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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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Saturday, 26 November 11
THE FREIGHT MARKETS EXPECTED TO BE STEADY NEXT WEEK - VISTAAR
COALspot.com - The market were down probably with the sentiments of global financial markets and all segments were down.
The BDI was up down by 4 ...
Friday, 25 November 11
DISPUTE BETWEEN GIANT MINING FIRMS ENDS IN LAHAT - THE JAKARTA POST
The Jakarta Post reported that, prolonged dispute taking place in the South Sumatra regency of Lahat and involving two giant mining companies PT Buk ...
Friday, 25 November 11
DRY BULK MARKET LOSING STEAM, FAST - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
It’s been a week of falls for the dry bulk market this one, leaving ship owners with a sour taste in their mouths, as evidence of a recovery i ...
Thursday, 24 November 11
INDONESIA/INDIA SPMX TC AROUND $ 7/8K AND AROUND $ 12/13.00 PMTS ON VOYAGE BASIS - FEARNLEYS
Handy
Last week ended on a positive note in the Atlantic however the activity levels are somewhat reduced. Owners are asking in excess of USD ...
Thursday, 24 November 11
DRY BULK MARKET KEEPS LOSING STEAM - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market was lower once again on Wednesday, with the industry’s benchmark, the Baltic Dry Index (BDI) ending the session down by 1. ...
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- Dalmia Cement Bharat India
- Samtan Co., Ltd - South Korea
- Standard Chartered Bank - UAE
- Electricity Generating Authority of Thailand
- Mintek Dendrill Indonesia
- Indo Tambangraya Megah - Indonesia
- Sakthi Sugars Limited - India
- Ministry of Mines - Canada
- Orica Mining Services - Indonesia
- Coalindo Energy - Indonesia
- CIMB Investment Bank - Malaysia
- Power Finance Corporation Ltd., India
- Posco Energy - South Korea
- Renaissance Capital - South Africa
- Intertek Mineral Services - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Electricity Authority, New Zealand
- Leighton Contractors Pty Ltd - Australia
- Vizag Seaport Private Limited - India
- Jindal Steel & Power Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Straits Asia Resources Limited - Singapore
- Thiess Contractors Indonesia
- Manunggal Multi Energi - Indonesia
- Wilmar Investment Holdings
- Maheswari Brothers Coal Limited - India
- Ministry of Finance - Indonesia
- CNBM International Corporation - China
- Jaiprakash Power Ventures ltd
- Oldendorff Carriers - Singapore
- Neyveli Lignite Corporation Ltd, - India
- Malabar Cements Ltd - India
- Grasim Industreis Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Singapore Mercantile Exchange
- Siam City Cement PLC, Thailand
- Chamber of Mines of South Africa
- PowerSource Philippines DevCo
- Karaikal Port Pvt Ltd - India
- Baramulti Group, Indonesia
- International Coal Ventures Pvt Ltd - India
- Goldman Sachs - Singapore
- Sojitz Corporation - Japan
- White Energy Company Limited
- IHS Mccloskey Coal Group - USA
- New Zealand Coal & Carbon
- TeaM Sual Corporation - Philippines
- Ceylon Electricity Board - Sri Lanka
- Meenaskhi Energy Private Limited - India
- European Bulk Services B.V. - Netherlands
- Offshore Bulk Terminal Pte Ltd, Singapore
- Asmin Koalindo Tuhup - Indonesia
- India Bulls Power Limited - India
- Georgia Ports Authority, United States
- Kaltim Prima Coal - Indonesia
- LBH Netherlands Bv - Netherlands
- Kepco SPC Power Corporation, Philippines
- Parliament of New Zealand
- Indonesian Coal Mining Association
- PetroVietnam Power Coal Import and Supply Company
- Australian Coal Association
- Ministry of Transport, Egypt
- Uttam Galva Steels Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Mercuria Energy - Indonesia
- Eastern Energy - Thailand
- Makarim & Taira - Indonesia
- Agrawal Coal Company - India
- Carbofer General Trading SA - India
- Sical Logistics Limited - India
- Bhoruka Overseas - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- VISA Power Limited - India
- Kartika Selabumi Mining - Indonesia
- Vedanta Resources Plc - India
- Semirara Mining and Power Corporation, Philippines
- Independent Power Producers Association of India
- The State Trading Corporation of India Ltd
- Tata Chemicals Ltd - India
- Tamil Nadu electricity Board
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Ambuja Cements Ltd - India
- Coal and Oil Company - UAE
- Central Java Power - Indonesia
- South Luzon Thermal Energy Corporation
- Ind-Barath Power Infra Limited - India
- Semirara Mining Corp, Philippines
- Parry Sugars Refinery, India
- MS Steel International - UAE
- Trasteel International SA, Italy
- Indian Oil Corporation Limited
- Essar Steel Hazira Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Africa Commodities Group - South Africa
- Coastal Gujarat Power Limited - India
- Bukit Makmur.PT - Indonesia
- Aboitiz Power Corporation - Philippines
- Gujarat Electricity Regulatory Commission - India
- Directorate Of Revenue Intelligence - India
- Star Paper Mills Limited - India
- Sarangani Energy Corporation, Philippines
- Barasentosa Lestari - Indonesia
- ASAPP Information Group - India
- Minerals Council of Australia
- Medco Energi Mining Internasional
- Global Green Power PLC Corporation, Philippines
- Alfred C Toepfer International GmbH - Germany
- Energy Link Ltd, New Zealand
- Thai Mozambique Logistica
- Interocean Group of Companies - India
- The Treasury - Australian Government
- Banpu Public Company Limited - Thailand
- Borneo Indobara - Indonesia
- Altura Mining Limited, Indonesia
- Orica Australia Pty. Ltd.
