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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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Thursday, 14 July 11
INDO GOVT. SETS JULY COAL REFERENCE PRICE AT US$ 118.24 PER TON
COALspot.com - The Ministry of Energy & Mineral Resources of Indonesia sets coal spot price benchmark for July 2011 at US$ 118.24 per ton, US$ 0 ...
Thursday, 14 July 11
DRY BULK MARKET KEEPS FALLING ON WEAK CAPESIZE SENTIMENT - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market kept on retreating on Wednesday, with the Baltic Dry Index (BDI) falling to 1,383 points, from 1,411 of the previous day. Capesi ...
Thursday, 14 July 11
UNITED TRACTORS BUYS DUTA SEJAHTERA - INSIDER STORIES
Insider Stories reported that, PT United Tractors Tbk (UNTR), via a wholly-owned subsidiary PT Tuah Turangga Agung, will acquire PT Duta Sejahtera a ...
Wednesday, 13 July 11
ANOTHER FIRMER WEEK FOR THE CAPES - BRS
Barry Rogliano Salles reported that, there were mixed results for the dry bulk market this week: the Capesize and Panamax markets performed well gai ...
Tuesday, 12 July 11
INDONESIAN MINERS PLAN $70M INVESTMENT TO UPGRADE QUALITY OF COAL - THE JAKARTA GLOBE
One of the leading english language news paper in indonesia, the Jakarta globe reported that, as the government implements a ban on the export of po ...
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- Barasentosa Lestari - Indonesia
- Intertek Mineral Services - Indonesia
- Sakthi Sugars Limited - India
- Aditya Birla Group - India
- Medco Energi Mining Internasional
- Indian Energy Exchange, India
- Maharashtra Electricity Regulatory Commission - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Straits Asia Resources Limited - Singapore
- Directorate General of MIneral and Coal - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Central Electricity Authority - India
- Bukit Makmur.PT - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Parliament of New Zealand
- Renaissance Capital - South Africa
- PetroVietnam Power Coal Import and Supply Company
- SN Aboitiz Power Inc, Philippines
- Coastal Gujarat Power Limited - India
- The State Trading Corporation of India Ltd
- Orica Australia Pty. Ltd.
- Binh Thuan Hamico - Vietnam
- Directorate Of Revenue Intelligence - India
- Sarangani Energy Corporation, Philippines
- Ceylon Electricity Board - Sri Lanka
- GVK Power & Infra Limited - India
- Global Coal Blending Company Limited - Australia
- Riau Bara Harum - Indonesia
- Planning Commission, India
- Makarim & Taira - Indonesia
- Metalloyd Limited - United Kingdom
- Videocon Industries ltd - India
- Wood Mackenzie - Singapore
- Minerals Council of Australia
- VISA Power Limited - India
- Krishnapatnam Port Company Ltd. - India
- Vedanta Resources Plc - India
- Manunggal Multi Energi - Indonesia
- Wilmar Investment Holdings
- Indogreen Group - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Sojitz Corporation - Japan
- GN Power Mariveles Coal Plant, Philippines
- Miang Besar Coal Terminal - Indonesia
- Xindia Steels Limited - India
- PowerSource Philippines DevCo
- PNOC Exploration Corporation - Philippines
- Karaikal Port Pvt Ltd - India
- Siam City Cement PLC, Thailand
- San Jose City I Power Corp, Philippines
- Trasteel International SA, Italy
- Essar Steel Hazira Ltd - India
- Simpson Spence & Young - Indonesia
- Chamber of Mines of South Africa
- Therma Luzon, Inc, Philippines
- Petron Corporation, Philippines
- GMR Energy Limited - India
- ASAPP Information Group - India
- Independent Power Producers Association of India
- Toyota Tsusho Corporation, Japan
- Edison Trading Spa - Italy
- Global Business Power Corporation, Philippines
- Bukit Baiduri Energy - Indonesia
- SMC Global Power, Philippines
- Bulk Trading Sa - Switzerland
- Energy Development Corp, Philippines
- Vizag Seaport Private Limited - India
- Chettinad Cement Corporation Ltd - India
- ICICI Bank Limited - India
- Coalindo Energy - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Bayan Resources Tbk. - Indonesia
- Tamil Nadu electricity Board
- Jindal Steel & Power Ltd - India
- Rio Tinto Coal - Australia
- India Bulls Power Limited - India
- CIMB Investment Bank - Malaysia
- Holcim Trading Pte Ltd - Singapore
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Kumho Petrochemical, South Korea
- Parry Sugars Refinery, India
- Jaiprakash Power Ventures ltd
- Pendopo Energi Batubara - Indonesia
- IHS Mccloskey Coal Group - USA
- Indonesian Coal Mining Association
- Electricity Generating Authority of Thailand
- AsiaOL BioFuels Corp., Philippines
