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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, 24 February 11
SUPRAS ARE FIXED AT CLOSE TO 10K FOR TRIPS VIA INDONESIA TO INDIA WITH COAL - FEARNBULK
Handy
After a short lived surge in rates the Atlantic market has flattened out due to too many spot vessels. The USGulf has cooled down somewhat f ...
Wednesday, 23 February 11
LIMITED AVAILABILITY OF COAL COULD TRIP MEGA POWER PLANT - THE ECONOMIC TIMES
The Economic Times, an Indian leading news paper reported that, an acute shortage of domestic coal is threatening to destabilize new power generatio ...
Wednesday, 23 February 11
DRY BULK MARKET BACK ON RETREAT MODE - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The two week rise of dry bulk freight rates seems to have come to a halt this week, with the industry’s benchmark, the Baltic Dry Index (BDI) lo ...
Wednesday, 23 February 11
INDONESIA NEEDS TO REVISE EXPORT BAN ON 5600 GAD COAL EXPORT - INDUSTRY
COALspot.com - The Indonesian government may be forced to revise its 2014 timeline for the proposed ban on all low quality coal exports, Patrick Han ...
Tuesday, 22 February 11
SUPRAMAX MARKET IS IMPROVING IN THE PACIFIC
BRS - A 10% rise in the BDI this week, mostly on the back of Panamax rates and improvements in the Supramax market in the Pacific. For the Capes, ra ...
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- Offshore Bulk Terminal Pte Ltd, Singapore
- Kepco SPC Power Corporation, Philippines
- Malabar Cements Ltd - India
- Sakthi Sugars Limited - India
- The Treasury - Australian Government
- Bangladesh Power Developement Board
- Bahari Cakrawala Sebuku - Indonesia
- Coal and Oil Company - UAE
- OPG Power Generation Pvt Ltd - India
- Mjunction Services Limited - India
- Vedanta Resources Plc - India
- Marubeni Corporation - India
- Romanian Commodities Exchange
- Directorate General of MIneral and Coal - Indonesia
- Bhoruka Overseas - Indonesia
- Standard Chartered Bank - UAE
- Larsen & Toubro Limited - India
- Semirara Mining and Power Corporation, Philippines
- Price Waterhouse Coopers - Russia
- IHS Mccloskey Coal Group - USA
- Parliament of New Zealand
- Energy Development Corp, Philippines
- Binh Thuan Hamico - Vietnam
- Chamber of Mines of South Africa
- Lanco Infratech Ltd - India
- Independent Power Producers Association of India
- PowerSource Philippines DevCo
- Maheswari Brothers Coal Limited - India
- Krishnapatnam Port Company Ltd. - India
- Trasteel International SA, Italy
- Directorate Of Revenue Intelligence - India
- Banpu Public Company Limited - Thailand
- Karbindo Abesyapradhi - Indoneisa
- Sical Logistics Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- ICICI Bank Limited - India
- Energy Link Ltd, New Zealand
- Eastern Energy - Thailand
- Power Finance Corporation Ltd., India
- Singapore Mercantile Exchange
- Tamil Nadu electricity Board
- Indogreen Group - Indonesia
- European Bulk Services B.V. - Netherlands
- International Coal Ventures Pvt Ltd - India
- Coalindo Energy - Indonesia
- Ministry of Transport, Egypt
- Holcim Trading Pte Ltd - Singapore
- Africa Commodities Group - South Africa
- Merrill Lynch Commodities Europe
- Dalmia Cement Bharat India
- TeaM Sual Corporation - Philippines
- Indian Oil Corporation Limited
- GVK Power & Infra Limited - India
- Uttam Galva Steels Limited - India
- Planning Commission, India
- Kobexindo Tractors - Indoneisa
- Minerals Council of Australia
- Indian Energy Exchange, India
- AsiaOL BioFuels Corp., Philippines
- SMG Consultants - Indonesia
- GAC Shipping (India) Pvt Ltd
- Iligan Light & Power Inc, Philippines
- PTC India Limited - India
- Jaiprakash Power Ventures ltd
- San Jose City I Power Corp, Philippines
- White Energy Company Limited
- Coastal Gujarat Power Limited - India
- Attock Cement Pakistan Limited
- Meralco Power Generation, Philippines
- Madhucon Powers Ltd - India
- Kumho Petrochemical, South Korea
- Indo Tambangraya Megah - Indonesia
- Toyota Tsusho Corporation, Japan
- Medco Energi Mining Internasional
- TNB Fuel Sdn Bhd - Malaysia
- SN Aboitiz Power Inc, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Agrawal Coal Company - India
- Thai Mozambique Logistica
- Salva Resources Pvt Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Thiess Contractors Indonesia
- Orica Mining Services - Indonesia
- Bhushan Steel Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Port Waratah Coal Services - Australia
- Central Electricity Authority - India
- Bharathi Cement Corporation - India
