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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, 15 October 11
BUNKER PRICES AND DEMANDS PUSHED FREIGHT RATES UP - VISTAAR
COALspot.com - The market continued to be firm with all segments moving up with biggest gain in Handy size segment up by 15 pct. The BDI was u ...
Saturday, 15 October 11
BENGAL COAL IMPORT TEST - THE TELEGRAPH
The Telegraph reported that, the power position in Bengal improved today but alarm bells are ringing over imported coal stocks that are running out ...
Friday, 14 October 11
CAPE DERIVATIVES MARKET HAS NOT REFLECTED OWNERS EXPECTATIONS' - FEARNBULK
Handy
The Atlantic market continued its upward trend, with fresh cargo entering the market. Skaw Passero to US Gulf climbed US$ 1500 from la ...
Friday, 14 October 11
ADARO BUYS SERVO MEDA FOR RP200 BIO - INSIDER STORIES
Insider Stories reported that, PT Adaro Energy Tbk (ADRO) announced that its subsidiary PT Alam Tri Abadi (ATI), acquired 35% stake in PT Serv ...
Thursday, 13 October 11
DRY BULK MARKETS RALLY CONTINUES, BUT ANALYSTS WARN IT WILL BE SHORTLIVED - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market continued its push forward yesterday, for yet another session, as the BDI (Baltic Dry Index), the industry’s benchmark edg ...
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- Sree Jayajothi Cements Limited - India
- New Zealand Coal & Carbon
- Star Paper Mills Limited - India
- Bulk Trading Sa - Switzerland
- Samtan Co., Ltd - South Korea
- Kalimantan Lumbung Energi - Indonesia
- The Treasury - Australian Government
- Global Business Power Corporation, Philippines
- CIMB Investment Bank - Malaysia
- Independent Power Producers Association of India
- Globalindo Alam Lestari - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Posco Energy - South Korea
- Petron Corporation, Philippines
- Kumho Petrochemical, South Korea
- Thiess Contractors Indonesia
- MS Steel International - UAE
- GVK Power & Infra Limited - India
- Siam City Cement - Thailand
- Barasentosa Lestari - Indonesia
- Merrill Lynch Commodities Europe
- Coal and Oil Company - UAE
- Savvy Resources Ltd - HongKong
- Tata Chemicals Ltd - India
- Sakthi Sugars Limited - India
- Energy Link Ltd, New Zealand
- Formosa Plastics Group - Taiwan
- LBH Netherlands Bv - Netherlands
- Mjunction Services Limited - India
- Chettinad Cement Corporation Ltd - India
- Uttam Galva Steels Limited - India
- White Energy Company Limited
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Medco Energi Mining Internasional
- Energy Development Corp, Philippines
- Edison Trading Spa - Italy
- Central Electricity Authority - India
- Mercuria Energy - Indonesia
- Binh Thuan Hamico - Vietnam
- Minerals Council of Australia
- Orica Mining Services - Indonesia
- Indian Oil Corporation Limited
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ceylon Electricity Board - Sri Lanka
- Kapuas Tunggal Persada - Indonesia
- Kideco Jaya Agung - Indonesia
- Price Waterhouse Coopers - Russia
- Meenaskhi Energy Private Limited - India
- Ind-Barath Power Infra Limited - India
- Attock Cement Pakistan Limited
- Australian Coal Association
- Renaissance Capital - South Africa
- Agrawal Coal Company - India
- Bharathi Cement Corporation - India
- Trasteel International SA, Italy
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kaltim Prima Coal - Indonesia
- Karaikal Port Pvt Ltd - India
- Vedanta Resources Plc - India
- Straits Asia Resources Limited - Singapore
- Krishnapatnam Port Company Ltd. - India
- TeaM Sual Corporation - Philippines
- Electricity Authority, New Zealand
- Meralco Power Generation, Philippines
- GMR Energy Limited - India
- Sojitz Corporation - Japan
- Gujarat Electricity Regulatory Commission - India
- SMG Consultants - Indonesia
- Cement Manufacturers Association - India
- Ambuja Cements Ltd - India
- Bhatia International Limited - India
- Madhucon Powers Ltd - India
- SN Aboitiz Power Inc, Philippines
- Central Java Power - Indonesia
- ASAPP Information Group - India
- Therma Luzon, Inc, Philippines
- Coastal Gujarat Power Limited - India
- Alfred C Toepfer International GmbH - Germany
- Neyveli Lignite Corporation Ltd, - India
- Heidelberg Cement - Germany
- Simpson Spence & Young - Indonesia
- Marubeni Corporation - India
- PTC India Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- London Commodity Brokers - England
- Toyota Tsusho Corporation, Japan
- Borneo Indobara - Indonesia
- Singapore Mercantile Exchange
- San Jose City I Power Corp, Philippines
