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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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Thursday, 09 December 10
DRY BULK MARKET LOOKING FOR DIRECTION THIS WEEK, AS CAPESIZE SHIPS END THEIR MISFORTUNES - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk has began the week on a positive note capitalizing on the positive sentiment which finally prevailed during the last days of the previo ...
Monday, 06 December 10
NTPC MAY OPT FOR INDONESIA OVER AFRICA, OZ FOR COAL MINES
Country's largest power producer NTPC, which is scouting for coal properties abroad to fuel its power plants back home, may zero in on Indonesia fo ...
Saturday, 04 December 10
INDONESIA TO INDIA AND CHINA SEA FREIGHT UP BY ABOUT US$ 2.50 PMT - CAPT. REDDY
COALspot.com - The freight market even though remained weak, but towards end of the week the market seemed to firm up.
The BDI was almost at sam ...
Saturday, 04 December 10
OFF WEST COAST OF INDIA TONNAGE IS SEEMINGLY QUITE SPARSE - FEARNBULK
Handy
The Atlantic markets are weak and remained unusually calm after the Thanksgiving ...
Friday, 03 December 10
INDONESIAN LOW RANK COAL IS ATTRACTING COAL BUYERS FROM INDIA AND CHINA
COALspot.com - Bhakti Energi Persada has sold out its whole coal production until the end of 2011, Jeffry Mulyono said during McCloskey Asia P ...
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- Gujarat Electricity Regulatory Commission - India
- Toyota Tsusho Corporation, Japan
- Lanco Infratech Ltd - India
- Binh Thuan Hamico - Vietnam
- Videocon Industries ltd - India
- Jindal Steel & Power Ltd - India
- Price Waterhouse Coopers - Russia
- Central Java Power - Indonesia
- Independent Power Producers Association of India
- Bukit Asam (Persero) Tbk - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Parry Sugars Refinery, India
- Thai Mozambique Logistica
- Planning Commission, India
- Sinarmas Energy and Mining - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Indian Oil Corporation Limited
- Sical Logistics Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Barasentosa Lestari - Indonesia
- Meralco Power Generation, Philippines
- Mintek Dendrill Indonesia
- Indian Energy Exchange, India
- Altura Mining Limited, Indonesia
- Coalindo Energy - Indonesia
- Grasim Industreis Ltd - India
- Baramulti Group, Indonesia
- Kobexindo Tractors - Indoneisa
- Savvy Resources Ltd - HongKong
- Africa Commodities Group - South Africa
- Ceylon Electricity Board - Sri Lanka
- GAC Shipping (India) Pvt Ltd
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- International Coal Ventures Pvt Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
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- OPG Power Generation Pvt Ltd - India
- Carbofer General Trading SA - India
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- GN Power Mariveles Coal Plant, Philippines
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- Thiess Contractors Indonesia
- Tata Chemicals Ltd - India
- PTC India Limited - India
- Agrawal Coal Company - India
- Eastern Energy - Thailand
- Kartika Selabumi Mining - Indonesia
- Sarangani Energy Corporation, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Antam Resourcindo - Indonesia
- India Bulls Power Limited - India
- Economic Council, Georgia
- Australian Coal Association
- Gujarat Mineral Development Corp Ltd - India
- Bharathi Cement Corporation - India
- Australian Commodity Traders Exchange
- Straits Asia Resources Limited - Singapore
- London Commodity Brokers - England
- Edison Trading Spa - Italy
- Meenaskhi Energy Private Limited - India
- Banpu Public Company Limited - Thailand
- AsiaOL BioFuels Corp., Philippines
- Pendopo Energi Batubara - Indonesia
- IEA Clean Coal Centre - UK
- Siam City Cement - Thailand
- Sojitz Corporation - Japan
- White Energy Company Limited
- Karbindo Abesyapradhi - Indoneisa
- Bhoruka Overseas - Indonesia
- ICICI Bank Limited - India
- Billiton Holdings Pty Ltd - Australia
- Bangladesh Power Developement Board
- Bhushan Steel Limited - India
- SN Aboitiz Power Inc, Philippines
- Petron Corporation, Philippines
- Chettinad Cement Corporation Ltd - India
- Port Waratah Coal Services - Australia
- Makarim & Taira - Indonesia
- Electricity Authority, New Zealand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Deloitte Consulting - India
- Malabar Cements Ltd - India
- Power Finance Corporation Ltd., India
- Bukit Baiduri Energy - Indonesia
- Georgia Ports Authority, United States
- Global Business Power Corporation, Philippines
- Indo Tambangraya Megah - Indonesia
- Heidelberg Cement - Germany
- Chamber of Mines of South Africa
- Bahari Cakrawala Sebuku - Indonesia
- Iligan Light & Power Inc, Philippines
- Bhatia International Limited - India
- Trasteel International SA, Italy
- McConnell Dowell - Australia
- SMC Global Power, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Metalloyd Limited - United Kingdom
- Energy Development Corp, Philippines
- Posco Energy - South Korea
- Intertek Mineral Services - Indonesia
- European Bulk Services B.V. - Netherlands
- Orica Australia Pty. Ltd.
