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