- IEA Clean Coal Centre - UK
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Lanco Infratech Ltd - India
- Edison Trading Spa - Italy
- Timah Investasi Mineral - Indoneisa
- Commonwealth Bank - Australia
- Deloitte Consulting - India
- Kalimantan Lumbung Energi - Indonesia
- Rio Tinto Coal - Australia
- Indika Energy - Indonesia
- Central Electricity Authority - India
- Kumho Petrochemical, South Korea
- AsiaOL BioFuels Corp., Philippines
- San Jose City I Power Corp, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Xindia Steels Limited - India
- Sindya Power Generating Company Private Ltd
- Pendopo Energi Batubara - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Rashtriya Ispat Nigam Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Binh Thuan Hamico - Vietnam
- Jorong Barutama Greston.PT - Indonesia
- Toyota Tsusho Corporation, Japan
- Marubeni Corporation - India
- Karbindo Abesyapradhi - Indoneisa
- Bangladesh Power Developement Board
- Cigading International Bulk Terminal - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Antam Resourcindo - Indonesia
- London Commodity Brokers - England
- Iligan Light & Power Inc, Philippines
- Bhushan Steel Limited - India
- Port Waratah Coal Services - Australia
- Formosa Plastics Group - Taiwan
- Salva Resources Pvt Ltd - India
- Metalloyd Limited - United Kingdom
- Sinarmas Energy and Mining - Indonesia
- Bulk Trading Sa - Switzerland
- ICICI Bank Limited - India
- GAC Shipping (India) Pvt Ltd
- SMC Global Power, Philippines
- SMG Consultants - Indonesia
- Eastern Coal Council - USA
- Bhatia International Limited - India
- Bharathi Cement Corporation - India
- McConnell Dowell - Australia
- Madhucon Powers Ltd - India
- PNOC Exploration Corporation - Philippines
- Attock Cement Pakistan Limited
- Indian Energy Exchange, India
- Kideco Jaya Agung - Indonesia
- Simpson Spence & Young - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Economic Council, Georgia
- Globalindo Alam Lestari - Indonesia
- Riau Bara Harum - Indonesia
- Cement Manufacturers Association - India
- Merrill Lynch Commodities Europe
- Larsen & Toubro Limited - India
- Holcim Trading Pte Ltd - Singapore
- GVK Power & Infra Limited - India
- Petron Corporation, Philippines
- Bayan Resources Tbk. - Indonesia
- OPG Power Generation Pvt Ltd - India
- Sree Jayajothi Cements Limited - India
- Kapuas Tunggal Persada - Indonesia
- SN Aboitiz Power Inc, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Australian Commodity Traders Exchange
- Miang Besar Coal Terminal - Indonesia
- Indogreen Group - Indonesia
- Wood Mackenzie - Singapore
- Heidelberg Cement - Germany
- Bank of Tokyo Mitsubishi UFJ Ltd
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- PTC India Limited - India
- Videocon Industries ltd - India
- The University of Queensland
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Romanian Commodities Exchange
- Aditya Birla Group - India
- Anglo American - United Kingdom
- Mjunction Services Limited - India
- Savvy Resources Ltd - HongKong
- GN Power Mariveles Coal Plant, Philippines
- Gujarat Sidhee Cement - India
- Latin American Coal - Colombia
- Energy Development Corp, Philippines
- Mercator Lines Limited - India
- Planning Commission, India
- Global Business Power Corporation, Philippines
- Global Coal Blending Company Limited - Australia
- Price Waterhouse Coopers - Russia
- Kobexindo Tractors - Indoneisa
- Chettinad Cement Corporation Ltd - India
- GMR Energy Limited - India
- Bukit Baiduri Energy - Indonesia
- Siam City Cement - Thailand
- Therma Luzon, Inc, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Meralco Power Generation, Philippines
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