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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, 10 September 11
THE FREIGHT MARKET LIKELY TO BE FIRM NEXT WEEK - CAPT. REDDY
COALspot.com - The freight market continued the upward trend during last week with BDI crossing 1,800 points and closing at 1,838 points up by 5.63 ...
Friday, 09 September 11
SUPRA BARA SECURES $20 MILLION LOAN - JP
The Jakarta Post reported that, Coal miner PT Supra Bara Energi says it has secured a US$20 million loan facility from BNP Paribas to buy heavy equi ...
Friday, 09 September 11
CAPESIZE CAN SECURE USD 17-18K SHORT PERIOD - FEARNBULK
Handy
The US Gulf has remained relatively steady, slightly more activity in the South Atlantic with owners aiming for low to mid USD 20k´s f ...
Thursday, 08 September 11
UKRAINES COAL PRODUCTION TO RISE 8% - IFANDP
Industrial fuels & power reported that, Ukraine will increase its coal output by about 8% this year compared to last year, said the country&rsqu ...
Thursday, 08 September 11
DRY BULK MARKETS RALLY COMES TO AN END - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
As was widely expected by analysts and shipbrokers alike, the latest rally of the dry bulk market came to a halt yesterday, with the Baltic Dry Inde ...
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- Larsen & Toubro Limited - India
- Orica Australia Pty. Ltd.
- SN Aboitiz Power Inc, Philippines
- Simpson Spence & Young - Indonesia
- Aditya Birla Group - India
- Sarangani Energy Corporation, Philippines
- Chamber of Mines of South Africa
- European Bulk Services B.V. - Netherlands
- Miang Besar Coal Terminal - Indonesia
- Borneo Indobara - Indonesia
- Tamil Nadu electricity Board
- Directorate General of MIneral and Coal - Indonesia
- Anglo American - United Kingdom
- Indian Oil Corporation Limited
- Metalloyd Limited - United Kingdom
- Straits Asia Resources Limited - Singapore
- Ministry of Finance - Indonesia
- GMR Energy Limited - India
- Australian Commodity Traders Exchange
- Sindya Power Generating Company Private Ltd
- Ministry of Mines - Canada
- Bulk Trading Sa - Switzerland
- Kobexindo Tractors - Indoneisa
- Maheswari Brothers Coal Limited - India
- Meralco Power Generation, Philippines
- ICICI Bank Limited - India
- White Energy Company Limited
- Bangladesh Power Developement Board
- Indian Energy Exchange, India
- Thai Mozambique Logistica
- Antam Resourcindo - Indonesia
- Thiess Contractors Indonesia
- Xindia Steels Limited - India
- Kideco Jaya Agung - Indonesia
- Medco Energi Mining Internasional
- CNBM International Corporation - China
- Barasentosa Lestari - Indonesia
- Agrawal Coal Company - India
- Sakthi Sugars Limited - India
- Leighton Contractors Pty Ltd - Australia
- Krishnapatnam Port Company Ltd. - India
- Ceylon Electricity Board - Sri Lanka
- Banpu Public Company Limited - Thailand
- Dalmia Cement Bharat India
- Globalindo Alam Lestari - Indonesia
- Bhoruka Overseas - Indonesia
- Merrill Lynch Commodities Europe
- Timah Investasi Mineral - Indoneisa
- Uttam Galva Steels Limited - India
- Australian Coal Association
- Eastern Coal Council - USA
- Semirara Mining and Power Corporation, Philippines
- GAC Shipping (India) Pvt Ltd
- Vedanta Resources Plc - India
- Goldman Sachs - Singapore
- Karbindo Abesyapradhi - Indoneisa
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Altura Mining Limited, Indonesia
- Standard Chartered Bank - UAE
- Bayan Resources Tbk. - Indonesia
- Commonwealth Bank - Australia
- McConnell Dowell - Australia
- CIMB Investment Bank - Malaysia
- Price Waterhouse Coopers - Russia
- Mercuria Energy - Indonesia
- Sinarmas Energy and Mining - Indonesia
- The Treasury - Australian Government
- Kapuas Tunggal Persada - Indonesia
- Heidelberg Cement - Germany
- Energy Development Corp, Philippines
- Gujarat Sidhee Cement - India
- IHS Mccloskey Coal Group - USA
- Pendopo Energi Batubara - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Petrochimia International Co. Ltd.- Taiwan
- IEA Clean Coal Centre - UK
- The University of Queensland
- Electricity Generating Authority of Thailand
- AsiaOL BioFuels Corp., Philippines
- New Zealand Coal & Carbon
- Makarim & Taira - Indonesia
- Binh Thuan Hamico - Vietnam
- Malabar Cements Ltd - India
- Semirara Mining Corp, Philippines
- Bukit Makmur.PT - Indonesia
- Formosa Plastics Group - Taiwan
- VISA Power Limited - India
- San Jose City I Power Corp, Philippines
- Kartika Selabumi Mining - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kohat Cement Company Ltd. - Pakistan
- Asmin Koalindo Tuhup - Indonesia
