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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, 23 July 11
PANAMAX MARKET FACED A LIMITED ACTIVITY IN ALL BASINS
Handy
Atlantic softening across all segments with little fresh enquiry ex Bsea/Cont/USG and ECSA. Trips to Far east remain healthy. More cargoes ex ...
Friday, 22 July 11
MARUBENI ACQUIRING 42.86% SHARE OF YTL JAWA POWER HOLDINGS
COALspot.com - Japan’s Marubeni Corporation acquisition 42.86% stake in YTL Jawa Power Holdings BV, which owns a 35% equity interest in Indone ...
Thursday, 21 July 11
INDIA IMPORTS 36.033 MILLION TONS OF INDONESIAN COAL TILL JUNE
COALspot.com - Indonesia shipped 28.27 Million tons of coal in June 2011, a 2.3 percent lesser than May export of about 28.962 million tons, I ...
Thursday, 21 July 11
COAL PRICES ARE AT US$ 120 A TONNE
COALspot.com - Indonesian coal production in 2011 is expected to reach 360 million tons or 5.8 percent higher than government's forecasts. The incr ...
Thursday, 21 July 11
DRY BULK RATES EDGE FURTHER DOWN ON WEAK MARKET SENTIMENT - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market fell once again on Wednesday marking the ninth straight day of losses. The industry’s benchmark, the Baltic Dry Index (BDI ...
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- Oldendorff Carriers - Singapore
- GN Power Mariveles Coal Plant, Philippines
- San Jose City I Power Corp, Philippines
- Chettinad Cement Corporation Ltd - India
- GAC Shipping (India) Pvt Ltd
- Thai Mozambique Logistica
- Power Finance Corporation Ltd., India
- Parry Sugars Refinery, India
- GVK Power & Infra Limited - India
- New Zealand Coal & Carbon
- Alfred C Toepfer International GmbH - Germany
- Simpson Spence & Young - Indonesia
- Binh Thuan Hamico - Vietnam
- Aboitiz Power Corporation - Philippines
- Latin American Coal - Colombia
- ICICI Bank Limited - India
- SMC Global Power, Philippines
- Sinarmas Energy and Mining - Indonesia
- GMR Energy Limited - India
- European Bulk Services B.V. - Netherlands
- Minerals Council of Australia
- Xindia Steels Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Marubeni Corporation - India
- Interocean Group of Companies - India
- Orica Mining Services - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Australian Commodity Traders Exchange
- Commonwealth Bank - Australia
- Electricity Authority, New Zealand
- Leighton Contractors Pty Ltd - Australia
- IEA Clean Coal Centre - UK
- Energy Development Corp, Philippines
- Banpu Public Company Limited - Thailand
- Renaissance Capital - South Africa
- Videocon Industries ltd - India
- India Bulls Power Limited - India
- Electricity Generating Authority of Thailand
- Merrill Lynch Commodities Europe
- Attock Cement Pakistan Limited
- Sree Jayajothi Cements Limited - India
- Larsen & Toubro Limited - India
- Wilmar Investment Holdings
- Bhoruka Overseas - Indonesia
- Vizag Seaport Private Limited - India
- PTC India Limited - India
- Bukit Baiduri Energy - Indonesia
- International Coal Ventures Pvt Ltd - India
- White Energy Company Limited
- Jaiprakash Power Ventures ltd
- Sical Logistics Limited - India
- Bhushan Steel Limited - India
- Parliament of New Zealand
- Goldman Sachs - Singapore
- Pendopo Energi Batubara - Indonesia
- Indonesian Coal Mining Association
- Kumho Petrochemical, South Korea
- Iligan Light & Power Inc, Philippines
- Kaltim Prima Coal - Indonesia
- Grasim Industreis Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Economic Council, Georgia
- Star Paper Mills Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Rashtriya Ispat Nigam Limited - India
- Rio Tinto Coal - Australia
- Neyveli Lignite Corporation Ltd, - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Gujarat Sidhee Cement - India
- Orica Australia Pty. Ltd.
