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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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Tuesday, 21 December 10
CIL TOLD TO SCOUT MINES ABROAD TO BRIDGE COAL DEFICIT - ECONOMIC TIMES
Economic Times reported that, The government asked state-owned CIL to look for acquiring assets abroad to meet the domestic shortfall of coal.
&q ...
Tuesday, 21 December 10
SHIPPING INDUSTRY RECOVERING, BUT STILL HAMPERED BY OVERSUPPLY OF VESSELS AND DEPRESSED FREIGHT RATES - UNCTAD / HELLENIC SHIPPING
International seaborne trade contracted by 4.5 per cent in 2009, reports UNCTAD´s Review of Maritime Transport 2010 . That decline put seaborn ...
Sunday, 19 December 10
SPOT SUPRAMAX VESSELS WERE FIXED AROUND US$ 13,000 PER DAY FOR TRIP VIA INDONESIA TO INDIA - VISTAAR
COALspot.com - The freight market continued to be soft with the BDI down by 96 points and closed at 1,999 points, touching below 2,000 points on Fri ...
Friday, 17 December 10
THE PANAMAX MARKET HAS EXPERIENCED A SOFTER TENDENCY THIS WEEK - FEARNBULK
Handy
Monotonous Atlantic markets with little fresh enquiry in Black Sea/Med/Continent. Large Supras are achieving usd 21/22k for TA rounds - 2/3 ...
Friday, 17 December 10
NALCO SHORTLISTS COAL FIRMS FOR INDONESIA PROJECT - BUSINESS-STANDARD
Business-Standard reported that, State-owned NALCO today said it has shortlisted two firms for supply of coal for its Rs 18,000-crore (US$ 3,953,003 ...
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- GAC Shipping (India) Pvt Ltd
- Energy Development Corp, Philippines
- Bukit Makmur.PT - Indonesia
- Lanco Infratech Ltd - India
- Videocon Industries ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Orica Mining Services - Indonesia
- Xindia Steels Limited - India
- Tamil Nadu electricity Board
- Sinarmas Energy and Mining - Indonesia
- New Zealand Coal & Carbon
- PowerSource Philippines DevCo
- IEA Clean Coal Centre - UK
- Global Coal Blending Company Limited - Australia
- Samtan Co., Ltd - South Korea
- Sojitz Corporation - Japan
- Merrill Lynch Commodities Europe
- Metalloyd Limited - United Kingdom
- McConnell Dowell - Australia
- Baramulti Group, Indonesia
- Romanian Commodities Exchange
- Directorate General of MIneral and Coal - Indonesia
- SMC Global Power, Philippines
- Latin American Coal - Colombia
- Malabar Cements Ltd - India
- Coalindo Energy - Indonesia
- Toyota Tsusho Corporation, Japan
- Global Business Power Corporation, Philippines
- TeaM Sual Corporation - Philippines
- PNOC Exploration Corporation - Philippines
- Australian Coal Association
- Holcim Trading Pte Ltd - Singapore
- SMG Consultants - Indonesia
- Indian Energy Exchange, India
- Bulk Trading Sa - Switzerland
- Parry Sugars Refinery, India
- Jaiprakash Power Ventures ltd
- Karaikal Port Pvt Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Attock Cement Pakistan Limited
- Bangladesh Power Developement Board
- Directorate Of Revenue Intelligence - India
- Antam Resourcindo - Indonesia
- Central Electricity Authority - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kobexindo Tractors - Indoneisa
- Mjunction Services Limited - India
- Miang Besar Coal Terminal - Indonesia
- International Coal Ventures Pvt Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Dalmia Cement Bharat India
- The University of Queensland
- Intertek Mineral Services - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Kideco Jaya Agung - Indonesia
- Orica Australia Pty. Ltd.
