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