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