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