- Manunggal Multi Energi - Indonesia
- Africa Commodities Group - South Africa
- Medco Energi Mining Internasional
- Planning Commission, India
- Thiess Contractors Indonesia
- Mercuria Energy - Indonesia
- Sree Jayajothi Cements Limited - India
- Gujarat Electricity Regulatory Commission - India
- South Luzon Thermal Energy Corporation
- ICICI Bank Limited - India
- Deloitte Consulting - India
- Indo Tambangraya Megah - Indonesia
- Bukit Baiduri Energy - Indonesia
- Sakthi Sugars Limited - India
- Maheswari Brothers Coal Limited - India
- Kepco SPC Power Corporation, Philippines
- Vedanta Resources Plc - India
- Port Waratah Coal Services - Australia
- Coastal Gujarat Power Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Sical Logistics Limited - India
- Bayan Resources Tbk. - Indonesia
- Binh Thuan Hamico - Vietnam
- Central Java Power - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Formosa Plastics Group - Taiwan
- Riau Bara Harum - Indonesia
- Sindya Power Generating Company Private Ltd
- Minerals Council of Australia
- Semirara Mining and Power Corporation, Philippines
- Tata Chemicals Ltd - India
- Gujarat Sidhee Cement - India
- PetroVietnam Power Coal Import and Supply Company
- Altura Mining Limited, Indonesia
- Power Finance Corporation Ltd., India
- Maharashtra Electricity Regulatory Commission - India
- GVK Power & Infra Limited - India
- Bhushan Steel Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Krishnapatnam Port Company Ltd. - India
- London Commodity Brokers - England
- Aditya Birla Group - India
- CIMB Investment Bank - Malaysia
- Renaissance Capital - South Africa
- AsiaOL BioFuels Corp., Philippines
- Coal and Oil Company - UAE
- Savvy Resources Ltd - HongKong
- Therma Luzon, Inc, Philippines
- Ministry of Mines - Canada
- Kaltim Prima Coal - Indonesia
- Mintek Dendrill Indonesia
- Rio Tinto Coal - Australia
- ASAPP Information Group - India
- Indian Oil Corporation Limited
- Price Waterhouse Coopers - Russia
- Kumho Petrochemical, South Korea
- Uttam Galva Steels Limited - India
- LBH Netherlands Bv - Netherlands
- Georgia Ports Authority, United States
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Wood Mackenzie - Singapore
- Pendopo Energi Batubara - Indonesia
- IHS Mccloskey Coal Group - USA
- Goldman Sachs - Singapore
- Indika Energy - Indonesia
- Interocean Group of Companies - India
- Bharathi Cement Corporation - India
- Independent Power Producers Association of India
- Petron Corporation, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- OPG Power Generation Pvt Ltd - India
- Posco Energy - South Korea
- Iligan Light & Power Inc, Philippines
- Ministry of Transport, Egypt
- Thai Mozambique Logistica
- Oldendorff Carriers - Singapore
- Marubeni Corporation - India
- GN Power Mariveles Coal Plant, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Meenaskhi Energy Private Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Electricity Generating Authority of Thailand
- Singapore Mercantile Exchange
- Carbofer General Trading SA - India
- Siam City Cement - Thailand
- Eastern Energy - Thailand
- Ceylon Electricity Board - Sri Lanka
- SN Aboitiz Power Inc, Philippines
- Larsen & Toubro Limited - India
- Wilmar Investment Holdings
- Bhatia International Limited - India
- MS Steel International - UAE
- Bhoruka Overseas - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Indonesian Coal Mining Association
- Ambuja Cements Ltd - India
- GMR Energy Limited - India
- White Energy Company Limited
- San Jose City I Power Corp, Philippines
- Indogreen Group - Indonesia
- Vizag Seaport Private Limited - India
- Sarangani Energy Corporation, Philippines
- Timah Investasi Mineral - Indoneisa
- Ind-Barath Power Infra Limited - India
- Global Green Power PLC Corporation, Philippines
- Billiton Holdings Pty Ltd - Australia
- Standard Chartered Bank - UAE
- Banpu Public Company Limited - Thailand
- Cigading International Bulk Terminal - Indonesia
- Salva Resources Pvt Ltd - India
- Aboitiz Power Corporation - Philippines
- Chamber of Mines of South Africa
- Edison Trading Spa - Italy
- Chettinad Cement Corporation Ltd - India
- Economic Council, Georgia
- Grasim Industreis Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Makarim & Taira - Indonesia
- Borneo Indobara - Indonesia
- Mercator Lines Limited - India
- Australian Commodity Traders Exchange
- PTC India Limited - India
- Star Paper Mills Limited - India
- Straits Asia Resources Limited - Singapore
- Simpson Spence & Young - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Cement Manufacturers Association - India
- CNBM International Corporation - China
- Semirara Mining Corp, Philippines
- Essar Steel Hazira Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Jindal Steel & Power Ltd - India
- European Bulk Services B.V. - Netherlands
- Pipit Mutiara Jaya. PT, Indonesia
- Anglo American - United Kingdom
- Meralco Power Generation, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Vijayanagar Sugar Pvt Ltd - India
- The State Trading Corporation of India Ltd
- Parliament of New Zealand
- Agrawal Coal Company - India
- Eastern Coal Council - USA
- Trasteel International SA, Italy
- Commonwealth Bank - Australia
- Barasentosa Lestari - Indonesia
- VISA Power Limited - India
- Madhucon Powers Ltd - India
- Ministry of Finance - Indonesia
- Siam City Cement PLC, Thailand
- Heidelberg Cement - Germany
- Energy Link Ltd, New Zealand
- Kartika Selabumi Mining - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Kapuas Tunggal Persada - Indonesia
- Electricity Authority, New Zealand
- The Treasury - Australian Government
- India Bulls Power Limited - India
- Globalindo Alam Lestari - Indonesia
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