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