- Baramulti Group, Indonesia
- Kartika Selabumi Mining - Indonesia
- Latin American Coal - Colombia
- Thiess Contractors Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Merrill Lynch Commodities Europe
- Star Paper Mills Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Marubeni Corporation - India
- Indika Energy - Indonesia
- Orica Mining Services - Indonesia
- Port Waratah Coal Services - Australia
- Australian Coal Association
- International Coal Ventures Pvt Ltd - India
- European Bulk Services B.V. - Netherlands
- OPG Power Generation Pvt Ltd - India
- Larsen & Toubro Limited - India
- Energy Link Ltd, New Zealand
- Meenaskhi Energy Private Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Gujarat Mineral Development Corp Ltd - India
- Borneo Indobara - Indonesia
- The Treasury - Australian Government
- Posco Energy - South Korea
- Bangladesh Power Developement Board
- Coal and Oil Company - UAE
- Attock Cement Pakistan Limited
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Georgia Ports Authority, United States
- Savvy Resources Ltd - HongKong
- Sree Jayajothi Cements Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Mercator Lines Limited - India
- IEA Clean Coal Centre - UK
- Commonwealth Bank - Australia
- Globalindo Alam Lestari - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Iligan Light & Power Inc, Philippines
- Banpu Public Company Limited - Thailand
- Asmin Koalindo Tuhup - Indonesia
- Price Waterhouse Coopers - Russia
- Carbofer General Trading SA - India
- Rashtriya Ispat Nigam Limited - India
- Anglo American - United Kingdom
- Kideco Jaya Agung - Indonesia
- Mercuria Energy - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Heidelberg Cement - Germany
- Bahari Cakrawala Sebuku - Indonesia
- Electricity Authority, New Zealand
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- LBH Netherlands Bv - Netherlands
- PTC India Limited - India
- South Luzon Thermal Energy Corporation
- Economic Council, Georgia
- Bhushan Steel Limited - India
- Goldman Sachs - Singapore
- Vijayanagar Sugar Pvt Ltd - India
- Dalmia Cement Bharat India
- Malabar Cements Ltd - India
- Salva Resources Pvt Ltd - India
- Romanian Commodities Exchange
- Eastern Energy - Thailand
- Ind-Barath Power Infra Limited - India
- Sical Logistics Limited - India
- Gujarat Sidhee Cement - India
- Kaltim Prima Coal - Indonesia
- Samtan Co., Ltd - South Korea
- Bharathi Cement Corporation - India
- Bhoruka Overseas - Indonesia
- Eastern Coal Council - USA
- Oldendorff Carriers - Singapore
- Timah Investasi Mineral - Indoneisa
- Formosa Plastics Group - Taiwan
- Singapore Mercantile Exchange
- Leighton Contractors Pty Ltd - Australia
- Jorong Barutama Greston.PT - Indonesia
- Kobexindo Tractors - Indoneisa
- Cement Manufacturers Association - India
- Siam City Cement - Thailand
- McConnell Dowell - Australia
- Sinarmas Energy and Mining - Indonesia
- Africa Commodities Group - South Africa
- Central Java Power - Indonesia
- Sindya Power Generating Company Private Ltd
- Neyveli Lignite Corporation Ltd, - India
- London Commodity Brokers - England
- Meralco Power Generation, Philippines
- Altura Mining Limited, Indonesia
- Indian Oil Corporation Limited
- Australian Commodity Traders Exchange
- Deloitte Consulting - India
- Ministry of Mines - Canada
- Madhucon Powers Ltd - India
- CNBM International Corporation - China
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kapuas Tunggal Persada - Indonesia
- Agrawal Coal Company - India
- Uttam Galva Steels Limited - India
- Billiton Holdings Pty Ltd - Australia
- Thai Mozambique Logistica
- Mintek Dendrill Indonesia
- Lanco Infratech Ltd - India
- Grasim Industreis Ltd - India
- Global Green Power PLC Corporation, Philippines
- Interocean Group of Companies - India
- GAC Shipping (India) Pvt Ltd
- Ministry of Finance - Indonesia
- Semirara Mining Corp, Philippines
- Tata Chemicals Ltd - India
- New Zealand Coal & Carbon
- The University of Queensland
- Antam Resourcindo - Indonesia
- Maheswari Brothers Coal Limited - India
- Power Finance Corporation Ltd., India
- SMG Consultants - Indonesia
- Ambuja Cements Ltd - India
- Ministry of Transport, Egypt
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bhatia International Limited - India
- Indo Tambangraya Megah - Indonesia
- Kepco SPC Power Corporation, Philippines
- MS Steel International - UAE
- Standard Chartered Bank - UAE
- White Energy Company Limited
- TeaM Sual Corporation - Philippines
- Mjunction Services Limited - India
- Aboitiz Power Corporation - Philippines
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