- Sree Jayajothi Cements Limited - India
- Star Paper Mills Limited - India
- Maheswari Brothers Coal Limited - India
- Alfred C Toepfer International GmbH - Germany
- CNBM International Corporation - China
- Global Coal Blending Company Limited - Australia
- Borneo Indobara - Indonesia
- Oldendorff Carriers - Singapore
- Essar Steel Hazira Ltd - India
- Formosa Plastics Group - Taiwan
- Electricity Generating Authority of Thailand
- Commonwealth Bank - Australia
- Minerals Council of Australia
- Medco Energi Mining Internasional
- Salva Resources Pvt Ltd - India
- Central Electricity Authority - India
- Coastal Gujarat Power Limited - India
- Merrill Lynch Commodities Europe
- Offshore Bulk Terminal Pte Ltd, Singapore
- San Jose City I Power Corp, Philippines
- Rashtriya Ispat Nigam Limited - India
- Wood Mackenzie - Singapore
- The Treasury - Australian Government
- Global Green Power PLC Corporation, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Indika Energy - Indonesia
- Energy Link Ltd, New Zealand
- VISA Power Limited - India
- Madhucon Powers Ltd - India
- Larsen & Toubro Limited - India
- Cement Manufacturers Association - India
- Singapore Mercantile Exchange
- Dalmia Cement Bharat India
- Neyveli Lignite Corporation Ltd, - India
- Simpson Spence & Young - Indonesia
- Mjunction Services Limited - India
- Cigading International Bulk Terminal - Indonesia
- Ambuja Cements Ltd - India
- Eastern Coal Council - USA
- Orica Mining Services - Indonesia
- SMG Consultants - Indonesia
- Manunggal Multi Energi - Indonesia
- GVK Power & Infra Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Vizag Seaport Private Limited - India
- Krishnapatnam Port Company Ltd. - India
- Bulk Trading Sa - Switzerland
- Interocean Group of Companies - India
- PowerSource Philippines DevCo
- Standard Chartered Bank - UAE
- Riau Bara Harum - Indonesia
- The State Trading Corporation of India Ltd
- Samtan Co., Ltd - South Korea
- Ministry of Mines - Canada
- Kideco Jaya Agung - Indonesia
- LBH Netherlands Bv - Netherlands
- The University of Queensland
- Indonesian Coal Mining Association
- Bayan Resources Tbk. - Indonesia
- Rio Tinto Coal - Australia
- South Luzon Thermal Energy Corporation
- TeaM Sual Corporation - Philippines
- Kepco SPC Power Corporation, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ministry of Finance - Indonesia
- Coal and Oil Company - UAE
- Sakthi Sugars Limited - India
- Globalindo Alam Lestari - Indonesia
- Uttam Galva Steels Limited - India
- Karaikal Port Pvt Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Ind-Barath Power Infra Limited - India
- Aboitiz Power Corporation - Philippines
- Kalimantan Lumbung Energi - Indonesia
- Marubeni Corporation - India
- GMR Energy Limited - India
- Ministry of Transport, Egypt
- Goldman Sachs - Singapore
- Mercuria Energy - Indonesia
- Tamil Nadu electricity Board
- Gujarat Sidhee Cement - India
- Asmin Koalindo Tuhup - Indonesia
- Siam City Cement PLC, Thailand
- Bukit Makmur.PT - Indonesia
- Kaltim Prima Coal - Indonesia
- Sindya Power Generating Company Private Ltd
- Wilmar Investment Holdings
- Petrochimia International Co. Ltd.- Taiwan
- Kapuas Tunggal Persada - Indonesia
- Mercator Lines Limited - India
- Romanian Commodities Exchange
- Renaissance Capital - South Africa
- Leighton Contractors Pty Ltd - Australia
- Xindia Steels Limited - India
- Vedanta Resources Plc - India
- PNOC Exploration Corporation - Philippines
- Latin American Coal - Colombia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- IHS Mccloskey Coal Group - USA
- Semirara Mining Corp, Philippines
- Timah Investasi Mineral - Indoneisa
- Parliament of New Zealand
- Semirara Mining and Power Corporation, Philippines
- CIMB Investment Bank - Malaysia
- Directorate Of Revenue Intelligence - India
- MS Steel International - UAE
- New Zealand Coal & Carbon
- Attock Cement Pakistan Limited
- ASAPP Information Group - India
- Therma Luzon, Inc, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Vijayanagar Sugar Pvt Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
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