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