- SMC Global Power, Philippines
- Mintek Dendrill Indonesia
- Savvy Resources Ltd - HongKong
- Therma Luzon, Inc, Philippines
- Energy Link Ltd, New Zealand
- GN Power Mariveles Coal Plant, Philippines
- PNOC Exploration Corporation - Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Samtan Co., Ltd - South Korea
- Manunggal Multi Energi - Indonesia
- Madhucon Powers Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Bharathi Cement Corporation - India
- Georgia Ports Authority, United States
- Lanco Infratech Ltd - India
- Central Java Power - Indonesia
- The State Trading Corporation of India Ltd
- Ind-Barath Power Infra Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Edison Trading Spa - Italy
- Alfred C Toepfer International GmbH - Germany
- Tata Chemicals Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- TNB Fuel Sdn Bhd - Malaysia
- Sical Logistics Limited - India
- SMG Consultants - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Indo Tambangraya Megah - Indonesia
- Orica Mining Services - Indonesia
- Kumho Petrochemical, South Korea
- Grasim Industreis Ltd - India
- Economic Council, Georgia
- ASAPP Information Group - India
- Sojitz Corporation - Japan
- Star Paper Mills Limited - India
- OPG Power Generation Pvt Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Salva Resources Pvt Ltd - India
- Essar Steel Hazira Ltd - India
- Wood Mackenzie - Singapore
- Bukit Baiduri Energy - Indonesia
- Wilmar Investment Holdings
- India Bulls Power Limited - India
- Trasteel International SA, Italy
- South Luzon Thermal Energy Corporation
- Maharashtra Electricity Regulatory Commission - India
- Kaltim Prima Coal - Indonesia
- Parliament of New Zealand
- Bukit Asam (Persero) Tbk - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Deloitte Consulting - India
- Posco Energy - South Korea
- Videocon Industries ltd - India
- Global Business Power Corporation, Philippines
- Karaikal Port Pvt Ltd - India
- Interocean Group of Companies - India
- Eastern Energy - Thailand
- LBH Netherlands Bv - Netherlands
- Minerals Council of Australia
- Singapore Mercantile Exchange
- GVK Power & Infra Limited - India
- Africa Commodities Group - South Africa
- Ministry of Transport, Egypt
- Planning Commission, India
- Renaissance Capital - South Africa
- Vijayanagar Sugar Pvt Ltd - India
- Parry Sugars Refinery, India
- PTC India Limited - India
- Rio Tinto Coal - Australia
- Global Coal Blending Company Limited - Australia
- Indogreen Group - Indonesia
- Baramulti Group, Indonesia
- Central Electricity Authority - India
- Bhatia International Limited - India
- Holcim Trading Pte Ltd - Singapore
- Bhushan Steel Limited - India
- Romanian Commodities Exchange
- Carbofer General Trading SA - India
- Pipit Mutiara Jaya. PT, Indonesia
- Directorate Of Revenue Intelligence - India
- International Coal Ventures Pvt Ltd - India
- Power Finance Corporation Ltd., India
- Riau Bara Harum - Indonesia
- Sree Jayajothi Cements Limited - India
- Mercator Lines Limited - India
- Latin American Coal - Colombia
- Jindal Steel & Power Ltd - India
- Iligan Light & Power Inc, Philippines
- MS Steel International - UAE
- Gujarat Electricity Regulatory Commission - India
- Chettinad Cement Corporation Ltd - India
- TeaM Sual Corporation - Philippines
- Indika Energy - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Electricity Authority, New Zealand
- Ambuja Cements Ltd - India
- Coalindo Energy - Indonesia
- Mjunction Services Limited - India
- London Commodity Brokers - England
- PowerSource Philippines DevCo
- Jaiprakash Power Ventures ltd
- Attock Cement Pakistan Limited
- Siam City Cement PLC, Thailand
- Intertek Mineral Services - Indonesia
- Siam City Cement - Thailand
- Coastal Gujarat Power Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Cement Manufacturers Association - India
- Marubeni Corporation - India
- Global Green Power PLC Corporation, Philippines
- Port Waratah Coal Services - Australia
- Aboitiz Power Corporation - Philippines
- Indonesian Coal Mining Association
- Cigading International Bulk Terminal - Indonesia
- Vizag Seaport Private Limited - India
- Kepco SPC Power Corporation, Philippines
- Petron Corporation, Philippines
- Oldendorff Carriers - Singapore
- Coal and Oil Company - UAE
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Independent Power Producers Association of India
- Meenaskhi Energy Private Limited - India
- Billiton Holdings Pty Ltd - Australia
- Toyota Tsusho Corporation, Japan
- Gujarat Mineral Development Corp Ltd - India
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