- Electricity Generating Authority of Thailand
- VISA Power Limited - India
- Deloitte Consulting - India
- Globalindo Alam Lestari - Indonesia
- South Luzon Thermal Energy Corporation
- Grasim Industreis Ltd - India
- Goldman Sachs - Singapore
- Edison Trading Spa - Italy
- Riau Bara Harum - Indonesia
- IEA Clean Coal Centre - UK
- Vizag Seaport Private Limited - India
- Sinarmas Energy and Mining - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Intertek Mineral Services - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Aboitiz Power Corporation - Philippines
- Cigading International Bulk Terminal - Indonesia
- Semirara Mining Corp, Philippines
- Billiton Holdings Pty Ltd - Australia
- Eastern Coal Council - USA
- Bukit Asam (Persero) Tbk - Indonesia
- Leighton Contractors Pty Ltd - Australia
- CNBM International Corporation - China
- Electricity Authority, New Zealand
- Videocon Industries ltd - India
- Bulk Trading Sa - Switzerland
- Georgia Ports Authority, United States
- Xindia Steels Limited - India
- Sindya Power Generating Company Private Ltd
- Carbofer General Trading SA - India
- Petron Corporation, Philippines
- Simpson Spence & Young - Indonesia
- Mercator Lines Limited - India
- Sojitz Corporation - Japan
- Ceylon Electricity Board - Sri Lanka
- Wood Mackenzie - Singapore
- Aditya Birla Group - India
- The State Trading Corporation of India Ltd
- Petrochimia International Co. Ltd.- Taiwan
- Star Paper Mills Limited - India
- Borneo Indobara - Indonesia
- London Commodity Brokers - England
- Bhatia International Limited - India
- Ministry of Mines - Canada
- Rashtriya Ispat Nigam Limited - India
- Global Green Power PLC Corporation, Philippines
- SMC Global Power, Philippines
- Central Java Power - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Barasentosa Lestari - Indonesia
- Karaikal Port Pvt Ltd - India
- New Zealand Coal & Carbon
- Latin American Coal - Colombia
- Posco Energy - South Korea
- Heidelberg Cement - Germany
- Global Coal Blending Company Limited - Australia
- Oldendorff Carriers - Singapore
- Kapuas Tunggal Persada - Indonesia
- Formosa Plastics Group - Taiwan
- Gujarat Sidhee Cement - India
- Siam City Cement - Thailand
- Miang Besar Coal Terminal - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Kartika Selabumi Mining - Indonesia
- Global Business Power Corporation, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- ASAPP Information Group - India
- Renaissance Capital - South Africa
- MS Steel International - UAE
- Meenaskhi Energy Private Limited - India
- Economic Council, Georgia
- Mercuria Energy - Indonesia
- McConnell Dowell - Australia
- Gujarat Mineral Development Corp Ltd - India
- Sarangani Energy Corporation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Siam City Cement PLC, Thailand
- Essar Steel Hazira Ltd - India
- Australian Coal Association
- Straits Asia Resources Limited - Singapore
- Chettinad Cement Corporation Ltd - India
- Ministry of Finance - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Therma Luzon, Inc, Philippines
- Ind-Barath Power Infra Limited - India
- Commonwealth Bank - Australia
- CIMB Investment Bank - Malaysia
- Sree Jayajothi Cements Limited - India
- Timah Investasi Mineral - Indoneisa
- Jorong Barutama Greston.PT - Indonesia
- Bayan Resources Tbk. - Indonesia
- Rio Tinto Coal - Australia
- Makarim & Taira - Indonesia
- GMR Energy Limited - India
- Jindal Steel & Power Ltd - India
- Kideco Jaya Agung - Indonesia
- Indika Energy - Indonesia
- PNOC Exploration Corporation - Philippines
- Wilmar Investment Holdings
- Kohat Cement Company Ltd. - Pakistan
- Indonesian Coal Mining Association
- Pendopo Energi Batubara - Indonesia
- Ambuja Cements Ltd - India
- LBH Netherlands Bv - Netherlands
- Metalloyd Limited - United Kingdom
- Manunggal Multi Energi - Indonesia
- The University of Queensland
- India Bulls Power Limited - India
- Savvy Resources Ltd - HongKong
- Antam Resourcindo - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Parry Sugars Refinery, India
- Anglo American - United Kingdom
- Interocean Group of Companies - India
- Australian Commodity Traders Exchange
- Mintek Dendrill Indonesia
- Altura Mining Limited, Indonesia
- Bukit Baiduri Energy - Indonesia
- Orica Australia Pty. Ltd.
- Kaltim Prima Coal - Indonesia
- Bukit Makmur.PT - Indonesia
- Tata Chemicals Ltd - India
- Cement Manufacturers Association - India
- Baramulti Group, Indonesia
- Samtan Co., Ltd - South Korea
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