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