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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, 03 November 11
DRY BULK MARKET OFFICIALLY IN THE RED ON LOWER CARGO DEMAND - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market kept falling yesterday, on lower iron ore demand, which has caused the industry’s benchmark, the BDI (Baltic Dry Index) to ...
Wednesday, 02 November 11
MMTC TO BUY 3.73 MILLION TONS OF COAL FOR 2011- 2013
COALspot.com - India’s state-owned coal and mineral trader MMTC looking for 3.73 million tons of power plant coal for the period 2011 - 2012/ ...
Wednesday, 02 November 11
PANAMAX MARKET BECAME QUIETER AFTER THE RECENT RECOVERY - BRS
There were substantial losses across the board this week: the BDI lost 6.3% to end at 2,018 and the BCI 8.2% to end 3,274. In the smaller sizes the ...
Tuesday, 01 November 11
BORNEO LUMBUNG BUYS 23.8% INTEREST IN BUMI
COALspot.com - PT. Borneo Lumbung Energi (BORN), an Indonesian coking coal producer announces that it has signed a sale and purchase agreement, cond ...
Tuesday, 01 November 11
BAKRIE FORMS STRATEGIC PARTNERSHIP WITH BORNEO - REDUCING DEBT BY USD 1 BILLION
Press Release - Enhancing the standing of “Indonesia Inc.” at the London Stock Exchange PT Bakrie & Brothers Tbk (“BNBR” ...
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- European Bulk Services B.V. - Netherlands
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Attock Cement Pakistan Limited
- PNOC Exploration Corporation - Philippines
- London Commodity Brokers - England
- Latin American Coal - Colombia
- AsiaOL BioFuels Corp., Philippines
- Maharashtra Electricity Regulatory Commission - India
- Wood Mackenzie - Singapore
- Meralco Power Generation, Philippines
- Aditya Birla Group - India
- Jindal Steel & Power Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Minerals Council of Australia
- Chettinad Cement Corporation Ltd - India
- Ministry of Transport, Egypt
- Orica Mining Services - Indonesia
- Indogreen Group - Indonesia
- Economic Council, Georgia
- Bulk Trading Sa - Switzerland
- Maheswari Brothers Coal Limited - India
- Orica Australia Pty. Ltd.
- Antam Resourcindo - Indonesia
- Parliament of New Zealand
- Independent Power Producers Association of India
- Coal and Oil Company - UAE
- Energy Link Ltd, New Zealand
- Madhucon Powers Ltd - India
- Heidelberg Cement - Germany
- Eastern Coal Council - USA
- Global Business Power Corporation, Philippines
- Ministry of Finance - Indonesia
- Savvy Resources Ltd - HongKong
- Sindya Power Generating Company Private Ltd
- Ambuja Cements Ltd - India
- International Coal Ventures Pvt Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Goldman Sachs - Singapore
- Billiton Holdings Pty Ltd - Australia
- Bhoruka Overseas - Indonesia
- Eastern Energy - Thailand
- ASAPP Information Group - India
- Simpson Spence & Young - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Meenaskhi Energy Private Limited - India
- Australian Coal Association
- OPG Power Generation Pvt Ltd - India
- Baramulti Group, Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Toyota Tsusho Corporation, Japan
- Essar Steel Hazira Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Indian Energy Exchange, India
- ICICI Bank Limited - India
- Mjunction Services Limited - India
- Kideco Jaya Agung - Indonesia
- Timah Investasi Mineral - Indoneisa
- Rio Tinto Coal - Australia
- GN Power Mariveles Coal Plant, Philippines
- Kepco SPC Power Corporation, Philippines
- Larsen & Toubro Limited - India
- Oldendorff Carriers - Singapore
- Sojitz Corporation - Japan
- SMC Global Power, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- PetroVietnam Power Coal Import and Supply Company
- Mercuria Energy - Indonesia
- Kobexindo Tractors - Indoneisa
- Electricity Authority, New Zealand
- Australian Commodity Traders Exchange
- Merrill Lynch Commodities Europe
- India Bulls Power Limited - India
- New Zealand Coal & Carbon
- Commonwealth Bank - Australia
- SMG Consultants - Indonesia
- Malabar Cements Ltd - India
- McConnell Dowell - Australia
- Leighton Contractors Pty Ltd - Australia
- Thai Mozambique Logistica
- Intertek Mineral Services - Indonesia
- Ind-Barath Power Infra Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- The State Trading Corporation of India Ltd
- Ministry of Mines - Canada
- VISA Power Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bukit Makmur.PT - Indonesia
- Edison Trading Spa - Italy
- Kumho Petrochemical, South Korea
- Mercator Lines Limited - India
- Karaikal Port Pvt Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Borneo Indobara - Indonesia
