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