- Carbofer General Trading SA - India
- CNBM International Corporation - China
- Vedanta Resources Plc - India
- PowerSource Philippines DevCo
- Central Java Power - Indonesia
- Metalloyd Limited - United Kingdom
- Cigading International Bulk Terminal - Indonesia
- Trasteel International SA, Italy
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Petron Corporation, Philippines
- Lanco Infratech Ltd - India
- Anglo American - United Kingdom
- Edison Trading Spa - Italy
- Offshore Bulk Terminal Pte Ltd, Singapore
- Altura Mining Limited, Indonesia
- Jindal Steel & Power Ltd - India
- Siam City Cement PLC, Thailand
- Riau Bara Harum - Indonesia
- Globalindo Alam Lestari - Indonesia
- Global Business Power Corporation, Philippines
- Bulk Trading Sa - Switzerland
- Eastern Energy - Thailand
- Ministry of Mines - Canada
- Deloitte Consulting - India
- Sakthi Sugars Limited - India
- Mercuria Energy - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Formosa Plastics Group - Taiwan
- Directorate Of Revenue Intelligence - India
- Indian Oil Corporation Limited
- Therma Luzon, Inc, Philippines
- Madhucon Powers Ltd - India
- Ministry of Transport, Egypt
- Uttam Galva Steels Limited - India
- TeaM Sual Corporation - Philippines
- Holcim Trading Pte Ltd - Singapore
- Billiton Holdings Pty Ltd - Australia
- Bharathi Cement Corporation - India
- OPG Power Generation Pvt Ltd - India
- Barasentosa Lestari - Indonesia
- Indian Energy Exchange, India
- Petrochimia International Co. Ltd.- Taiwan
- Salva Resources Pvt Ltd - India
- CIMB Investment Bank - Malaysia
- Thiess Contractors Indonesia
- Karaikal Port Pvt Ltd - India
- Eastern Coal Council - USA
- Posco Energy - South Korea
- Medco Energi Mining Internasional
- Mintek Dendrill Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Kartika Selabumi Mining - Indonesia
- Chamber of Mines of South Africa
- Pipit Mutiara Jaya. PT, Indonesia
- The University of Queensland
- The State Trading Corporation of India Ltd
- Sarangani Energy Corporation, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Intertek Mineral Services - Indonesia
- Mercator Lines Limited - India
- Global Coal Blending Company Limited - Australia
- Gujarat Mineral Development Corp Ltd - India
- Price Waterhouse Coopers - Russia
- Jorong Barutama Greston.PT - Indonesia
- Manunggal Multi Energi - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- SMG Consultants - Indonesia
- Toyota Tsusho Corporation, Japan
- Makarim & Taira - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Coastal Gujarat Power Limited - India
- South Luzon Thermal Energy Corporation
- Vijayanagar Sugar Pvt Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Tamil Nadu electricity Board
- Samtan Co., Ltd - South Korea
- Coalindo Energy - Indonesia
- Agrawal Coal Company - India
- AsiaOL BioFuels Corp., Philippines
- Siam City Cement - Thailand
- TNB Fuel Sdn Bhd - Malaysia
- Kideco Jaya Agung - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Miang Besar Coal Terminal - Indonesia
- Meenaskhi Energy Private Limited - India
- Sindya Power Generating Company Private Ltd
- Meralco Power Generation, Philippines
- Kohat Cement Company Ltd. - Pakistan
- PNOC Exploration Corporation - Philippines
- Indo Tambangraya Megah - Indonesia
- MS Steel International - UAE
- McConnell Dowell - Australia
- Essar Steel Hazira Ltd - India
- Kepco SPC Power Corporation, Philippines
- Bangladesh Power Developement Board
- Heidelberg Cement - Germany
- Dalmia Cement Bharat India
- Coal and Oil Company - UAE
- Tata Chemicals Ltd - India
- Malabar Cements Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Georgia Ports Authority, United States
- Maheswari Brothers Coal Limited - India
- SN Aboitiz Power Inc, Philippines
- Independent Power Producers Association of India
- Standard Chartered Bank - UAE
- Australian Coal Association
- Ambuja Cements Ltd - India
- Semirara Mining Corp, Philippines
- The Treasury - Australian Government
- Global Green Power PLC Corporation, Philippines
- IHS Mccloskey Coal Group - USA
- Bayan Resources Tbk. - Indonesia
- Timah Investasi Mineral - Indoneisa
- Semirara Mining and Power Corporation, Philippines
- Africa Commodities Group - South Africa
- Aditya Birla Group - India
- Kalimantan Lumbung Energi - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Borneo Indobara - Indonesia
- Kobexindo Tractors - Indoneisa
- Savvy Resources Ltd - HongKong
- Bukit Makmur.PT - Indonesia
- Antam Resourcindo - Indonesia
- Wood Mackenzie - Singapore
- Straits Asia Resources Limited - Singapore
- Mjunction Services Limited - India
- ASAPP Information Group - India
- Indogreen Group - Indonesia
- Indika Energy - Indonesia
- Planning Commission, India
- London Commodity Brokers - England
- Bhatia International Limited - India
- Romanian Commodities Exchange
- Singapore Mercantile Exchange
- Ind-Barath Power Infra Limited - India
- Energy Link Ltd, New Zealand
- Sojitz Corporation - Japan
- LBH Netherlands Bv - Netherlands
- VISA Power Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Central Electricity Authority - India
- Cement Manufacturers Association - India
- Port Waratah Coal Services - Australia
- Baramulti Group, Indonesia
- Ministry of Finance - Indonesia
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