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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, 02 June 11
LARGE SUPRAS FOR RBCT/INDIA ROUND ARE NOW ASKING 14K - FEARNBULK
Handy
The Handy/Supra market has in general been flat and un-exciting this week. The Black Sea market is almost non existing while the US Gulf mar ...
Thursday, 02 June 11
DRY BULK SHIP OWNERS LOOKING INTO SHORTENED WEEK WITH ANXIETY - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
With most markets in the western world closed yesterday, as a result of Memorial Day, dry bulk stakeholders weren’t able to build over the pos ...
Monday, 30 May 11
MIANG BESAR COAL TERMINAL ON TARGET
COALspot.com - MBCT, to be largest coal terminal in Asia to start construction in Indonesia’s east Kalimantan Island in July 2011 says Mr. Joh ...
Sunday, 29 May 11
THE FREIGHT MARKET CONTINUED TO GAIN MOMENTUM - VISTAAR
COALspot.com - The freight market continued to gain momentum and the BDI, Cape Index and Panamax was by up almost 10-12 pct and on all sectors, Vist ...
Saturday, 28 May 11
WCI-CHINA RATES SLIDED TO 15K AND FROM ECI AROUND 12K - FEARNLEYS AS
Handy
Rates in the Atlantic remain steady/flat with the Black Sea remaining quiet with little fresh enquiries. The Continent is seeing more tonnag ...
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- Indonesian Coal Mining Association
- Petrochimia International Co. Ltd.- Taiwan
- Aboitiz Power Corporation - Philippines
- Bhushan Steel Limited - India
- TeaM Sual Corporation - Philippines
- SMG Consultants - Indonesia
- Chamber of Mines of South Africa
- Energy Development Corp, Philippines
- Economic Council, Georgia
- Mintek Dendrill Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Deloitte Consulting - India
- Therma Luzon, Inc, Philippines
- Posco Energy - South Korea
- Sakthi Sugars Limited - India
- Petron Corporation, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Marubeni Corporation - India
- Directorate General of MIneral and Coal - Indonesia
- Medco Energi Mining Internasional
- Eastern Coal Council - USA
- Kobexindo Tractors - Indoneisa
- McConnell Dowell - Australia
- Pipit Mutiara Jaya. PT, Indonesia
- Vizag Seaport Private Limited - India
- Merrill Lynch Commodities Europe
- Siam City Cement PLC, Thailand
- Iligan Light & Power Inc, Philippines
- New Zealand Coal & Carbon
- Karbindo Abesyapradhi - Indoneisa
- Goldman Sachs - Singapore
- Bhoruka Overseas - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- The University of Queensland
- Orica Australia Pty. Ltd.
- ICICI Bank Limited - India
- Gujarat Electricity Regulatory Commission - India
- TNB Fuel Sdn Bhd - Malaysia
- Madhucon Powers Ltd - India
- Uttam Galva Steels Limited - India
- European Bulk Services B.V. - Netherlands
- Power Finance Corporation Ltd., India
- The Treasury - Australian Government
- Manunggal Multi Energi - Indonesia
- Indika Energy - Indonesia
- GAC Shipping (India) Pvt Ltd
- Trasteel International SA, Italy
- Central Java Power - Indonesia
- Kideco Jaya Agung - Indonesia
- Singapore Mercantile Exchange
- Carbofer General Trading SA - India
- Thiess Contractors Indonesia
- Sinarmas Energy and Mining - Indonesia
- Australian Coal Association
- Coal and Oil Company - UAE
- Indian Energy Exchange, India
- Minerals Council of Australia
- London Commodity Brokers - England
- PNOC Exploration Corporation - Philippines
- Sical Logistics Limited - India
- Kaltim Prima Coal - Indonesia
- International Coal Ventures Pvt Ltd - India
- Baramulti Group, Indonesia
- Bhatia International Limited - India
- Georgia Ports Authority, United States
- MS Steel International - UAE
- Coastal Gujarat Power Limited - India
- Edison Trading Spa - Italy
- PetroVietnam Power Coal Import and Supply Company
- Alfred C Toepfer International GmbH - Germany
- Eastern Energy - Thailand
- Orica Mining Services - Indonesia
- SN Aboitiz Power Inc, Philippines
- Tamil Nadu electricity Board
- Coalindo Energy - Indonesia
- GMR Energy Limited - India
- Simpson Spence & Young - Indonesia
- Videocon Industries ltd - India
- LBH Netherlands Bv - Netherlands
- Neyveli Lignite Corporation Ltd, - India
- Parry Sugars Refinery, India
- Vedanta Resources Plc - India
- Pendopo Energi Batubara - Indonesia
- Energy Link Ltd, New Zealand
- Independent Power Producers Association of India
- San Jose City I Power Corp, Philippines
- Indo Tambangraya Megah - Indonesia
- Price Waterhouse Coopers - Russia
- Savvy Resources Ltd - HongKong
- PowerSource Philippines DevCo
- Karaikal Port Pvt Ltd - India
- Binh Thuan Hamico - Vietnam
