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