- The Treasury - Australian Government
- GMR Energy Limited - India
- Vedanta Resources Plc - India
- SN Aboitiz Power Inc, Philippines
- Standard Chartered Bank - UAE
- Star Paper Mills Limited - India
- GAC Shipping (India) Pvt Ltd
- Georgia Ports Authority, United States
- Thiess Contractors Indonesia
- Metalloyd Limited - United Kingdom
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Global Green Power PLC Corporation, Philippines
- Anglo American - United Kingdom
- Africa Commodities Group - South Africa
- Planning Commission, India
- Riau Bara Harum - Indonesia
- Singapore Mercantile Exchange
- Price Waterhouse Coopers - Russia
- Agrawal Coal Company - India
- Directorate General of MIneral and Coal - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Uttam Galva Steels Limited - India
- Cement Manufacturers Association - India
- Sinarmas Energy and Mining - Indonesia
- IHS Mccloskey Coal Group - USA
- Kaltim Prima Coal - Indonesia
- Central Java Power - Indonesia
- Globalindo Alam Lestari - Indonesia
- Global Coal Blending Company Limited - Australia
- Kartika Selabumi Mining - Indonesia
- Coastal Gujarat Power Limited - India
- Grasim Industreis Ltd - India
- Jaiprakash Power Ventures ltd
- Energy Development Corp, Philippines
- PowerSource Philippines DevCo
- Bharathi Cement Corporation - India
- Krishnapatnam Port Company Ltd. - India
- Parry Sugars Refinery, India
- Alfred C Toepfer International GmbH - Germany
- Aboitiz Power Corporation - Philippines
- Petron Corporation, Philippines
- Iligan Light & Power Inc, Philippines
- Directorate Of Revenue Intelligence - India
- Medco Energi Mining Internasional
- MS Steel International - UAE
- The University of Queensland
- Power Finance Corporation Ltd., India
- Bangladesh Power Developement Board
- Lanco Infratech Ltd - India
- Coalindo Energy - Indonesia
- Formosa Plastics Group - Taiwan
- Barasentosa Lestari - Indonesia
- LBH Netherlands Bv - Netherlands
- Rashtriya Ispat Nigam Limited - India
- San Jose City I Power Corp, Philippines
- Siam City Cement - Thailand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bank of Tokyo Mitsubishi UFJ Ltd
- GVK Power & Infra Limited - India
- Central Electricity Authority - India
- Siam City Cement PLC, Thailand
- Vijayanagar Sugar Pvt Ltd - India
- White Energy Company Limited
- Vizag Seaport Private Limited - India
- Dalmia Cement Bharat India
- Bukit Asam (Persero) Tbk - Indonesia
- Chamber of Mines of South Africa
- Bahari Cakrawala Sebuku - Indonesia
- Carbofer General Trading SA - India
- Videocon Industries ltd - India
- Renaissance Capital - South Africa
- Miang Besar Coal Terminal - Indonesia
- Banpu Public Company Limited - Thailand
- Semirara Mining and Power Corporation, Philippines
- Cigading International Bulk Terminal - Indonesia
- IEA Clean Coal Centre - UK
- Bhushan Steel Limited - India
- Indika Energy - Indonesia
- Altura Mining Limited, Indonesia
- Indonesian Coal Mining Association
- Xindia Steels Limited - India
- Tata Chemicals Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Sical Logistics Limited - India
- TeaM Sual Corporation - Philippines
- Marubeni Corporation - India
- CIMB Investment Bank - Malaysia
- Trasteel International SA, Italy
- Interocean Group of Companies - India
- Romanian Commodities Exchange
- Bukit Baiduri Energy - Indonesia
- Semirara Mining Corp, Philippines
- Wilmar Investment Holdings
- Sarangani Energy Corporation, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Posco Energy - South Korea
- Manunggal Multi Energi - Indonesia
- Sree Jayajothi Cements Limited - India
- Therma Luzon, Inc, Philippines
- Port Waratah Coal Services - Australia
- Indo Tambangraya Megah - Indonesia
- Makarim & Taira - Indonesia
- Pendopo Energi Batubara - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Bayan Resources Tbk. - Indonesia
- Binh Thuan Hamico - Vietnam
- PTC India Limited - India
- Gujarat Sidhee Cement - India
- Electricity Generating Authority of Thailand
- Samtan Co., Ltd - South Korea
- CNBM International Corporation - China
- Mintek Dendrill Indonesia
- Salva Resources Pvt Ltd - India
- Tamil Nadu electricity Board
- Sakthi Sugars Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Gujarat Electricity Regulatory Commission - India
- Indian Oil Corporation Limited
- Straits Asia Resources Limited - Singapore
- Deloitte Consulting - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bhatia International Limited - India
- South Luzon Thermal Energy Corporation
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