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