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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, 24 October 11
CAPESIZE RENTAL RATES RISE FOR THIRD DAY AS MORE SHIPS HIRED - HELLENIC SHIPPING
Rates to hire capesize vessels advanced for a third day on signs of increased demand to transport iron ore, used to make steel.Daily rates for the s ...
Sunday, 23 October 11
CHINA LOOKING TO RESELL INDONESIAN COAL CARGOES - BARCLAYS
Commodity Online reported that, Anecdotal evidence has suggested that China is even looking to resell Indonesian cargoes back into the seaborne coal ...
Saturday, 22 October 11
THE SHORT-PERIOD RATES FOR PANAMAX REMAINED FIRM - CAPT. REDDY
COALspot.com - "The market seemed to slow down a bit this week, and all sectors were down by about One to five percent", said Capt. Reddy, ...
Saturday, 22 October 11
WILL THE PROPOSED 26 PERCENT PROFIT SHARING CLAUSE IN THE MINING BILL SPEED UP THE PRODUCTION OR SCARE AWAY INVESTORS? - DIPESH DIPU
A draft law has been approved by a ministerial panel headed by Finance Minister Pranab Mukherjee of India which, if passed by the Cabinet, will make ...
Saturday, 22 October 11
INDONESIA'S GOLDEN ENERGY SLASHES ITS IPO PRICE - THE JAKARTA GLOBE
The Jakarta Globe reported that, Golden Energy Mines, a coal mining company affiliated with Sinar Mas Group, lowered its target in an initial public ...
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- Wilmar Investment Holdings
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- The University of Queensland
- Bangladesh Power Developement Board
- Asmin Koalindo Tuhup - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Goldman Sachs - Singapore
- London Commodity Brokers - England
- CIMB Investment Bank - Malaysia
- Borneo Indobara - Indonesia
- Central Java Power - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Bahari Cakrawala Sebuku - Indonesia
- Bhushan Steel Limited - India
- Oldendorff Carriers - Singapore
- SN Aboitiz Power Inc, Philippines
- Eastern Energy - Thailand
- Electricity Generating Authority of Thailand
- Indonesian Coal Mining Association
- Petrochimia International Co. Ltd.- Taiwan
- Romanian Commodities Exchange
- South Luzon Thermal Energy Corporation
- Tata Chemicals Ltd - India
- Vedanta Resources Plc - India
- Australian Coal Association
- Makarim & Taira - Indonesia
- Indian Energy Exchange, India
- Merrill Lynch Commodities Europe
- Therma Luzon, Inc, Philippines
- Petron Corporation, Philippines
- Toyota Tsusho Corporation, Japan
- Central Electricity Authority - India
- Leighton Contractors Pty Ltd - Australia
- Planning Commission, India
- Ministry of Mines - Canada
- Kalimantan Lumbung Energi - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Bukit Asam (Persero) Tbk - Indonesia
- Billiton Holdings Pty Ltd - Australia
- TeaM Sual Corporation - Philippines
- European Bulk Services B.V. - Netherlands
- PetroVietnam Power Coal Import and Supply Company
- Timah Investasi Mineral - Indoneisa
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Directorate Of Revenue Intelligence - India
- LBH Netherlands Bv - Netherlands
- Neyveli Lignite Corporation Ltd, - India
- Medco Energi Mining Internasional
- Ministry of Transport, Egypt
- Meralco Power Generation, Philippines
- Parry Sugars Refinery, India
- Videocon Industries ltd - India
- Georgia Ports Authority, United States
- Aboitiz Power Corporation - Philippines
- Minerals Council of Australia
- Antam Resourcindo - Indonesia
- Africa Commodities Group - South Africa
- MS Steel International - UAE
- Barasentosa Lestari - Indonesia
- Intertek Mineral Services - Indonesia
- Riau Bara Harum - Indonesia
- Vizag Seaport Private Limited - India
- Larsen & Toubro Limited - India
- Mercuria Energy - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Economic Council, Georgia
- IHS Mccloskey Coal Group - USA
- Bhatia International Limited - India
- Power Finance Corporation Ltd., India
- Sical Logistics Limited - India
- Cement Manufacturers Association - India
- Mintek Dendrill Indonesia
- Xindia Steels Limited - India
- Sree Jayajothi Cements Limited - India
- India Bulls Power Limited - India
- Commonwealth Bank - Australia
- SMC Global Power, Philippines
- Essar Steel Hazira Ltd - India
- Altura Mining Limited, Indonesia
- Cigading International Bulk Terminal - Indonesia
- San Jose City I Power Corp, Philippines
- Bhoruka Overseas - Indonesia
- Energy Development Corp, Philippines
- Bharathi Cement Corporation - India
- Global Business Power Corporation, Philippines
- Lanco Infratech Ltd - India
- Siam City Cement PLC, Thailand
- Uttam Galva Steels Limited - India
- Sinarmas Energy and Mining - Indonesia
- Thiess Contractors Indonesia
- Edison Trading Spa - Italy
- Manunggal Multi Energi - Indonesia
- Gujarat Sidhee Cement - India
- Baramulti Group, Indonesia
- IEA Clean Coal Centre - UK
- PTC India Limited - India
- Star Paper Mills Limited - India
- Binh Thuan Hamico - Vietnam
- Port Waratah Coal Services - Australia
- PowerSource Philippines DevCo
- Agrawal Coal Company - India
- Coalindo Energy - Indonesia
- Malabar Cements Ltd - India
- Bulk Trading Sa - Switzerland
- Savvy Resources Ltd - HongKong
- New Zealand Coal & Carbon
- Simpson Spence & Young - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Tamil Nadu electricity Board
- Coal and Oil Company - UAE
- Indo Tambangraya Megah - Indonesia
- Sojitz Corporation - Japan
- Kumho Petrochemical, South Korea
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Orica Australia Pty. Ltd.
