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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, 15 December 10
SMALLER DRY BULK VESSELS ARE LOOKING UP, LARGER ONES FAIL TO DELIVER - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market lost further ground at the beginning of the week, in what could prove one of the slowest periods ship owners have been faced. Ye ...
Tuesday, 14 December 10
COAL IMPORTS MAY INCREASE 78% TO CHINA, INDIA: ENERGY MARKETS - BUSINESS WEEK
Business Week reported that, China and India may increase imports of coal by 78 percent to 337 million metric tons next year, further driving up pri ...
Tuesday, 14 December 10
BANPU PLANNING PRODUCTION BOOM - BANGKOK POST
Australian, Indonesian output to lead growth
Bangkok Post reported that, Banpu Plc, Asean's largest coal miner, wants to nearly double its coal ...
Tuesday, 14 December 10
THE FREIGHT RATES FROM INDONESIA TO INDIA AND CHINA REMAINED FIRM - CAPT. REDDY
COALspot.com - The freight market continued to be soft with the Cape sector most effected which was down by 289 points and closed at 2,694 poi ...
Monday, 13 December 10
ICE FUTURES EUROPE TO LAUNCH IHS MCCLOSKEY INDONESIAN SUB-BITUMINOUS FOB MARKER COAL CONTRACTS - MONDOVISIONE
Mondovisione reported that, IntercontinentalExchange (NYSE: ICE), a leading operator of global regulated futures exchanges, clearing houses and over ...
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- AsiaOL BioFuels Corp., Philippines
- Global Business Power Corporation, Philippines
- Riau Bara Harum - Indonesia
- Star Paper Mills Limited - India
- Ministry of Finance - Indonesia
- Savvy Resources Ltd - HongKong
- Commonwealth Bank - Australia
- Rashtriya Ispat Nigam Limited - India
- Tamil Nadu electricity Board
- Oldendorff Carriers - Singapore
- Cigading International Bulk Terminal - Indonesia
- Therma Luzon, Inc, Philippines
- Sarangani Energy Corporation, Philippines
- GMR Energy Limited - India
- Indonesian Coal Mining Association
- Energy Development Corp, Philippines
- Barasentosa Lestari - Indonesia
- Bhatia International Limited - India
- Edison Trading Spa - Italy
- IHS Mccloskey Coal Group - USA
- PetroVietnam Power Coal Import and Supply Company
- SMG Consultants - Indonesia
- Ministry of Transport, Egypt
- The Treasury - Australian Government
- Orica Mining Services - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Holcim Trading Pte Ltd - Singapore
- TNB Fuel Sdn Bhd - Malaysia
- The University of Queensland
- Borneo Indobara - Indonesia
- Antam Resourcindo - Indonesia
- Gujarat Sidhee Cement - India
- Indian Energy Exchange, India
- Indian Oil Corporation Limited
- Standard Chartered Bank - UAE
- Coastal Gujarat Power Limited - India
- Altura Mining Limited, Indonesia
- GAC Shipping (India) Pvt Ltd
- Billiton Holdings Pty Ltd - Australia
- Sree Jayajothi Cements Limited - India
- Madhucon Powers Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Iligan Light & Power Inc, Philippines
- Renaissance Capital - South Africa
- Siam City Cement - Thailand
- Karaikal Port Pvt Ltd - India
- Bharathi Cement Corporation - India
- Ind-Barath Power Infra Limited - India
- San Jose City I Power Corp, Philippines
- Bukit Baiduri Energy - Indonesia
- Mjunction Services Limited - India
- Bulk Trading Sa - Switzerland
- Formosa Plastics Group - Taiwan
- Lanco Infratech Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Sojitz Corporation - Japan
- Agrawal Coal Company - India
- GN Power Mariveles Coal Plant, Philippines
- MS Steel International - UAE
- Banpu Public Company Limited - Thailand
- Salva Resources Pvt Ltd - India
- IEA Clean Coal Centre - UK
- Siam City Cement PLC, Thailand
- Aditya Birla Group - India
- Maheswari Brothers Coal Limited - India
- Intertek Mineral Services - Indonesia
- Baramulti Group, Indonesia
- Sinarmas Energy and Mining - Indonesia
- Anglo American - United Kingdom
- London Commodity Brokers - England
- Kalimantan Lumbung Energi - Indonesia
- Rio Tinto Coal - Australia
- Larsen & Toubro Limited - India
- Posco Energy - South Korea
- Meralco Power Generation, Philippines
- Bukit Makmur.PT - Indonesia
- Merrill Lynch Commodities Europe
- Bangladesh Power Developement Board
- Electricity Authority, New Zealand
- Asmin Koalindo Tuhup - Indonesia
- Grasim Industreis Ltd - India
- Xindia Steels Limited - India
- Timah Investasi Mineral - Indoneisa
- Offshore Bulk Terminal Pte Ltd, Singapore
- Semirara Mining and Power Corporation, Philippines
- Coal and Oil Company - UAE
- Aboitiz Power Corporation - Philippines
- Vizag Seaport Private Limited - India
- CIMB Investment Bank - Malaysia
- Price Waterhouse Coopers - Russia
- Trasteel International SA, Italy
- CNBM International Corporation - China
- Australian Coal Association
- Eastern Coal Council - USA
- Ministry of Mines - Canada
- Global Green Power PLC Corporation, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Central Java Power - Indonesia
- Mercuria Energy - Indonesia
- VISA Power Limited - India
- Orica Australia Pty. Ltd.
