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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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Saturday, 07 May 11
SUPRAMAXES ARE AT AROUND $ 13,500-14,000 PER DAY FOR SINGLE TRIPS
COALspot.com - The freight remained fairly steady this week with the BDI up by 71 points and closing at 1,340 points, said Capt. Reddy, the director ...
Saturday, 07 May 11
COAL PRODUCTION MAY REACH 95M TONS IN SECOND QUARTER - THE JAKARTA POST
The Jakarta Post reported that, Indonesian miners are projected to produce around 95 million tons of coal in the second quarter of this year after l ...
Friday, 06 May 11
BUKIT ASAM TO CLOSE COAL TAKEOVER IN Q2 - INSIDER STORIES
The state-controlled PT Tambang Bukit Asam Tbk (PTBA) expects to complete acquisition of two coal mining companies from four companies which is now ...
Thursday, 05 May 11
SUPRAS IN NORTH CHINA ARE GETTING CLOSE TO $ 13K FOR INDO-INDIA
Handy
The Atlantic market is stable/flat with positive undertone meaning more enquiries hitting the market today. Lack of prompt vessels. Trips to ...
Thursday, 05 May 11
PANAMAXES LEAD DRY BULK MARKET TO HIGHER GROUND - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market’s benchmark, the Baltic Dry Index (BDI) managed to edge higher yesterday, rising by 1.81% to 1,292 points, in the first po ...
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- Kepco SPC Power Corporation, Philippines
- SN Aboitiz Power Inc, Philippines
- VISA Power Limited - India
- Banpu Public Company Limited - Thailand
- Directorate General of MIneral and Coal - Indonesia
- ASAPP Information Group - India
- The State Trading Corporation of India Ltd
- Kobexindo Tractors - Indoneisa
- Independent Power Producers Association of India
- Maharashtra Electricity Regulatory Commission - India
- Star Paper Mills Limited - India
- The Treasury - Australian Government
- Aboitiz Power Corporation - Philippines
- Simpson Spence & Young - Indonesia
- Parry Sugars Refinery, India
- Billiton Holdings Pty Ltd - Australia
- Larsen & Toubro Limited - India
- IHS Mccloskey Coal Group - USA
- Savvy Resources Ltd - HongKong
- Oldendorff Carriers - Singapore
- Power Finance Corporation Ltd., India
- Thiess Contractors Indonesia
- South Luzon Thermal Energy Corporation
- Malabar Cements Ltd - India
- Kumho Petrochemical, South Korea
- White Energy Company Limited
- European Bulk Services B.V. - Netherlands
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Petron Corporation, Philippines
- SMC Global Power, Philippines
- Siam City Cement PLC, Thailand
- Semirara Mining and Power Corporation, Philippines
- Vizag Seaport Private Limited - India
- San Jose City I Power Corp, Philippines
- Sarangani Energy Corporation, Philippines
- Georgia Ports Authority, United States
- Goldman Sachs - Singapore
- Wood Mackenzie - Singapore
- Kalimantan Lumbung Energi - Indonesia
- Ind-Barath Power Infra Limited - India
- Metalloyd Limited - United Kingdom
- Gujarat Sidhee Cement - India
- Xindia Steels Limited - India
- Ambuja Cements Ltd - India
- Orica Australia Pty. Ltd.
- Aditya Birla Group - India
- Dalmia Cement Bharat India
- Salva Resources Pvt Ltd - India
- London Commodity Brokers - England
- Riau Bara Harum - Indonesia
- Electricity Authority, New Zealand
- Bangladesh Power Developement Board
- Renaissance Capital - South Africa
- Africa Commodities Group - South Africa
- Thai Mozambique Logistica
- TNB Fuel Sdn Bhd - Malaysia
- Ministry of Finance - Indonesia
- Cement Manufacturers Association - India
- Vijayanagar Sugar Pvt Ltd - India
- Ministry of Transport, Egypt
- Bukit Asam (Persero) Tbk - Indonesia
- Economic Council, Georgia
- Indian Energy Exchange, India
- Meenaskhi Energy Private Limited - India
- Global Green Power PLC Corporation, Philippines
- Price Waterhouse Coopers - Russia
- Posco Energy - South Korea
- Barasentosa Lestari - Indonesia
- Orica Mining Services - Indonesia
- Minerals Council of Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Global Business Power Corporation, Philippines
- LBH Netherlands Bv - Netherlands
- Kapuas Tunggal Persada - Indonesia
- Sakthi Sugars Limited - India
- Sinarmas Energy and Mining - Indonesia
- Edison Trading Spa - Italy
- Kohat Cement Company Ltd. - Pakistan
- Interocean Group of Companies - India
- Kaltim Prima Coal - Indonesia
- Singapore Mercantile Exchange
- Samtan Co., Ltd - South Korea
- Electricity Generating Authority of Thailand
- Jaiprakash Power Ventures ltd
- Parliament of New Zealand
- Gujarat Mineral Development Corp Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Tamil Nadu electricity Board