- Rio Tinto Coal - Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Madhucon Powers Ltd - India
- Mjunction Services Limited - India
- Aditya Birla Group - India
- Salva Resources Pvt Ltd - India
- Price Waterhouse Coopers - Russia
- Sakthi Sugars Limited - India
- Semirara Mining Corp, Philippines
- Pendopo Energi Batubara - Indonesia
- Trasteel International SA, Italy
- Bukit Baiduri Energy - Indonesia
- Kartika Selabumi Mining - Indonesia
- Bayan Resources Tbk. - Indonesia
- Parliament of New Zealand
- PNOC Exploration Corporation - Philippines
- Energy Link Ltd, New Zealand
- Renaissance Capital - South Africa
- White Energy Company Limited
- Anglo American - United Kingdom
- Coastal Gujarat Power Limited - India
- SMG Consultants - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kapuas Tunggal Persada - Indonesia
- McConnell Dowell - Australia
- International Coal Ventures Pvt Ltd - India
- Jaiprakash Power Ventures ltd
- Gujarat Mineral Development Corp Ltd - India
- Chettinad Cement Corporation Ltd - India
- Indogreen Group - Indonesia
- Meenaskhi Energy Private Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- TNB Fuel Sdn Bhd - Malaysia
- Maheswari Brothers Coal Limited - India
- Jorong Barutama Greston.PT - Indonesia
- CNBM International Corporation - China
- Miang Besar Coal Terminal - Indonesia
- Chamber of Mines of South Africa
- Singapore Mercantile Exchange
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kobexindo Tractors - Indoneisa
- ASAPP Information Group - India
- Siam City Cement - Thailand
- Karaikal Port Pvt Ltd - India
- Marubeni Corporation - India
- Kideco Jaya Agung - Indonesia
- Ambuja Cements Ltd - India
- Semirara Mining and Power Corporation, Philippines
- GVK Power & Infra Limited - India
- Electricity Authority, New Zealand
- OPG Power Generation Pvt Ltd - India
- Thai Mozambique Logistica
- Dalmia Cement Bharat India
- Karbindo Abesyapradhi - Indoneisa
- Sarangani Energy Corporation, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Indian Oil Corporation Limited
- Deloitte Consulting - India
- Carbofer General Trading SA - India
- Mercator Lines Limited - India
- VISA Power Limited - India
- Australian Commodity Traders Exchange
- Alfred C Toepfer International GmbH - Germany
- Kaltim Prima Coal - Indonesia
- Formosa Plastics Group - Taiwan
- Standard Chartered Bank - UAE
- Pipit Mutiara Jaya. PT, Indonesia
- Globalindo Alam Lestari - Indonesia
- Rashtriya Ispat Nigam Limited - India
- ICICI Bank Limited - India
- Iligan Light & Power Inc, Philippines
- Ministry of Finance - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- The Treasury - Australian Government
- Ind-Barath Power Infra Limited - India
- Samtan Co., Ltd - South Korea
- GAC Shipping (India) Pvt Ltd
- Bukit Makmur.PT - Indonesia
- Global Green Power PLC Corporation, Philippines
- Banpu Public Company Limited - Thailand
- Vijayanagar Sugar Pvt Ltd - India
- Wood Mackenzie - Singapore
- Independent Power Producers Association of India
- Interocean Group of Companies - India
- Heidelberg Cement - Germany
- Gujarat Electricity Regulatory Commission - India
- Straits Asia Resources Limited - Singapore
- Global Coal Blending Company Limited - Australia
- Sindya Power Generating Company Private Ltd
- Latin American Coal - Colombia
- Grasim Industreis Ltd - India
- Jindal Steel & Power Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Indika Energy - Indonesia
- Attock Cement Pakistan Limited
- Orica Mining Services - Indonesia
- Eastern Coal Council - USA
- GMR Energy Limited - India
- The State Trading Corporation of India Ltd
- Posco Energy - South Korea
- Kepco SPC Power Corporation, Philippines
- Metalloyd Limited - United Kingdom
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