- The State Trading Corporation of India Ltd
- Straits Asia Resources Limited - Singapore
- Semirara Mining Corp, Philippines
- Eastern Energy - Thailand
- Romanian Commodities Exchange
- Singapore Mercantile Exchange
- Ceylon Electricity Board - Sri Lanka
- Indo Tambangraya Megah - Indonesia
- Coalindo Energy - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Kaltim Prima Coal - Indonesia
- Latin American Coal - Colombia
- Bayan Resources Tbk. - Indonesia
- Metalloyd Limited - United Kingdom
- PTC India Limited - India
- Marubeni Corporation - India
- Neyveli Lignite Corporation Ltd, - India
- GVK Power & Infra Limited - India
- ICICI Bank Limited - India
- Port Waratah Coal Services - Australia
- Kapuas Tunggal Persada - Indonesia
- Binh Thuan Hamico - Vietnam
- Directorate Of Revenue Intelligence - India
- Economic Council, Georgia
- Vijayanagar Sugar Pvt Ltd - India
- Jaiprakash Power Ventures ltd
- Bhushan Steel Limited - India
- Thai Mozambique Logistica
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Parliament of New Zealand
- Kartika Selabumi Mining - Indonesia
- Electricity Generating Authority of Thailand
- Carbofer General Trading SA - India
- Attock Cement Pakistan Limited
- Uttam Galva Steels Limited - India
- ASAPP Information Group - India
- Videocon Industries ltd - India
- Dalmia Cement Bharat India
- Central Electricity Authority - India
- Leighton Contractors Pty Ltd - Australia
- Kideco Jaya Agung - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Georgia Ports Authority, United States
- Globalindo Alam Lestari - Indonesia
- Interocean Group of Companies - India
- Power Finance Corporation Ltd., India
- Kohat Cement Company Ltd. - Pakistan
- International Coal Ventures Pvt Ltd - India
- Independent Power Producers Association of India
- Sakthi Sugars Limited - India
- Kobexindo Tractors - Indoneisa
- PowerSource Philippines DevCo
- Directorate General of MIneral and Coal - Indonesia
- South Luzon Thermal Energy Corporation
- Goldman Sachs - Singapore
- OPG Power Generation Pvt Ltd - India
- Global Coal Blending Company Limited - Australia
- Wilmar Investment Holdings
- Simpson Spence & Young - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Jindal Steel & Power Ltd - India
- SMC Global Power, Philippines
- Bhoruka Overseas - Indonesia
- White Energy Company Limited
- Kepco SPC Power Corporation, Philippines
- Kumho Petrochemical, South Korea
- PNOC Exploration Corporation - Philippines
- Samtan Co., Ltd - South Korea
- Meenaskhi Energy Private Limited - India
- Essar Steel Hazira Ltd - India
- Wood Mackenzie - Singapore
- Energy Link Ltd, New Zealand
- Medco Energi Mining Internasional
- TeaM Sual Corporation - Philippines
- New Zealand Coal & Carbon
- Toyota Tsusho Corporation, Japan
- Cement Manufacturers Association - India
- Maharashtra Electricity Regulatory Commission - India
- Parry Sugars Refinery, India
- Bahari Cakrawala Sebuku - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Minerals Council of Australia
- Jorong Barutama Greston.PT - Indonesia
- Chamber of Mines of South Africa
- Africa Commodities Group - South Africa
- Petron Corporation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Sical Logistics Limited - India
- Planning Commission, India
- Manunggal Multi Energi - Indonesia
- Mintek Dendrill Indonesia
- Heidelberg Cement - Germany
- Pendopo Energi Batubara - Indonesia
- Sindya Power Generating Company Private Ltd
- Vedanta Resources Plc - India
- Indogreen Group - Indonesia
- India Bulls Power Limited - India
- European Bulk Services B.V. - Netherlands
- SN Aboitiz Power Inc, Philippines
- Australian Commodity Traders Exchange
- Alfred C Toepfer International GmbH - Germany
- LBH Netherlands Bv - Netherlands
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Tata Chemicals Ltd - India
- Deloitte Consulting - India
- Indika Energy - Indonesia
- Ambuja Cements Ltd - India
- Thiess Contractors Indonesia
- Mercator Lines Limited - India
- Chettinad Cement Corporation Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- McConnell Dowell - Australia
- Malabar Cements Ltd - India
- Makarim & Taira - Indonesia
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