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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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Tuesday, 06 September 11
SEMEN GRESIK TO ACQUIRE COAL MINE FOR RP. 1 TRILLION
COALspot.com - PT Semen Gresik Tbk (SMGR) is planning to acquire a low calorific value coal concession (IUP). According to Semen Gresik, the coal mi ...
Tuesday, 06 September 11
DRY BULK MARKETS RALLY POWERS THROUGH TO NEW WEEK, BUT A CORRECTION COULD BE OVERDUE - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market’s freights rates kept leaping forwards during the beginning of the week, with the industry’s benchmark, the Baltic D ...
Monday, 05 September 11
TNPL POSTPONES BID OPENING UNTIL 12 SEPTEMBER 2011
COALspot.com - TNPL has postponed submission of the offer until 12 September 2011 on request from the supplier, an Indian trader said.
Due to Ram ...
Monday, 05 September 11
INDONESIAN COAL BENCHMARK PRICE - ANALYSIS
Analyst : Sunil K Kumbhat
COALspot.com - As a part of the Government’s efforts to stop transfer pricing abuses which have resulted in the los ...
Saturday, 03 September 11
FEW SHIPS REPORTED FIXED FROM INDONESIA TO INDIA - VISTAAR
COALspot.com - The freight market continued the upward trend during last week with BDI up by about 13 pct closing at 1,740 points and cape index up ...
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- Orica Australia Pty. Ltd.
- Barasentosa Lestari - Indonesia
- Anglo American - United Kingdom
- Chettinad Cement Corporation Ltd - India
- Central Java Power - Indonesia
- New Zealand Coal & Carbon
- Electricity Authority, New Zealand
- CNBM International Corporation - China
- Toyota Tsusho Corporation, Japan
- Maheswari Brothers Coal Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Orica Mining Services - Indonesia
- Rio Tinto Coal - Australia
- Kalimantan Lumbung Energi - Indonesia
- Baramulti Group, Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Bulk Trading Sa - Switzerland
- Gujarat Sidhee Cement - India
- Billiton Holdings Pty Ltd - Australia
- Videocon Industries ltd - India
- Coalindo Energy - Indonesia
- Malabar Cements Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Therma Luzon, Inc, Philippines
- Eastern Energy - Thailand
- CIMB Investment Bank - Malaysia
- Coal and Oil Company - UAE
- Deloitte Consulting - India
- Directorate General of MIneral and Coal - Indonesia
- Singapore Mercantile Exchange
- GVK Power & Infra Limited - India
- Goldman Sachs - Singapore
- Ministry of Mines - Canada
- Simpson Spence & Young - Indonesia
- Mercuria Energy - Indonesia
- Wood Mackenzie - Singapore
- Edison Trading Spa - Italy
- Global Coal Blending Company Limited - Australia
- Trasteel International SA, Italy
- Globalindo Alam Lestari - Indonesia
- The State Trading Corporation of India Ltd
- Karbindo Abesyapradhi - Indoneisa
- Salva Resources Pvt Ltd - India
- Economic Council, Georgia
- Aboitiz Power Corporation - Philippines
- Uttam Galva Steels Limited - India
- Sree Jayajothi Cements Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Ministry of Finance - Indonesia
- Energy Development Corp, Philippines
- Kumho Petrochemical, South Korea
- Offshore Bulk Terminal Pte Ltd, Singapore
- Power Finance Corporation Ltd., India
- Standard Chartered Bank - UAE
- PetroVietnam Power Coal Import and Supply Company
- Planning Commission, India
- Directorate Of Revenue Intelligence - India
- Bangladesh Power Developement Board
- Oldendorff Carriers - Singapore
- Meenaskhi Energy Private Limited - India
- Indika Energy - Indonesia
- Kartika Selabumi Mining - Indonesia
- Electricity Generating Authority of Thailand
- White Energy Company Limited
- IHS Mccloskey Coal Group - USA
- Bayan Resources Tbk. - Indonesia
- Antam Resourcindo - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Parry Sugars Refinery, India
- PNOC Exploration Corporation - Philippines
- Jindal Steel & Power Ltd - India
- PowerSource Philippines DevCo
- Indonesian Coal Mining Association
- Port Waratah Coal Services - Australia
- Maharashtra Electricity Regulatory Commission - India
- Australian Coal Association
- Kaltim Prima Coal - Indonesia
- Indian Energy Exchange, India
- Rashtriya Ispat Nigam Limited - India
- South Luzon Thermal Energy Corporation
- Bukit Asam (Persero) Tbk - Indonesia
- Global Business Power Corporation, Philippines
- SMG Consultants - Indonesia
- Interocean Group of Companies - India
- Renaissance Capital - South Africa
- Jaiprakash Power Ventures ltd
- McConnell Dowell - Australia
- Madhucon Powers Ltd - India
