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