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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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Wednesday, 19 January 11
DRY BULK MARKET HAS BOTTOMED OUT, AS WEATHER IN AUSTRALIA DIALS DOWN - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market has finally halted its plunge, after a devastating week of yet more losses. The industry’s benchmark, the Baltic Dry Index ...
Tuesday, 18 January 11
MINISTRY SEEKS COAL FROM INDONESIA - SUNDAY OBSERVER
Sunday Observer reported that, Ministry of Power and Energy is to explore the possibilities of importing quality coal from Indonesia.
Minister Pa ...
Tuesday, 18 January 11
DRY BULK MARKET HAS BOTTOMED OUT, AS WEATHER IN AUSTRALIA DIALS DOWN - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market has finally halted its plunge, after a devastating week of yet more losses. The industry’s benchmark, the Baltic Dry Index ...
Sunday, 16 January 11
STANCHART GLOBAL RESEARCH SEES COAL PRICE RISING ON SUPPLY DISRUPTION - BURSA MALAYSIA MARKET NEWS
Bursa Malaysia Market News reported that, Standard Chartered Global Research has upgraded its 2011 forecasts for global thermal coal prices based on ...
Saturday, 15 January 11
SUPRAMAX VESSELS FIXED AROUND $ 8K FOR TRIP VIA INDONESIA TO INDIA - VISTAAR
COALspot.com - The BDI continues to drop and has touched below 1,500 points with the cape index severely affected with the index touching 1,595 poin ...
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- Asmin Koalindo Tuhup - Indonesia
- Coalindo Energy - Indonesia
- Coastal Gujarat Power Limited - India
- Indo Tambangraya Megah - Indonesia
- Central Electricity Authority - India
- ICICI Bank Limited - India
- Electricity Authority, New Zealand
- The Treasury - Australian Government
- Sical Logistics Limited - India
- Jaiprakash Power Ventures ltd
- Eastern Coal Council - USA
- MS Steel International - UAE
- Parry Sugars Refinery, India
- South Luzon Thermal Energy Corporation
- Uttam Galva Steels Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Kumho Petrochemical, South Korea
- Global Coal Blending Company Limited - Australia
- Cement Manufacturers Association - India
- The University of Queensland
- Mercuria Energy - Indonesia
- Mercator Lines Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Savvy Resources Ltd - HongKong
- Sinarmas Energy and Mining - Indonesia
- Holcim Trading Pte Ltd - Singapore
- GN Power Mariveles Coal Plant, Philippines
- Indian Oil Corporation Limited
- Petrochimia International Co. Ltd.- Taiwan
- Commonwealth Bank - Australia
- San Jose City I Power Corp, Philippines
- Intertek Mineral Services - Indonesia
- Barasentosa Lestari - Indonesia
- White Energy Company Limited
- Star Paper Mills Limited - India
- Agrawal Coal Company - India
- Ambuja Cements Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Port Waratah Coal Services - Australia
- PetroVietnam Power Coal Import and Supply Company
- Simpson Spence & Young - Indonesia
- GVK Power & Infra Limited - India
- Indian Energy Exchange, India
- Maharashtra Electricity Regulatory Commission - India
- Madhucon Powers Ltd - India
- Iligan Light & Power Inc, Philippines
- Tamil Nadu electricity Board
- Merrill Lynch Commodities Europe
- Energy Link Ltd, New Zealand
- Posco Energy - South Korea
- Sree Jayajothi Cements Limited - India
- Goldman Sachs - Singapore
- Africa Commodities Group - South Africa
- PTC India Limited - India
- International Coal Ventures Pvt Ltd - India
- Edison Trading Spa - Italy
- McConnell Dowell - Australia
- Georgia Ports Authority, United States
- ASAPP Information Group - India
- Videocon Industries ltd - India
- Bhushan Steel Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Toyota Tsusho Corporation, Japan
- Heidelberg Cement - Germany
- Eastern Energy - Thailand
- Jindal Steel & Power Ltd - India
- Vedanta Resources Plc - India
- Bayan Resources Tbk. - Indonesia
- IHS Mccloskey Coal Group - USA
- TeaM Sual Corporation - Philippines
- Aditya Birla Group - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- VISA Power Limited - India
- Billiton Holdings Pty Ltd - Australia
- Trasteel International SA, Italy
- Therma Luzon, Inc, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Kepco SPC Power Corporation, Philippines
- Directorate Of Revenue Intelligence - India
- Orica Mining Services - Indonesia
- Kobexindo Tractors - Indoneisa
- Price Waterhouse Coopers - Russia
- Karbindo Abesyapradhi - Indoneisa
- Coal and Oil Company - UAE
- AsiaOL BioFuels Corp., Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Dalmia Cement Bharat India
- Standard Chartered Bank - UAE