- Holcim Trading Pte Ltd - Singapore
- Latin American Coal - Colombia
- Asmin Koalindo Tuhup - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Anglo American - United Kingdom
- Alfred C Toepfer International GmbH - Germany
- Indo Tambangraya Megah - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Leighton Contractors Pty Ltd - Australia
- Semirara Mining Corp, Philippines
- Meralco Power Generation, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Central Java Power - Indonesia
- CNBM International Corporation - China
- Jorong Barutama Greston.PT - Indonesia
- Global Coal Blending Company Limited - Australia
- Carbofer General Trading SA - India
- GAC Shipping (India) Pvt Ltd
- Gujarat Electricity Regulatory Commission - India
- Miang Besar Coal Terminal - Indonesia
- PNOC Exploration Corporation - Philippines
- Eastern Coal Council - USA
- Rio Tinto Coal - Australia
- Trasteel International SA, Italy
- New Zealand Coal & Carbon
- Chettinad Cement Corporation Ltd - India
- Marubeni Corporation - India
- MS Steel International - UAE
- Bayan Resources Tbk. - Indonesia
- The University of Queensland
- Wilmar Investment Holdings
- Timah Investasi Mineral - Indoneisa
- Karaikal Port Pvt Ltd - India
- Binh Thuan Hamico - Vietnam
- ICICI Bank Limited - India
- Standard Chartered Bank - UAE
- Makarim & Taira - Indonesia
- Indonesian Coal Mining Association
- Sojitz Corporation - Japan
- Port Waratah Coal Services - Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Deloitte Consulting - India
- Uttam Galva Steels Limited - India
- Indogreen Group - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Tata Chemicals Ltd - India
- Kartika Selabumi Mining - Indonesia
- Bhatia International Limited - India
- Grasim Industreis Ltd - India
- Agrawal Coal Company - India
- Pipit Mutiara Jaya. PT, Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Manunggal Multi Energi - Indonesia
- PowerSource Philippines DevCo
- Straits Asia Resources Limited - Singapore
- Romanian Commodities Exchange
- Bulk Trading Sa - Switzerland
- CIMB Investment Bank - Malaysia
- Karbindo Abesyapradhi - Indoneisa
- Mintek Dendrill Indonesia
- Intertek Mineral Services - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Planning Commission, India
- McConnell Dowell - Australia
- Chamber of Mines of South Africa
- IEA Clean Coal Centre - UK
- TeaM Sual Corporation - Philippines
- Sindya Power Generating Company Private Ltd
- Ministry of Mines - Canada
- Bhushan Steel Limited - India
- Mjunction Services Limited - India
- Lanco Infratech Ltd - India
- Globalindo Alam Lestari - Indonesia
- Bharathi Cement Corporation - India
- Coal and Oil Company - UAE
- Sree Jayajothi Cements Limited - India
- Siam City Cement - Thailand
- Antam Resourcindo - Indonesia
- Central Electricity Authority - India
- SMG Consultants - Indonesia
- Mercuria Energy - Indonesia
- Borneo Indobara - Indonesia
- Rashtriya Ispat Nigam Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Eastern Energy - Thailand
- Krishnapatnam Port Company Ltd. - India
- International Coal Ventures Pvt Ltd - India
- Essar Steel Hazira Ltd - India
- Coastal Gujarat Power Limited - India
- Kideco Jaya Agung - Indonesia
- Coalindo Energy - Indonesia
- Commonwealth Bank - Australia
- Ceylon Electricity Board - Sri Lanka
- GVK Power & Infra Limited - India
- Indika Energy - Indonesia
- Attock Cement Pakistan Limited
- Formosa Plastics Group - Taiwan
- Madhucon Powers Ltd - India
- Pendopo Energi Batubara - Indonesia
- GMR Energy Limited - India
- India Bulls Power Limited - India
- Sical Logistics Limited - India
- PTC India Limited - India
- Energy Link Ltd, New Zealand
- Maheswari Brothers Coal Limited - India
- Australian Coal Association
- Australian Commodity Traders Exchange
- Indian Oil Corporation Limited
- Jindal Steel & Power Ltd - India
- Therma Luzon, Inc, Philippines
- Energy Development Corp, Philippines
- Bukit Baiduri Energy - Indonesia
- Bhoruka Overseas - Indonesia
- OPG Power Generation Pvt Ltd - India
- Baramulti Group, Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- GN Power Mariveles Coal Plant, Philippines
- Heidelberg Cement - Germany
- Vedanta Resources Plc - India
- Bahari Cakrawala Sebuku - Indonesia
- Iligan Light & Power Inc, Philippines
- Mercator Lines Limited - India
- Altura Mining Limited, Indonesia
- Merrill Lynch Commodities Europe
- Bukit Makmur.PT - Indonesia
- Videocon Industries ltd - India
- Medco Energi Mining Internasional
- Toyota Tsusho Corporation, Japan
- Directorate Of Revenue Intelligence - India
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