- Holcim Trading Pte Ltd - Singapore
- Borneo Indobara - Indonesia
- Coal and Oil Company - UAE
- AsiaOL BioFuels Corp., Philippines
- Pendopo Energi Batubara - Indonesia
- Petron Corporation, Philippines
- Thai Mozambique Logistica
- Indian Oil Corporation Limited
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