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