- Thai Mozambique Logistica
- Independent Power Producers Association of India
- Aditya Birla Group - India
- GMR Energy Limited - India
- Makarim & Taira - Indonesia
- Tamil Nadu electricity Board
- Riau Bara Harum - Indonesia
- Kepco SPC Power Corporation, Philippines
- Latin American Coal - Colombia
- European Bulk Services B.V. - Netherlands
- Merrill Lynch Commodities Europe
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Metalloyd Limited - United Kingdom
- Vijayanagar Sugar Pvt Ltd - India
- Sojitz Corporation - Japan
- Intertek Mineral Services - Indonesia
- Meralco Power Generation, Philippines
- Leighton Contractors Pty Ltd - Australia
- ICICI Bank Limited - India
- Kapuas Tunggal Persada - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Ambuja Cements Ltd - India
- GAC Shipping (India) Pvt Ltd
- Vedanta Resources Plc - India
- Cement Manufacturers Association - India
- Karaikal Port Pvt Ltd - India
- Manunggal Multi Energi - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Gujarat Electricity Regulatory Commission - India
- MS Steel International - UAE
- Formosa Plastics Group - Taiwan
- Bhushan Steel Limited - India
- Medco Energi Mining Internasional
- Petrochimia International Co. Ltd.- Taiwan
- Agrawal Coal Company - India
- Gujarat Mineral Development Corp Ltd - India
- Sindya Power Generating Company Private Ltd
- SN Aboitiz Power Inc, Philippines
- Indo Tambangraya Megah - Indonesia
- Indian Oil Corporation Limited
- Siam City Cement - Thailand
- PTC India Limited - India
- Grasim Industreis Ltd - India
- Lanco Infratech Ltd - India
- Semirara Mining Corp, Philippines
- London Commodity Brokers - England
- AsiaOL BioFuels Corp., Philippines
- Holcim Trading Pte Ltd - Singapore
- Cigading International Bulk Terminal - Indonesia
- IEA Clean Coal Centre - UK
- Borneo Indobara - Indonesia
- Binh Thuan Hamico - Vietnam
- Chamber of Mines of South Africa
- TNB Fuel Sdn Bhd - Malaysia
- Ceylon Electricity Board - Sri Lanka
- Asmin Koalindo Tuhup - Indonesia
- India Bulls Power Limited - India
- Australian Commodity Traders Exchange
- Indogreen Group - Indonesia
- Thiess Contractors Indonesia
- Ind-Barath Power Infra Limited - India
- Samtan Co., Ltd - South Korea
- Price Waterhouse Coopers - Russia
- Dalmia Cement Bharat India
- Mintek Dendrill Indonesia
- Krishnapatnam Port Company Ltd. - India
- TeaM Sual Corporation - Philippines
- The University of Queensland
- Minerals Council of Australia
- Star Paper Mills Limited - India
- Bukit Makmur.PT - Indonesia
- Energy Link Ltd, New Zealand
- Marubeni Corporation - India
- Attock Cement Pakistan Limited
- Parliament of New Zealand
- Larsen & Toubro Limited - India
- SMC Global Power, Philippines
- Essar Steel Hazira Ltd - India
- Posco Energy - South Korea
- Mercator Lines Limited - India
- Coastal Gujarat Power Limited - India
- Africa Commodities Group - South Africa
- San Jose City I Power Corp, Philippines
- Bhatia International Limited - India
- Sical Logistics Limited - India
- Kobexindo Tractors - Indoneisa
- Eastern Coal Council - USA
- Iligan Light & Power Inc, Philippines
- Commonwealth Bank - Australia
- Bukit Baiduri Energy - Indonesia
- VISA Power Limited - India
- Sakthi Sugars Limited - India
- Miang Besar Coal Terminal - Indonesia
- International Coal Ventures Pvt Ltd - India
- Romanian Commodities Exchange
- Savvy Resources Ltd - HongKong
- Carbofer General Trading SA - India
- Siam City Cement PLC, Thailand
- Alfred C Toepfer International GmbH - Germany
- Heidelberg Cement - Germany
- Altura Mining Limited, Indonesia
- Tata Chemicals Ltd - India
- Xindia Steels Limited - India
- Wilmar Investment Holdings
- Kideco Jaya Agung - Indonesia
- ASAPP Information Group - India
- Mjunction Services Limited - India
- Banpu Public Company Limited - Thailand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Sarangani Energy Corporation, Philippines
- Petron Corporation, Philippines
- OPG Power Generation Pvt Ltd - India
- LBH Netherlands Bv - Netherlands
- Timah Investasi Mineral - Indoneisa
- Pipit Mutiara Jaya. PT, Indonesia
- The Treasury - Australian Government
- Vizag Seaport Private Limited - India
- Pendopo Energi Batubara - Indonesia
- Georgia Ports Authority, United States
- Straits Asia Resources Limited - Singapore
- Bharathi Cement Corporation - India
- Global Green Power PLC Corporation, Philippines
- Bhoruka Overseas - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ministry of Transport, Egypt
- Central Electricity Authority - India
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