- Parry Sugars Refinery, India
- Maharashtra Electricity Regulatory Commission - India
- Intertek Mineral Services - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Carbofer General Trading SA - India
- Aboitiz Power Corporation - Philippines
- Baramulti Group, Indonesia
- Georgia Ports Authority, United States
- Maheswari Brothers Coal Limited - India
- Ministry of Mines - Canada
- Deloitte Consulting - India
- Rashtriya Ispat Nigam Limited - India
- Bukit Makmur.PT - Indonesia
- Romanian Commodities Exchange
- Tamil Nadu electricity Board
- Metalloyd Limited - United Kingdom
- Kobexindo Tractors - Indoneisa
- Pendopo Energi Batubara - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Bangladesh Power Developement Board
- Eastern Coal Council - USA
- Eastern Energy - Thailand
- Indika Energy - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Standard Chartered Bank - UAE
- Wood Mackenzie - Singapore
- Pipit Mutiara Jaya. PT, Indonesia
- The State Trading Corporation of India Ltd
- Timah Investasi Mineral - Indoneisa
- The University of Queensland
- Kohat Cement Company Ltd. - Pakistan
- Dalmia Cement Bharat India
- Larsen & Toubro Limited - India
- European Bulk Services B.V. - Netherlands
- Iligan Light & Power Inc, Philippines
- Africa Commodities Group - South Africa
- Siam City Cement PLC, Thailand
- Ministry of Finance - Indonesia
- Jindal Steel & Power Ltd - India
- Coalindo Energy - Indonesia
- Chamber of Mines of South Africa
- OPG Power Generation Pvt Ltd - India
- ICICI Bank Limited - India
- Altura Mining Limited, Indonesia
- Makarim & Taira - Indonesia
- Parliament of New Zealand
- Lanco Infratech Ltd - India
- Kepco SPC Power Corporation, Philippines
- Indonesian Coal Mining Association
- Commonwealth Bank - Australia
- Bahari Cakrawala Sebuku - Indonesia
- Riau Bara Harum - Indonesia
- Jaiprakash Power Ventures ltd
- Karbindo Abesyapradhi - Indoneisa
- Bhushan Steel Limited - India
- Manunggal Multi Energi - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- IEA Clean Coal Centre - UK
- Indogreen Group - Indonesia
- Economic Council, Georgia
- South Luzon Thermal Energy Corporation
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kartika Selabumi Mining - Indonesia
- Vizag Seaport Private Limited - India
- GAC Shipping (India) Pvt Ltd
- PNOC Exploration Corporation - Philippines
- Semirara Mining Corp, Philippines
- Sinarmas Energy and Mining - Indonesia
- Malabar Cements Ltd - India
- Xindia Steels Limited - India
- Planning Commission, India
- SMC Global Power, Philippines
- McConnell Dowell - Australia
- Rio Tinto Coal - Australia
- Leighton Contractors Pty Ltd - Australia
- Goldman Sachs - Singapore
- Salva Resources Pvt Ltd - India
- IHS Mccloskey Coal Group - USA
- PowerSource Philippines DevCo
- Oldendorff Carriers - Singapore
- Global Green Power PLC Corporation, Philippines
- Directorate Of Revenue Intelligence - India
- Electricity Generating Authority of Thailand
- Thai Mozambique Logistica
- TNB Fuel Sdn Bhd - Malaysia
- Holcim Trading Pte Ltd - Singapore
- Indian Energy Exchange, India
- Latin American Coal - Colombia
- GN Power Mariveles Coal Plant, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- PetroVietnam Power Coal Import and Supply Company
- Mintek Dendrill Indonesia
- India Bulls Power Limited - India
- Banpu Public Company Limited - Thailand
- Grasim Industreis Ltd - India
- Sarangani Energy Corporation, Philippines
- Power Finance Corporation Ltd., India
- Anglo American - United Kingdom
- Antam Resourcindo - Indonesia
- Australian Commodity Traders Exchange
- Port Waratah Coal Services - Australia
- Bukit Baiduri Energy - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Ministry of Transport, Egypt
- CNBM International Corporation - China
- VISA Power Limited - India
- Indo Tambangraya Megah - Indonesia
- Orica Australia Pty. Ltd.
- Mercator Lines Limited - India
- Sical Logistics Limited - India
- Bhoruka Overseas - Indonesia
- Videocon Industries ltd - India
- Interocean Group of Companies - India
- Sindya Power Generating Company Private Ltd
- Miang Besar Coal Terminal - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Gujarat Sidhee Cement - India
- Essar Steel Hazira Ltd - India
- Aditya Birla Group - India
- International Coal Ventures Pvt Ltd - India
- Bayan Resources Tbk. - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Global Coal Blending Company Limited - Australia
- Wilmar Investment Holdings
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