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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, 12 January 11
BULKER DELIVERIES WEIGHING IN ON FREIGHT RATES KEEPING SENTIMENT ON A NEGATIVE MODE - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
A flurry of new buildings still hitting the water has caught up for good with the freight market, with capesizes unable to weather the storm. With r ...
Tuesday, 11 January 11
SUPRAMAX TRIP VIA INDONESIA TO INDIA US$ 8,000 PER DAY
Despite continued growth in the bulk trades, the delivery of new vessels is beginning to take its toll. The BDI continued its decline, finishing las ...
Tuesday, 11 January 11
DRY BULK MARKET REACHES NEW LOWS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market’s benchmark index, the Baltic Dry Index (BDI) lost further ground in the beginning of the week, following the trend of the ...
Monday, 10 January 11
MINING INVESTMENT TARGET TOO LOW - TEMPO INTERACTIVE
TEMPO Interactive reported that, the Indonesian Mining Association’s executive director, Priyo Pribadi, believes the government’s invest ...
Monday, 10 January 11
COAL MONGOLIA IS INVITING YOU TO THE INTERNATIONAL COAL SECTOR INVESTORS CONFERENCE
COALspot.com - (Press Release) - The Coal Mongolian Conference will take place at Chinggis Hotel, in Ulaanbaatar on 24-25, Feb 2011. The coal bonanz ...
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- Independent Power Producers Association of India
- Ambuja Cements Ltd - India
- Wood Mackenzie - Singapore
- Bhushan Steel Limited - India
- CNBM International Corporation - China
- Sindya Power Generating Company Private Ltd
- Minerals Council of Australia
- Malabar Cements Ltd - India
- Central Java Power - Indonesia
- Orica Australia Pty. Ltd.
- Economic Council, Georgia
- Jindal Steel & Power Ltd - India
- Attock Cement Pakistan Limited
- Holcim Trading Pte Ltd - Singapore
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- McConnell Dowell - Australia
- Maheswari Brothers Coal Limited - India
- Semirara Mining and Power Corporation, Philippines
- GVK Power & Infra Limited - India
- Dalmia Cement Bharat India
- Parry Sugars Refinery, India
- Videocon Industries ltd - India
- Therma Luzon, Inc, Philippines
- European Bulk Services B.V. - Netherlands
- Eastern Coal Council - USA
- Siam City Cement PLC, Thailand
- Kobexindo Tractors - Indoneisa
- SMC Global Power, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Vedanta Resources Plc - India
- Pendopo Energi Batubara - Indonesia
- Mintek Dendrill Indonesia
- Ministry of Mines - Canada
- Kepco SPC Power Corporation, Philippines
- VISA Power Limited - India
- Kumho Petrochemical, South Korea
- Simpson Spence & Young - Indonesia
- Posco Energy - South Korea
- Bahari Cakrawala Sebuku - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Parliament of New Zealand
- Neyveli Lignite Corporation Ltd, - India
- The State Trading Corporation of India Ltd
- India Bulls Power Limited - India
- Standard Chartered Bank - UAE
- Binh Thuan Hamico - Vietnam
- Bukit Baiduri Energy - Indonesia
- Meralco Power Generation, Philippines
- Barasentosa Lestari - Indonesia
- Sarangani Energy Corporation, Philippines
- Salva Resources Pvt Ltd - India
- Savvy Resources Ltd - HongKong
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Central Electricity Authority - India
- Thiess Contractors Indonesia
- Ministry of Finance - Indonesia
- Heidelberg Cement - Germany
- Intertek Mineral Services - Indonesia
- Carbofer General Trading SA - India
- Indika Energy - Indonesia
- Mjunction Services Limited - India
- Interocean Group of Companies - India
- Thai Mozambique Logistica
- Bayan Resources Tbk. - Indonesia
- LBH Netherlands Bv - Netherlands
- Borneo Indobara - Indonesia
- Toyota Tsusho Corporation, Japan
- Straits Asia Resources Limited - Singapore
- ASAPP Information Group - India
- Indian Energy Exchange, India
- Power Finance Corporation Ltd., India
- San Jose City I Power Corp, Philippines
- Jaiprakash Power Ventures ltd
- Kalimantan Lumbung Energi - Indonesia
- IHS Mccloskey Coal Group - USA
- GAC Shipping (India) Pvt Ltd
- SN Aboitiz Power Inc, Philippines
- Bulk Trading Sa - Switzerland
- Coal and Oil Company - UAE
- GN Power Mariveles Coal Plant, Philippines
- Grasim Industreis Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Sree Jayajothi Cements Limited - India
- Makarim & Taira - Indonesia
- Agrawal Coal Company - India
- Eastern Energy - Thailand
- Riau Bara Harum - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Electricity Generating Authority of Thailand
- Iligan Light & Power Inc, Philippines
