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