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