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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, 19 May 11
OVERSUPPLY, VERY LARGE ORE CARRIERS EAT UP ON DRY BULK FREIGHT RATES - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
After a brief upward momentum which ended early last week, the Baltic Dry Index, the dry bulk market’s benchmark has returned to its usual pat ...
Wednesday, 18 May 11
THE US COAL INDUSTRY LOGGED EXPORTS OF AROUND 25M TONNES IN 1Q OF 2011 - BRS
Another slow decline in the bulk markets this week, with the BCI losing the most at nearly 5%, the BPI 2.8% and the smaller sizes sub-1% amounts. Th ...
Wednesday, 18 May 11
AKR AIMS TO SELL COAL WORTH RP216 BILLION - PAPER
Bisnis Indonesia, an Indonesia's one of the leading business paper reported that, PT AKR Corporindo Tbk has targeted coal sales valued at Rp216 bil ...
Wednesday, 18 May 11
OVERHAUL OF MINING LAW MAY DETER INVESTMENT, S&P SAYS - THE JAKARTA GLOBE
The Jakarta Globe, an Indonesian English language news paper reported that, A report by Standard & Poor’s Ratings Services that a regulatory ...
Tuesday, 17 May 11
DRY BULK MARKET ENTERS WEEK ON WEAK MODE - HELLENIC SHIPPING
In yet another sign of softening freight rates for dry bulk carriers and oversupply issues, the dry bulk market entered this week on a downward path ...
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- Offshore Bulk Terminal Pte Ltd, Singapore
- Africa Commodities Group - South Africa
- Port Waratah Coal Services - Australia
- Xindia Steels Limited - India
- Chettinad Cement Corporation Ltd - India
- Coal and Oil Company - UAE
- The University of Queensland
- PowerSource Philippines DevCo
- Vijayanagar Sugar Pvt Ltd - India
- Anglo American - United Kingdom
- Chamber of Mines of South Africa
- Bukit Asam (Persero) Tbk - Indonesia
- Wilmar Investment Holdings
- Electricity Authority, New Zealand
- Trasteel International SA, Italy
- Coalindo Energy - Indonesia
- GAC Shipping (India) Pvt Ltd
- Energy Development Corp, Philippines
- VISA Power Limited - India
- Economic Council, Georgia
- Orica Mining Services - Indonesia
- Orica Australia Pty. Ltd.
- India Bulls Power Limited - India
- Indian Oil Corporation Limited
- Deloitte Consulting - India
- Coastal Gujarat Power Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Metalloyd Limited - United Kingdom
- Minerals Council of Australia
- Indo Tambangraya Megah - Indonesia
- Iligan Light & Power Inc, Philippines
- Grasim Industreis Ltd - India
- Global Green Power PLC Corporation, Philippines
- Medco Energi Mining Internasional
- Formosa Plastics Group - Taiwan
- Planning Commission, India
- Kapuas Tunggal Persada - Indonesia
- Singapore Mercantile Exchange
- Oldendorff Carriers - Singapore
- Bayan Resources Tbk. - Indonesia
- Pendopo Energi Batubara - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Thiess Contractors Indonesia
- Malabar Cements Ltd - India
- Baramulti Group, Indonesia
- Price Waterhouse Coopers - Russia
- Bhatia International Limited - India
- Binh Thuan Hamico - Vietnam
- Sarangani Energy Corporation, Philippines
- Billiton Holdings Pty Ltd - Australia
- Aditya Birla Group - India
- Bukit Makmur.PT - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Sojitz Corporation - Japan
- Renaissance Capital - South Africa
- Petron Corporation, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Merrill Lynch Commodities Europe
- Rashtriya Ispat Nigam Limited - India
- Central Electricity Authority - India
- TeaM Sual Corporation - Philippines
- Larsen & Toubro Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Parry Sugars Refinery, India
- Meenaskhi Energy Private Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Altura Mining Limited, Indonesia
- Cement Manufacturers Association - India
- Vedanta Resources Plc - India
- Jorong Barutama Greston.PT - Indonesia
- Jaiprakash Power Ventures ltd
- Georgia Ports Authority, United States
- Eastern Energy - Thailand
- Eastern Coal Council - USA
- New Zealand Coal & Carbon
- The Treasury - Australian Government
- Siam City Cement - Thailand
- Latin American Coal - Colombia
- Star Paper Mills Limited - India
- Bangladesh Power Developement Board
- Globalindo Alam Lestari - Indonesia
- White Energy Company Limited
- Sical Logistics Limited - India
- Intertek Mineral Services - Indonesia
- Marubeni Corporation - India
- Posco Energy - South Korea
- Kepco SPC Power Corporation, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Agrawal Coal Company - India
- The State Trading Corporation of India Ltd
- Commonwealth Bank - Australia
