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