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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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Monday, 13 June 11
THE INDONESIAN COAL REFERENCE PRICE HAS JUMPED 1.2 PERCENT IN JUNE
COALspot.com - The Ministry of Energy & Mineral Resources sets coal spot price benchmark for June 2011 at US$ 119.03 per ton, higher than US$ 1. ...
Sunday, 12 June 11
THE FREIGHT MARKET IS LIKELY TO BE SOFT NEXT WEEK - CAPT. REDDY
COALspot.com - The freight market continued to soften this week except for Panamax index. The BDI was down by about 4.77 pct and closed at 1,418 poi ...
Friday, 10 June 11
DRY BULK ON RETREAT MODE - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
This week has offered dry bulk ship owners no real reason to smile, as the industry’s benchmarket, the Baltic Dry Index (BDI) has been steadil ...
Friday, 10 June 11
BUKIT ASAM RECORDED RP1.3 TRILLION PROFIT IN MAY - TEMPO INTERACTIVE
Tempo Interactive reported that, PT PT Tambang Batubara Bukit Asam Tbk (PTBA) made a net profit of Rp 1.3 trillion (approx. US$ 152,779,410) at the ...
Friday, 10 June 11
DRY BULK ON RETREAT MODE - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
This week has offered dry bulk ship owners no real reason to smile, as the industry’s benchmarket, the Baltic Dry Index (BDI) has been steadil ...
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- New Zealand Coal & Carbon
- Miang Besar Coal Terminal - Indonesia
- Sarangani Energy Corporation, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- London Commodity Brokers - England
- Sindya Power Generating Company Private Ltd
- Savvy Resources Ltd - HongKong
- Electricity Authority, New Zealand
- Ministry of Transport, Egypt
- Toyota Tsusho Corporation, Japan
- Price Waterhouse Coopers - Russia
- PowerSource Philippines DevCo
- Rashtriya Ispat Nigam Limited - India
- Xindia Steels Limited - India
- Makarim & Taira - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Trasteel International SA, Italy
- Vijayanagar Sugar Pvt Ltd - India
- Eastern Coal Council - USA
- Billiton Holdings Pty Ltd - Australia
- Electricity Generating Authority of Thailand
- Bukit Asam (Persero) Tbk - Indonesia
- GAC Shipping (India) Pvt Ltd
- Meralco Power Generation, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Barasentosa Lestari - Indonesia
- Bhushan Steel Limited - India
- Salva Resources Pvt Ltd - India
- Central Java Power - Indonesia
- Sree Jayajothi Cements Limited - India
- Australian Commodity Traders Exchange
- IHS Mccloskey Coal Group - USA
- Kalimantan Lumbung Energi - Indonesia
- TeaM Sual Corporation - Philippines
- Therma Luzon, Inc, Philippines
- Sojitz Corporation - Japan
- Metalloyd Limited - United Kingdom
- Minerals Council of Australia
- Wilmar Investment Holdings
- Cigading International Bulk Terminal - Indonesia
- Iligan Light & Power Inc, Philippines
- Global Coal Blending Company Limited - Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- OPG Power Generation Pvt Ltd - India
- Bharathi Cement Corporation - India
- Energy Development Corp, Philippines
- Romanian Commodities Exchange
- Uttam Galva Steels Limited - India
- Bulk Trading Sa - Switzerland
- Standard Chartered Bank - UAE
- Aboitiz Power Corporation - Philippines
- Jindal Steel & Power Ltd - India
- Kepco SPC Power Corporation, Philippines
- Georgia Ports Authority, United States
- Intertek Mineral Services - Indonesia
- VISA Power Limited - India
- Mercuria Energy - Indonesia
- Indo Tambangraya Megah - Indonesia
- Banpu Public Company Limited - Thailand
- ASAPP Information Group - India
- The State Trading Corporation of India Ltd
- Tata Chemicals Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Medco Energi Mining Internasional
- Power Finance Corporation Ltd., India
- Tamil Nadu electricity Board
- Posco Energy - South Korea
- Renaissance Capital - South Africa
- Orica Mining Services - Indonesia
- Semirara Mining Corp, Philippines
- Kumho Petrochemical, South Korea
- Latin American Coal - Colombia
- Sical Logistics Limited - India
- Goldman Sachs - Singapore
- Grasim Industreis Ltd - India
- Indika Energy - Indonesia
- Simpson Spence & Young - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Coal and Oil Company - UAE
- The Treasury - Australian Government
- Pipit Mutiara Jaya. PT, Indonesia
- Indian Oil Corporation Limited
- CNBM International Corporation - China
- Straits Asia Resources Limited - Singapore
- GN Power Mariveles Coal Plant, Philippines
- ICICI Bank Limited - India
- Mercator Lines Limited - India
- Jaiprakash Power Ventures ltd