- Vizag Seaport Private Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Karaikal Port Pvt Ltd - India
- CIMB Investment Bank - Malaysia
- Renaissance Capital - South Africa
- Miang Besar Coal Terminal - Indonesia
- Globalindo Alam Lestari - Indonesia
- Siam City Cement - Thailand
- Tata Chemicals Ltd - India
- Chamber of Mines of South Africa
- International Coal Ventures Pvt Ltd - India
- Australian Coal Association
- Altura Mining Limited, Indonesia
- Kapuas Tunggal Persada - Indonesia
- Coastal Gujarat Power Limited - India
- Sinarmas Energy and Mining - Indonesia
- Price Waterhouse Coopers - Russia
- Cement Manufacturers Association - India
- Goldman Sachs - Singapore
- ICICI Bank Limited - India
- Global Business Power Corporation, Philippines
- South Luzon Thermal Energy Corporation
- Indogreen Group - Indonesia
- Essar Steel Hazira Ltd - India
- Larsen & Toubro Limited - India
- Petron Corporation, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- GMR Energy Limited - India
- Marubeni Corporation - India
- Bhoruka Overseas - Indonesia
- Star Paper Mills Limited - India
- Bangladesh Power Developement Board
- Jorong Barutama Greston.PT - Indonesia
- The University of Queensland
- Wilmar Investment Holdings
- Chettinad Cement Corporation Ltd - India
- Oldendorff Carriers - Singapore
- Bukit Makmur.PT - Indonesia
- Electricity Authority, New Zealand
- Semirara Mining Corp, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Trasteel International SA, Italy
- Antam Resourcindo - Indonesia
- Orica Mining Services - Indonesia
- PNOC Exploration Corporation - Philippines
- Ind-Barath Power Infra Limited - India
- PTC India Limited - India
- Bhatia International Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Australian Commodity Traders Exchange
- SMG Consultants - Indonesia
- Commonwealth Bank - Australia
- Indian Oil Corporation Limited
- Meenaskhi Energy Private Limited - India
- AsiaOL BioFuels Corp., Philippines
- Latin American Coal - Colombia
- Port Waratah Coal Services - Australia
- Georgia Ports Authority, United States
- Timah Investasi Mineral - Indoneisa
- Kaltim Prima Coal - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Xindia Steels Limited - India
- Romanian Commodities Exchange
- Coalindo Energy - Indonesia
- Mercuria Energy - Indonesia
- Sical Logistics Limited - India
- Energy Development Corp, Philippines
- Ministry of Transport, Egypt
- Anglo American - United Kingdom
- Planning Commission, India
- Rio Tinto Coal - Australia
- Africa Commodities Group - South Africa
- The Treasury - Australian Government
- New Zealand Coal & Carbon
- Kohat Cement Company Ltd. - Pakistan
- Metalloyd Limited - United Kingdom
- Aditya Birla Group - India
- Indo Tambangraya Megah - Indonesia
- Krishnapatnam Port Company Ltd. - India
- TNB Fuel Sdn Bhd - Malaysia
- London Commodity Brokers - England
- Sojitz Corporation - Japan
- Rashtriya Ispat Nigam Limited - India
- Manunggal Multi Energi - Indonesia
- Energy Link Ltd, New Zealand
- Madhucon Powers Ltd - India
- Kideco Jaya Agung - Indonesia
- Aboitiz Power Corporation - Philippines
- Billiton Holdings Pty Ltd - Australia
- Pipit Mutiara Jaya. PT, Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Cigading International Bulk Terminal - Indonesia
- White Energy Company Limited
- Vijayanagar Sugar Pvt Ltd - India
- Uttam Galva Steels Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Lanco Infratech Ltd - India
- IEA Clean Coal Centre - UK
- Tamil Nadu electricity Board
- Asmin Koalindo Tuhup - Indonesia
- Gujarat Sidhee Cement - India
- Karbindo Abesyapradhi - Indoneisa
- Alfred C Toepfer International GmbH - Germany
- Samtan Co., Ltd - South Korea
- Gujarat Electricity Regulatory Commission - India
- Directorate Of Revenue Intelligence - India
- Indonesian Coal Mining Association
- Maharashtra Electricity Regulatory Commission - India
- Sakthi Sugars Limited - India
- Edison Trading Spa - Italy
- Bharathi Cement Corporation - India
- Mercator Lines Limited - India
- TeaM Sual Corporation - Philippines
- Global Coal Blending Company Limited - Australia
- MS Steel International - UAE
- Deloitte Consulting - India
- Merrill Lynch Commodities Europe
- Kartika Selabumi Mining - Indonesia
- Banpu Public Company Limited - Thailand
- PowerSource Philippines DevCo
- Formosa Plastics Group - Taiwan
- Medco Energi Mining Internasional
- Global Green Power PLC Corporation, Philippines
- OPG Power Generation Pvt Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Baramulti Group, Indonesia
- Singapore Mercantile Exchange
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