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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, 04 November 10
GVK TALKS WITH MEC FOR INDONESIAN MINES DEAL - DNA INDIA
As reported by DNA India, GVK Power and Infrastructure on Wednesday said it is in talks with Gulf-based MEC Coal to buy its coal mines in Indonesia, ...
Wednesday, 03 November 10
PANAMAX SIZE DRY-BULK CARRIER MARKET IS STRONG - GERSON LEHRMAN
Panamax class vessels have been part of the fluctuation of the broader current dry bulk market. They have experienced occasional steep movements, du ...
Tuesday, 02 November 10
ADDED VALUE REMAINS STAGNANT - MAJALAH TAMBANG
The improvement of added value of mining products in accordance with mandate of the mining law has not been visible. Minerals and coal are still exp ...
Saturday, 30 October 10
THE SUPRAMAX FREIGHT MARKET THIS WEEK REMAINED ALMOST AT LAST WEEK LEVELS - VISTAAR SINGAPORE
COALspot.com: The freight market this week remained almost at same levels except for Panamax index which was up by 191 points.
The feast/SE Asia ...
Friday, 29 October 10
CAPE MARKET STARTED TO BREAK THOUGH THE UPWARDS RESISTANCE LEVEL OF USD 40K DAILY FOR SPOT CARGOS - FEARNLEYS
HANDY
The Atlantic markets remain flat and lackluster. The expectations that the grain ...
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- Manunggal Multi Energi - Indonesia
- Bukit Makmur.PT - Indonesia
- Bharathi Cement Corporation - India
- Pipit Mutiara Jaya. PT, Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Deloitte Consulting - India
- Standard Chartered Bank - UAE
- GN Power Mariveles Coal Plant, Philippines
- Kideco Jaya Agung - Indonesia
- New Zealand Coal & Carbon
- Meenaskhi Energy Private Limited - India
- Lanco Infratech Ltd - India
- Ambuja Cements Ltd - India
- Uttam Galva Steels Limited - India
- TeaM Sual Corporation - Philippines
- Renaissance Capital - South Africa
- Simpson Spence & Young - Indonesia
- GAC Shipping (India) Pvt Ltd
- Makarim & Taira - Indonesia
- Bhushan Steel Limited - India
- Aboitiz Power Corporation - Philippines
- Orica Mining Services - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Eastern Energy - Thailand
- Eastern Coal Council - USA
- Coalindo Energy - Indonesia
- Mintek Dendrill Indonesia
- Riau Bara Harum - Indonesia
- Coal and Oil Company - UAE
- Central Java Power - Indonesia
- Ministry of Transport, Egypt
- TNB Fuel Sdn Bhd - Malaysia
- Power Finance Corporation Ltd., India
- Georgia Ports Authority, United States
- Madhucon Powers Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Baramulti Group, Indonesia
- Asmin Koalindo Tuhup - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bhoruka Overseas - Indonesia
- Sojitz Corporation - Japan
- Independent Power Producers Association of India
- GVK Power & Infra Limited - India
- Minerals Council of Australia
- Antam Resourcindo - Indonesia
- Sical Logistics Limited - India
- Orica Australia Pty. Ltd.
- Latin American Coal - Colombia
- Miang Besar Coal Terminal - Indonesia
- Borneo Indobara - Indonesia
- Energy Link Ltd, New Zealand
- Edison Trading Spa - Italy
- Indika Energy - Indonesia
- Coastal Gujarat Power Limited - India
- Holcim Trading Pte Ltd - Singapore
- Grasim Industreis Ltd - India
- Videocon Industries ltd - India
- Semirara Mining and Power Corporation, Philippines
- IEA Clean Coal Centre - UK
- Karbindo Abesyapradhi - Indoneisa
- Vedanta Resources Plc - India
- Parry Sugars Refinery, India
- Merrill Lynch Commodities Europe
- Bahari Cakrawala Sebuku - Indonesia
- Interocean Group of Companies - India
- Global Coal Blending Company Limited - Australia
- Ministry of Mines - Canada
- Indo Tambangraya Megah - Indonesia
- SN Aboitiz Power Inc, Philippines
- Karaikal Port Pvt Ltd - India
- Anglo American - United Kingdom
- Malabar Cements Ltd - India
- McConnell Dowell - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Aditya Birla Group - India
- Central Electricity Authority - India
- Romanian Commodities Exchange
- Africa Commodities Group - South Africa
- India Bulls Power Limited - India
- MS Steel International - UAE
- Australian Coal Association
- Bulk Trading Sa - Switzerland
- Trasteel International SA, Italy
- Iligan Light & Power Inc, Philippines
- Pendopo Energi Batubara - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Wilmar Investment Holdings
- Xindia Steels Limited - India
- Petron Corporation, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kohat Cement Company Ltd. - Pakistan
- Bayan Resources Tbk. - Indonesia
- Mercator Lines Limited - India
