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