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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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Monday, 08 November 10
INDONESIAN HBA HAS INCREASED TO $ 95.51 PER TON FOR NOVEMBER LOADING
COALspot.com: The Directorate General of Mineral, Coal and Geothermal of Indonesia has been publishing a monthly coal price reference (HBA) since Fe ...
Sunday, 07 November 10
THE SUPRAMAX INDEX IN THE FAR EAST CONTINUED TO BE UNDER PRESSURE - CAPT. REDDY
COALspot.com: The freight market continued to remain soft and all segments were down by almost about 6 pct.
The BDI and Cape Size index was down ...
Saturday, 06 November 10
DRY BULK MARKET LACKING SUPPORT TO SUSTAIN CURRENT LEVELS, BUT PANAMAX OWNERS ARE MORE FORTUNATE - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
Posting its fifth straight losing session, the dry bulk market benchmark, the BDI (Baltic Dry Index) was down yesterday by another 1.26% to 2510 poi ...
Friday, 05 November 10
RI COAL EXPORT PROSPECTS STILL BRIGHT - THE JAKARTA POST
The Jakarta Post reported that, Indonesia, already the world’s largest exporter of seaborne thermal coal since 2005, will continue to be a maj ...
Thursday, 04 November 10
CAPE SIZE SENTIMENT FOR THIS WEEK WAS NEGATIVE - FEARNBULK
Handy
The Atlantic markets remain flat and lackluster. High volume of tonnage availabi ...
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- Riau Bara Harum - Indonesia
- Ministry of Mines - Canada
- Bayan Resources Tbk. - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Asmin Koalindo Tuhup - Indonesia
- CIMB Investment Bank - Malaysia
- Bhatia International Limited - India
- Commonwealth Bank - Australia
- Neyveli Lignite Corporation Ltd, - India
- Toyota Tsusho Corporation, Japan
- Rio Tinto Coal - Australia
- Power Finance Corporation Ltd., India
- Vedanta Resources Plc - India
- Coalindo Energy - Indonesia
- Global Coal Blending Company Limited - Australia
- Banpu Public Company Limited - Thailand
- Dalmia Cement Bharat India
- San Jose City I Power Corp, Philippines
- Edison Trading Spa - Italy
- Oldendorff Carriers - Singapore
- ICICI Bank Limited - India
- Mercator Lines Limited - India
- CNBM International Corporation - China
- Borneo Indobara - Indonesia
- Kobexindo Tractors - Indoneisa
- Jindal Steel & Power Ltd - India
- Tata Chemicals Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Larsen & Toubro Limited - India
- Independent Power Producers Association of India
- Petron Corporation, Philippines
- Electricity Generating Authority of Thailand
- Sakthi Sugars Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Therma Luzon, Inc, Philippines
- Marubeni Corporation - India
- Kideco Jaya Agung - Indonesia
- Planning Commission, India
- Agrawal Coal Company - India
- Bahari Cakrawala Sebuku - Indonesia
- GMR Energy Limited - India
- Heidelberg Cement - Germany
- Interocean Group of Companies - India
- Madhucon Powers Ltd - India
- Binh Thuan Hamico - Vietnam
- Kaltim Prima Coal - Indonesia
- Kumho Petrochemical, South Korea
- Orica Mining Services - Indonesia
- Eastern Energy - Thailand
- Thiess Contractors Indonesia
- Anglo American - United Kingdom
- Indo Tambangraya Megah - Indonesia
- PNOC Exploration Corporation - Philippines
- Meralco Power Generation, Philippines
- Aditya Birla Group - India
- Bulk Trading Sa - Switzerland
- Sarangani Energy Corporation, Philippines
- Chettinad Cement Corporation Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Grasim Industreis Ltd - India
- Orica Australia Pty. Ltd.