- Kartika Selabumi Mining - Indonesia
- Bukit Baiduri Energy - Indonesia
- Formosa Plastics Group - Taiwan
- Electricity Authority, New Zealand
- Savvy Resources Ltd - HongKong
- ICICI Bank Limited - India
- Rio Tinto Coal - Australia
- Directorate Of Revenue Intelligence - India
- Kalimantan Lumbung Energi - Indonesia
- Thai Mozambique Logistica
- VISA Power Limited - India
- Global Business Power Corporation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Petrochimia International Co. Ltd.- Taiwan
- Port Waratah Coal Services - Australia
- Star Paper Mills Limited - India
- Sree Jayajothi Cements Limited - India
- Thiess Contractors Indonesia
- CNBM International Corporation - China
- Intertek Mineral Services - Indonesia
- Medco Energi Mining Internasional
- Carbofer General Trading SA - India
- OPG Power Generation Pvt Ltd - India
- Sindya Power Generating Company Private Ltd
- Parliament of New Zealand
- Kepco SPC Power Corporation, Philippines
- Gujarat Electricity Regulatory Commission - India
- Kobexindo Tractors - Indoneisa
- Indogreen Group - Indonesia
- SMC Global Power, Philippines
- Tata Chemicals Ltd - India
- San Jose City I Power Corp, Philippines
- Sarangani Energy Corporation, Philippines
- Posco Energy - South Korea
- European Bulk Services B.V. - Netherlands
- Larsen & Toubro Limited - India
- Sinarmas Energy and Mining - Indonesia
- Siam City Cement PLC, Thailand
- Dalmia Cement Bharat India
- Tamil Nadu electricity Board
- Kumho Petrochemical, South Korea
- Barasentosa Lestari - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Chettinad Cement Corporation Ltd - India
- Mjunction Services Limited - India
- Bhatia International Limited - India
- Binh Thuan Hamico - Vietnam
- Sakthi Sugars Limited - India
- Chamber of Mines of South Africa
- Straits Asia Resources Limited - Singapore
- Ministry of Finance - Indonesia
- Altura Mining Limited, Indonesia
- Indian Oil Corporation Limited
- Attock Cement Pakistan Limited
- Heidelberg Cement - Germany
- SMG Consultants - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Siam City Cement - Thailand
- Krishnapatnam Port Company Ltd. - India
- Electricity Generating Authority of Thailand
- Maheswari Brothers Coal Limited - India
- Cement Manufacturers Association - India
- Leighton Contractors Pty Ltd - Australia
- Samtan Co., Ltd - South Korea
- Billiton Holdings Pty Ltd - Australia
- Ind-Barath Power Infra Limited - India
- Mercuria Energy - Indonesia
- The University of Queensland
- Gujarat Mineral Development Corp Ltd - India
- Metalloyd Limited - United Kingdom
- IHS Mccloskey Coal Group - USA
- Alfred C Toepfer International GmbH - Germany
- Meralco Power Generation, Philippines
- Therma Luzon, Inc, Philippines
- Kapuas Tunggal Persada - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Toyota Tsusho Corporation, Japan
- Economic Council, Georgia
- Agrawal Coal Company - India
- Singapore Mercantile Exchange
- International Coal Ventures Pvt Ltd - India
- PowerSource Philippines DevCo
- Vizag Seaport Private Limited - India
- Jaiprakash Power Ventures ltd
- CIMB Investment Bank - Malaysia
- Energy Development Corp, Philippines
- Bangladesh Power Developement Board
- Wood Mackenzie - Singapore
- Directorate General of MIneral and Coal - Indonesia
- Australian Commodity Traders Exchange
- Offshore Bulk Terminal Pte Ltd, Singapore
- Salva Resources Pvt Ltd - India
- Oldendorff Carriers - Singapore
- Goldman Sachs - Singapore
- Kaltim Prima Coal - Indonesia
- Essar Steel Hazira Ltd - India
- Semirara Mining Corp, Philippines
- Jorong Barutama Greston.PT - Indonesia
- GMR Energy Limited - India
- Commonwealth Bank - Australia
- White Energy Company Limited
- PTC India Limited - India
- Rashtriya Ispat Nigam Limited - India
- The Treasury - Australian Government
- Banpu Public Company Limited - Thailand
- Price Waterhouse Coopers - Russia
- Globalindo Alam Lestari - Indonesia
- LBH Netherlands Bv - Netherlands
- Global Green Power PLC Corporation, Philippines
- South Luzon Thermal Energy Corporation
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Jindal Steel & Power Ltd - India
- London Commodity Brokers - England
- Planning Commission, India
- The State Trading Corporation of India Ltd
- Indian Energy Exchange, India
- PNOC Exploration Corporation - Philippines
- Timah Investasi Mineral - Indoneisa
- Indonesian Coal Mining Association
- Gujarat Sidhee Cement - India
- Marubeni Corporation - India
- ASAPP Information Group - India
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