- Standard Chartered Bank - UAE
- Directorate Of Revenue Intelligence - India
- Indian Energy Exchange, India
- Goldman Sachs - Singapore
- Mercator Lines Limited - India
- Thai Mozambique Logistica
- Gujarat Electricity Regulatory Commission - India
- ICICI Bank Limited - India
- Independent Power Producers Association of India
- Kobexindo Tractors - Indoneisa
- IHS Mccloskey Coal Group - USA
- Mintek Dendrill Indonesia
- GMR Energy Limited - India
- Australian Commodity Traders Exchange
- OPG Power Generation Pvt Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Riau Bara Harum - Indonesia
- Meralco Power Generation, Philippines
- Directorate General of MIneral and Coal - Indonesia
- International Coal Ventures Pvt Ltd - India
- Karaikal Port Pvt Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Straits Asia Resources Limited - Singapore
- Maharashtra Electricity Regulatory Commission - India
- Toyota Tsusho Corporation, Japan
- London Commodity Brokers - England
- Ministry of Mines - Canada
- Indonesian Coal Mining Association
- San Jose City I Power Corp, Philippines
- Madhucon Powers Ltd - India
- Bhushan Steel Limited - India
- Power Finance Corporation Ltd., India
- CNBM International Corporation - China
- GVK Power & Infra Limited - India
- Sree Jayajothi Cements Limited - India
- Bulk Trading Sa - Switzerland
- IEA Clean Coal Centre - UK
- European Bulk Services B.V. - Netherlands
- Kideco Jaya Agung - Indonesia
- CIMB Investment Bank - Malaysia
- South Luzon Thermal Energy Corporation
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- McConnell Dowell - Australia
- Sindya Power Generating Company Private Ltd
- PNOC Exploration Corporation - Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Australian Coal Association
- SN Aboitiz Power Inc, Philippines
- Manunggal Multi Energi - Indonesia
- Savvy Resources Ltd - HongKong
- Krishnapatnam Port Company Ltd. - India
- Kumho Petrochemical, South Korea
- Barasentosa Lestari - Indonesia
- Samtan Co., Ltd - South Korea
- Siam City Cement PLC, Thailand
- Indogreen Group - Indonesia
- Indika Energy - Indonesia
- Edison Trading Spa - Italy
- Holcim Trading Pte Ltd - Singapore
- Maheswari Brothers Coal Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Tata Chemicals Ltd - India
- Carbofer General Trading SA - India
- Antam Resourcindo - Indonesia
- Ind-Barath Power Infra Limited - India
- Banpu Public Company Limited - Thailand
- Ministry of Transport, Egypt
- Kaltim Prima Coal - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Electricity Generating Authority of Thailand
- Global Coal Blending Company Limited - Australia
- Borneo Indobara - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Bharathi Cement Corporation - India
- Asmin Koalindo Tuhup - Indonesia
- Bukit Baiduri Energy - Indonesia
- LBH Netherlands Bv - Netherlands
- Energy Link Ltd, New Zealand
- Interocean Group of Companies - India
- Central Java Power - Indonesia
- SMC Global Power, Philippines
- Wood Mackenzie - Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- Timah Investasi Mineral - Indoneisa
- Jindal Steel & Power Ltd - India
- Heidelberg Cement - Germany
- Videocon Industries ltd - India
- Salva Resources Pvt Ltd - India
- Romanian Commodities Exchange
- Simpson Spence & Young - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Neyveli Lignite Corporation Ltd, - India
- Kalimantan Lumbung Energi - Indonesia
- Gujarat Sidhee Cement - India
- Dalmia Cement Bharat India
- Mjunction Services Limited - India
- Bhoruka Overseas - Indonesia
- Makarim & Taira - Indonesia
- Tamil Nadu electricity Board
- Ceylon Electricity Board - Sri Lanka
- Alfred C Toepfer International GmbH - Germany
- Lanco Infratech Ltd - India
- Kartika Selabumi Mining - Indonesia
- Global Business Power Corporation, Philippines
- Ambuja Cements Ltd - India
- Aboitiz Power Corporation - Philippines
- Semirara Mining Corp, Philippines
- Uttam Galva Steels Limited - India
- Mercuria Energy - Indonesia
- SMG Consultants - Indonesia
- Rio Tinto Coal - Australia
- Cigading International Bulk Terminal - Indonesia
- Sakthi Sugars Limited - India
- Attock Cement Pakistan Limited
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Vizag Seaport Private Limited - India
- Essar Steel Hazira Ltd - India
- Leighton Contractors Pty Ltd - Australia
- MS Steel International - UAE
- PTC India Limited - India
- Ministry of Finance - Indonesia
- Therma Luzon, Inc, Philippines
- ASAPP Information Group - India
- Parliament of New Zealand
- GN Power Mariveles Coal Plant, Philippines
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