- TeaM Sual Corporation - Philippines
- Sojitz Corporation - Japan
- Ceylon Electricity Board - Sri Lanka
- New Zealand Coal & Carbon
- VISA Power Limited - India
- Eastern Coal Council - USA
- Holcim Trading Pte Ltd - Singapore
- Ind-Barath Power Infra Limited - India
- Wood Mackenzie - Singapore
- Jaiprakash Power Ventures ltd
- Merrill Lynch Commodities Europe
- Baramulti Group, Indonesia
- Meenaskhi Energy Private Limited - India
- Gujarat Electricity Regulatory Commission - India
- Singapore Mercantile Exchange
- Chamber of Mines of South Africa
- PowerSource Philippines DevCo
- Maharashtra Electricity Regulatory Commission - India
- Vizag Seaport Private Limited - India
- Global Business Power Corporation, Philippines
- Sindya Power Generating Company Private Ltd
- Simpson Spence & Young - Indonesia
- Xindia Steels Limited - India
- The State Trading Corporation of India Ltd
- SMC Global Power, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Price Waterhouse Coopers - Russia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Carbofer General Trading SA - India
- Antam Resourcindo - Indonesia
- European Bulk Services B.V. - Netherlands
- Sinarmas Energy and Mining - Indonesia
- Parliament of New Zealand
- Pendopo Energi Batubara - Indonesia
- Ambuja Cements Ltd - India
- Karaikal Port Pvt Ltd - India
- Metalloyd Limited - United Kingdom
- GVK Power & Infra Limited - India
- White Energy Company Limited
- Economic Council, Georgia
- Indian Energy Exchange, India
- International Coal Ventures Pvt Ltd - India
- Mjunction Services Limited - India
- ASAPP Information Group - India
- SMG Consultants - Indonesia
- Wilmar Investment Holdings
- Sical Logistics Limited - India
- Intertek Mineral Services - Indonesia
- Bharathi Cement Corporation - India
- Indian Oil Corporation Limited
- IHS Mccloskey Coal Group - USA
- Leighton Contractors Pty Ltd - Australia
- Star Paper Mills Limited - India
- Globalindo Alam Lestari - Indonesia
- Gujarat Sidhee Cement - India
- Vijayanagar Sugar Pvt Ltd - India
- Mercuria Energy - Indonesia
- Ministry of Transport, Egypt
- PetroVietnam Power Coal Import and Supply Company
- Tamil Nadu electricity Board
- Ministry of Finance - Indonesia
- Krishnapatnam Port Company Ltd. - India
- The Treasury - Australian Government
- The University of Queensland
- McConnell Dowell - Australia
- Global Green Power PLC Corporation, Philippines
- LBH Netherlands Bv - Netherlands
- Jorong Barutama Greston.PT - Indonesia
- Parry Sugars Refinery, India
- Bhoruka Overseas - Indonesia
- Georgia Ports Authority, United States
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Indogreen Group - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Salva Resources Pvt Ltd - India
- Trasteel International SA, Italy
- PTC India Limited - India
- Lanco Infratech Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Indika Energy - Indonesia
- Malabar Cements Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bangladesh Power Developement Board
- Videocon Industries ltd - India
- Siam City Cement - Thailand
- Kalimantan Lumbung Energi - Indonesia
- OPG Power Generation Pvt Ltd - India
- Siam City Cement PLC, Thailand
- IEA Clean Coal Centre - UK
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Semirara Mining Corp, Philippines
- Makarim & Taira - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Billiton Holdings Pty Ltd - Australia
- Kohat Cement Company Ltd. - Pakistan
- Iligan Light & Power Inc, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- MS Steel International - UAE
- Bukit Makmur.PT - Indonesia
- Essar Steel Hazira Ltd - India
- Timah Investasi Mineral - Indoneisa
- Africa Commodities Group - South Africa
- Attock Cement Pakistan Limited
- Indonesian Coal Mining Association
- Coal and Oil Company - UAE
- Kapuas Tunggal Persada - Indonesia
- SN Aboitiz Power Inc, Philippines
- Goldman Sachs - Singapore
- Savvy Resources Ltd - HongKong
- Port Waratah Coal Services - Australia
- Coastal Gujarat Power Limited - India
- South Luzon Thermal Energy Corporation
- Barasentosa Lestari - Indonesia
- Central Java Power - Indonesia
- Kepco SPC Power Corporation, Philippines
- London Commodity Brokers - England
- Latin American Coal - Colombia
- Uttam Galva Steels Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bhushan Steel Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Sree Jayajothi Cements Limited - India
- Standard Chartered Bank - UAE
- Cement Manufacturers Association - India
- Samtan Co., Ltd - South Korea
- GN Power Mariveles Coal Plant, Philippines
- Electricity Authority, New Zealand
- Aboitiz Power Corporation - Philippines
- Australian Commodity Traders Exchange
- Minerals Council of Australia
- Altura Mining Limited, Indonesia
- Bukit Baiduri Energy - Indonesia
- Energy Development Corp, Philippines
- GAC Shipping (India) Pvt Ltd
- Central Electricity Authority - India
- Posco Energy - South Korea
- Kartika Selabumi Mining - Indonesia
- India Bulls Power Limited - India
- Energy Link Ltd, New Zealand
- Deloitte Consulting - India
- Cigading International Bulk Terminal - Indonesia
- Australian Coal Association
- AsiaOL BioFuels Corp., Philippines
- Maheswari Brothers Coal Limited - India
- Mintek Dendrill Indonesia
- Straits Asia Resources Limited - Singapore
- Manunggal Multi Energi - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Medco Energi Mining Internasional
- Romanian Commodities Exchange
- Thai Mozambique Logistica
- Formosa Plastics Group - Taiwan
- Renaissance Capital - South Africa
- Directorate Of Revenue Intelligence - India
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