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