- Bukit Asam (Persero) Tbk - Indonesia
- Rio Tinto Coal - Australia
- Marubeni Corporation - India
- Tata Chemicals Ltd - India
- Antam Resourcindo - Indonesia
- Economic Council, Georgia
- Bharathi Cement Corporation - India
- Global Green Power PLC Corporation, Philippines
- Altura Mining Limited, Indonesia
- Salva Resources Pvt Ltd - India
- Globalindo Alam Lestari - Indonesia
- Ministry of Mines - Canada
- Sindya Power Generating Company Private Ltd
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Banpu Public Company Limited - Thailand
- Alfred C Toepfer International GmbH - Germany
- GAC Shipping (India) Pvt Ltd
- Aboitiz Power Corporation - Philippines
- Timah Investasi Mineral - Indoneisa
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Singapore Mercantile Exchange
- Energy Development Corp, Philippines
- Leighton Contractors Pty Ltd - Australia
- Semirara Mining Corp, Philippines
- Planning Commission, India
- India Bulls Power Limited - India
- Lanco Infratech Ltd - India
- Sojitz Corporation - Japan
- Binh Thuan Hamico - Vietnam
- Ministry of Transport, Egypt
- Chettinad Cement Corporation Ltd - India
- Xindia Steels Limited - India
- Makarim & Taira - Indonesia
- Renaissance Capital - South Africa
- Pipit Mutiara Jaya. PT, Indonesia
- Attock Cement Pakistan Limited
- Anglo American - United Kingdom
- Central Java Power - Indonesia
- Interocean Group of Companies - India
- TNB Fuel Sdn Bhd - Malaysia
- Bhoruka Overseas - Indonesia
- Baramulti Group, Indonesia
- Krishnapatnam Port Company Ltd. - India
- SN Aboitiz Power Inc, Philippines
- CNBM International Corporation - China
- Bangladesh Power Developement Board
- Siam City Cement - Thailand
- Carbofer General Trading SA - India
- Ministry of Finance - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Straits Asia Resources Limited - Singapore
- Siam City Cement PLC, Thailand
- GMR Energy Limited - India
- Oldendorff Carriers - Singapore
- Power Finance Corporation Ltd., India
- PowerSource Philippines DevCo
- Gujarat Mineral Development Corp Ltd - India
- Thai Mozambique Logistica
- Maheswari Brothers Coal Limited - India
- Borneo Indobara - Indonesia
- Kaltim Prima Coal - Indonesia
- Sakthi Sugars Limited - India
- Meenaskhi Energy Private Limited - India
- Indogreen Group - Indonesia
- Latin American Coal - Colombia
- Neyveli Lignite Corporation Ltd, - India
- Larsen & Toubro Limited - India
- Manunggal Multi Energi - Indonesia
- CIMB Investment Bank - Malaysia
- Formosa Plastics Group - Taiwan
- Bukit Makmur.PT - Indonesia
- Romanian Commodities Exchange
- Essar Steel Hazira Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Electricity Generating Authority of Thailand
- Minerals Council of Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Mintek Dendrill Indonesia
- The State Trading Corporation of India Ltd
- SMC Global Power, Philippines
- Mjunction Services Limited - India
- OPG Power Generation Pvt Ltd - India
- Indonesian Coal Mining Association
- Bukit Baiduri Energy - Indonesia
- Medco Energi Mining Internasional
- IEA Clean Coal Centre - UK
- Bulk Trading Sa - Switzerland
- Kapuas Tunggal Persada - Indonesia
- SMG Consultants - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Riau Bara Harum - Indonesia
- Wood Mackenzie - Singapore
- Independent Power Producers Association of India
- PNOC Exploration Corporation - Philippines
- Petron Corporation, Philippines
- Rashtriya Ispat Nigam Limited - India
- Malabar Cements Ltd - India
- Orica Australia Pty. Ltd.
- London Commodity Brokers - England
- Metalloyd Limited - United Kingdom
- Deloitte Consulting - India
- Grasim Industreis Ltd - India
- Meralco Power Generation, Philippines
- Global Business Power Corporation, Philippines
- Kartika Selabumi Mining - Indonesia
- Parliament of New Zealand
- Ind-Barath Power Infra Limited - India
- Pendopo Energi Batubara - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Samtan Co., Ltd - South Korea
- Vizag Seaport Private Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- New Zealand Coal & Carbon
- Kalimantan Lumbung Energi - Indonesia
- Chamber of Mines of South Africa
- LBH Netherlands Bv - Netherlands
- Gujarat Sidhee Cement - India
- Indika Energy - Indonesia
- Sarangani Energy Corporation, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- European Bulk Services B.V. - Netherlands
- Karaikal Port Pvt Ltd - India
- Thiess Contractors Indonesia
- Kideco Jaya Agung - Indonesia
- Australian Commodity Traders Exchange
- Wilmar Investment Holdings
- Australian Coal Association
- Bhatia International Limited - India
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