- Lanco Infratech Ltd - India
- Economic Council, Georgia
- Holcim Trading Pte Ltd - Singapore
- Agrawal Coal Company - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Siam City Cement - Thailand
- Aditya Birla Group - India
- Sakthi Sugars Limited - India
- Interocean Group of Companies - India
- Planning Commission, India
- Krishnapatnam Port Company Ltd. - India
- Malabar Cements Ltd - India
- Bhatia International Limited - India
- Bukit Baiduri Energy - Indonesia
- The University of Queensland
- Global Business Power Corporation, Philippines
- Wood Mackenzie - Singapore
- Borneo Indobara - Indonesia
- Kapuas Tunggal Persada - Indonesia
- CIMB Investment Bank - Malaysia
- Ambuja Cements Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- IEA Clean Coal Centre - UK
- Carbofer General Trading SA - India
- European Bulk Services B.V. - Netherlands
- Mjunction Services Limited - India
- Africa Commodities Group - South Africa
- Bangladesh Power Developement Board
- Energy Link Ltd, New Zealand
- Coalindo Energy - Indonesia
- McConnell Dowell - Australia
- Kobexindo Tractors - Indoneisa
- Meenaskhi Energy Private Limited - India
- Star Paper Mills Limited - India
- Globalindo Alam Lestari - Indonesia
- Maheswari Brothers Coal Limited - India
- Samtan Co., Ltd - South Korea
- Attock Cement Pakistan Limited
- Essar Steel Hazira Ltd - India
- Australian Coal Association
- Independent Power Producers Association of India
- Ind-Barath Power Infra Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Timah Investasi Mineral - Indoneisa
- Central Electricity Authority - India
- TNB Fuel Sdn Bhd - Malaysia
- Cement Manufacturers Association - India
- Sinarmas Energy and Mining - Indonesia
- PTC India Limited - India
- Oldendorff Carriers - Singapore
- San Jose City I Power Corp, Philippines
- South Luzon Thermal Energy Corporation
- Kartika Selabumi Mining - Indonesia
- Edison Trading Spa - Italy
- Singapore Mercantile Exchange
- Karaikal Port Pvt Ltd - India
- GVK Power & Infra Limited - India
- Anglo American - United Kingdom
- Bahari Cakrawala Sebuku - Indonesia
- Binh Thuan Hamico - Vietnam
- Gujarat Sidhee Cement - India
- Thai Mozambique Logistica
- PNOC Exploration Corporation - Philippines
- Parry Sugars Refinery, India
- Bayan Resources Tbk. - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Chettinad Cement Corporation Ltd - India
- SN Aboitiz Power Inc, Philippines
- Riau Bara Harum - Indonesia
- Heidelberg Cement - Germany
- Ministry of Finance - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Videocon Industries ltd - India
- Baramulti Group, Indonesia
- GMR Energy Limited - India
- Formosa Plastics Group - Taiwan
- White Energy Company Limited
- Commonwealth Bank - Australia
- Directorate General of MIneral and Coal - Indonesia
- Pendopo Energi Batubara - Indonesia
- Siam City Cement PLC, Thailand
- Parliament of New Zealand
- Maharashtra Electricity Regulatory Commission - India
- Orica Australia Pty. Ltd.
- Larsen & Toubro Limited - India
- Global Green Power PLC Corporation, Philippines
- Indian Energy Exchange, India
- Chamber of Mines of South Africa
- Coastal Gujarat Power Limited - India
- Dalmia Cement Bharat India
- Port Waratah Coal Services - Australia
- SMG Consultants - Indonesia
- India Bulls Power Limited - India
- Petron Corporation, Philippines
- Vedanta Resources Plc - India
- Antam Resourcindo - Indonesia
- Vizag Seaport Private Limited - India
- LBH Netherlands Bv - Netherlands
- Rio Tinto Coal - Australia
- Thiess Contractors Indonesia
- Altura Mining Limited, Indonesia
- Indonesian Coal Mining Association
- Alfred C Toepfer International GmbH - Germany
- Manunggal Multi Energi - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kohat Cement Company Ltd. - Pakistan
- Ceylon Electricity Board - Sri Lanka
- Indogreen Group - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Bhoruka Overseas - Indonesia
- International Coal Ventures Pvt Ltd - India
- Ministry of Mines - Canada
- Madhucon Powers Ltd - India
- Directorate Of Revenue Intelligence - India
- Leighton Contractors Pty Ltd - Australia
- MS Steel International - UAE
- SMC Global Power, Philippines
- Semirara Mining and Power Corporation, Philippines
- Merrill Lynch Commodities Europe
- Neyveli Lignite Corporation Ltd, - India
- Marubeni Corporation - India
- Karbindo Abesyapradhi - Indoneisa
- Bukit Makmur.PT - Indonesia
- Kideco Jaya Agung - Indonesia
- Mintek Dendrill Indonesia
- Deloitte Consulting - India
- Kaltim Prima Coal - Indonesia
- Eastern Energy - Thailand
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