- Heidelberg Cement - Germany
- Wood Mackenzie - Singapore
- IHS Mccloskey Coal Group - USA
- Thai Mozambique Logistica
- Makarim & Taira - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Commonwealth Bank - Australia
- Cigading International Bulk Terminal - Indonesia
- The State Trading Corporation of India Ltd
- Parliament of New Zealand
- South Luzon Thermal Energy Corporation
- Global Green Power PLC Corporation, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Chettinad Cement Corporation Ltd - India
- Africa Commodities Group - South Africa
- Holcim Trading Pte Ltd - Singapore
- Intertek Mineral Services - Indonesia
- Gujarat Sidhee Cement - India
- Maheswari Brothers Coal Limited - India
- Riau Bara Harum - Indonesia
- Tata Chemicals Ltd - India
- Straits Asia Resources Limited - Singapore
- Grasim Industreis Ltd - India
- Kartika Selabumi Mining - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Ministry of Mines - Canada
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- PTC India Limited - India
- GVK Power & Infra Limited - India
- CNBM International Corporation - China
- Offshore Bulk Terminal Pte Ltd, Singapore
- Ambuja Cements Ltd - India
- Meenaskhi Energy Private Limited - India
- Electricity Authority, New Zealand
- Kepco SPC Power Corporation, Philippines
- Renaissance Capital - South Africa
- Kumho Petrochemical, South Korea
- Semirara Mining Corp, Philippines
- OPG Power Generation Pvt Ltd - India
- Meralco Power Generation, Philippines
- Australian Commodity Traders Exchange
- Ind-Barath Power Infra Limited - India
- Toyota Tsusho Corporation, Japan
- Vijayanagar Sugar Pvt Ltd - India
- Agrawal Coal Company - India
- SMC Global Power, Philippines
- India Bulls Power Limited - India
- Electricity Generating Authority of Thailand
- Xindia Steels Limited - India
- VISA Power Limited - India
- Central Electricity Authority - India
- Kapuas Tunggal Persada - Indonesia
- Global Business Power Corporation, Philippines
- White Energy Company Limited
- Star Paper Mills Limited - India
- Barasentosa Lestari - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Antam Resourcindo - Indonesia
- Borneo Indobara - Indonesia
- Romanian Commodities Exchange
- Indian Oil Corporation Limited
- Ministry of Transport, Egypt
- Bharathi Cement Corporation - India
- Jindal Steel & Power Ltd - India
- Sarangani Energy Corporation, Philippines
- Interocean Group of Companies - India
- Bayan Resources Tbk. - Indonesia
- Globalindo Alam Lestari - Indonesia
- Essar Steel Hazira Ltd - India
- Malabar Cements Ltd - India
- Jaiprakash Power Ventures ltd
- Mjunction Services Limited - India
- Timah Investasi Mineral - Indoneisa
- Maharashtra Electricity Regulatory Commission - India
- Rio Tinto Coal - Australia
- Formosa Plastics Group - Taiwan
- Ministry of Finance - Indonesia
- Dalmia Cement Bharat India
- Attock Cement Pakistan Limited
- Metalloyd Limited - United Kingdom
- Rashtriya Ispat Nigam Limited - India
- Miang Besar Coal Terminal - Indonesia
- Bukit Baiduri Energy - Indonesia
- Sindya Power Generating Company Private Ltd
- CIMB Investment Bank - Malaysia
- Port Waratah Coal Services - Australia
- Banpu Public Company Limited - Thailand
- Bukit Makmur.PT - Indonesia
- Lanco Infratech Ltd - India
- Mercator Lines Limited - India
- Krishnapatnam Port Company Ltd. - India
- Directorate Of Revenue Intelligence - India
- Anglo American - United Kingdom
- Leighton Contractors Pty Ltd - Australia
- Indogreen Group - Indonesia
- Global Coal Blending Company Limited - Australia
- Samtan Co., Ltd - South Korea
- Sree Jayajothi Cements Limited - India
- Oldendorff Carriers - Singapore
- IEA Clean Coal Centre - UK
- Jorong Barutama Greston.PT - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- ASAPP Information Group - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Aditya Birla Group - India
- Cement Manufacturers Association - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Standard Chartered Bank - UAE
- Mercuria Energy - Indonesia
- Bulk Trading Sa - Switzerland
- Billiton Holdings Pty Ltd - Australia
- Wilmar Investment Holdings
- AsiaOL BioFuels Corp., Philippines
- Latin American Coal - Colombia
- Siam City Cement - Thailand
- Larsen & Toubro Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Altura Mining Limited, Indonesia
- Planning Commission, India
- Sojitz Corporation - Japan
- Gujarat Mineral Development Corp Ltd - India
- Salva Resources Pvt Ltd - India
- Bangladesh Power Developement Board
- Semirara Mining and Power Corporation, Philippines
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