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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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Tuesday, 26 October 10
DRY BULK MARKET TO KEEP RISING THIS WEEK ON STRONG CHINESE IRON ORE AND THERMAL COAL DEMAND - HELLENIC SHIPPING
Overcapacitated or not, the dry bulk market keeps its positive momentum as we move forward this week, with the Baltic Dry Index (BDI) rising by 0.77 ...
Monday, 25 October 10
TWO CHINESE COMPANIES INK DEAL TO TAP AUSSIE COAL RESERVES
China Daily reportd that, two Chinese coal firms have teamed up to explore and develop coal resources in an area in Australia that has forecast rese ...
Monday, 25 October 10
DRY BULK MARKET STILL HEAVILY DEPENDENT ON CHINA, POSTS SMALL WEEKLY LOSS OF 1.27% - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
With every twitch and turn from China’s metals industry, the dry bulk market is disproportionally affected, as evidenced by the course of the ...
Sunday, 24 October 10
SUPRAMAX VESSELS BEING FIXED AROUND $ 15 K PER DAY DELIVERY N. CHINA FOR TRIP VIA INDONESIA TO INDIA - VISTAAR SHIPPING
COALspot.com: The freight market this week remained almost at same levels with not much change. However the Far East/SE Asia market was quite soft w ...
Saturday, 23 October 10
HEAVY RAINS NO DAMPENER FOR 2010 COAL OUTPUT TARGET, MINISTRY SAYS - THE JAKARTA GLOBE
The Jakarta Globe reported that, National coal production would likely meet the target set by the Energy Ministry despite unusually heavy rain this ...
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- Holcim Trading Pte Ltd - Singapore
- Electricity Generating Authority of Thailand
- Agrawal Coal Company - India
- Samtan Co., Ltd - South Korea
- Salva Resources Pvt Ltd - India
- LBH Netherlands Bv - Netherlands
- Baramulti Group, Indonesia
- Kideco Jaya Agung - Indonesia
- Formosa Plastics Group - Taiwan
- Chamber of Mines of South Africa
- Power Finance Corporation Ltd., India
- Altura Mining Limited, Indonesia
- Gujarat Electricity Regulatory Commission - India
- Bahari Cakrawala Sebuku - Indonesia
- Georgia Ports Authority, United States
- Indian Oil Corporation Limited
- Sinarmas Energy and Mining - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Eastern Energy - Thailand
- Medco Energi Mining Internasional
- Kapuas Tunggal Persada - Indonesia
- ICICI Bank Limited - India
- Indonesian Coal Mining Association
- Posco Energy - South Korea
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Xindia Steels Limited - India
- Binh Thuan Hamico - Vietnam
- Orica Mining Services - Indonesia
- GAC Shipping (India) Pvt Ltd
- Antam Resourcindo - Indonesia
- Siam City Cement - Thailand
- PowerSource Philippines DevCo
- Coalindo Energy - Indonesia
- Wood Mackenzie - Singapore
- Ministry of Transport, Egypt
- White Energy Company Limited
- Mercator Lines Limited - India
- Lanco Infratech Ltd - India
- Edison Trading Spa - Italy
- Kaltim Prima Coal - Indonesia
- Global Business Power Corporation, Philippines
- Coastal Gujarat Power Limited - India
- European Bulk Services B.V. - Netherlands
- Intertek Mineral Services - Indonesia
- Tamil Nadu electricity Board
- Oldendorff Carriers - Singapore
- SMC Global Power, Philippines
- Dalmia Cement Bharat India
- AsiaOL BioFuels Corp., Philippines
- Madhucon Powers Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Miang Besar Coal Terminal - Indonesia
- London Commodity Brokers - England
- Star Paper Mills Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Energy Development Corp, Philippines
- IHS Mccloskey Coal Group - USA
- Port Waratah Coal Services - Australia
- MS Steel International - UAE
- Coal and Oil Company - UAE
- Orica Australia Pty. Ltd.
- Renaissance Capital - South Africa
- Bangladesh Power Developement Board
- Sakthi Sugars Limited - India
- Siam City Cement PLC, Thailand
- Straits Asia Resources Limited - Singapore
- Romanian Commodities Exchange
- Gujarat Sidhee Cement - India
- CNBM International Corporation - China
- Karbindo Abesyapradhi - Indoneisa
- Planning Commission, India
- Meenaskhi Energy Private Limited - India
- Latin American Coal - Colombia
- Ambuja Cements Ltd - India
- PTC India Limited - India
- Chettinad Cement Corporation Ltd - India
- Petron Corporation, Philippines
- Tata Chemicals Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Essar Steel Hazira Ltd - India
- Bharathi Cement Corporation - India
- Wilmar Investment Holdings
- Maharashtra Electricity Regulatory Commission - India
- Ceylon Electricity Board - Sri Lanka
- Central Java Power - Indonesia
- ASAPP Information Group - India
- Videocon Industries ltd - India
- Pendopo Energi Batubara - Indonesia
- Bhoruka Overseas - Indonesia
- South Luzon Thermal Energy Corporation
- VISA Power Limited - India
- Singapore Mercantile Exchange
- Australian Coal Association
- Parry Sugars Refinery, India
- Petrochimia International Co. Ltd.- Taiwan
- International Coal Ventures Pvt Ltd - India
- IEA Clean Coal Centre - UK
- Indian Energy Exchange, India
- Energy Link Ltd, New Zealand
- Riau Bara Harum - Indonesia
- Mercuria Energy - Indonesia
- The Treasury - Australian Government
- Alfred C Toepfer International GmbH - Germany
- Bank of Tokyo Mitsubishi UFJ Ltd
- Mjunction Services Limited - India
- Attock Cement Pakistan Limited
- Sojitz Corporation - Japan
- Sindya Power Generating Company Private Ltd
- Grasim Industreis Ltd - India
- Australian Commodity Traders Exchange
- Sree Jayajothi Cements Limited - India
- Anglo American - United Kingdom
- Jaiprakash Power Ventures ltd
- PetroVietnam Power Coal Import and Supply Company
- Bukit Baiduri Energy - Indonesia
- Kobexindo Tractors - Indoneisa
- Rio Tinto Coal - Australia
- Gujarat Mineral Development Corp Ltd - India
- Simpson Spence & Young - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Ministry of Finance - Indonesia
- Timah Investasi Mineral - Indoneisa
- Africa Commodities Group - South Africa
- Rashtriya Ispat Nigam Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Deloitte Consulting - India
- Bukit Makmur.PT - Indonesia
- Toyota Tsusho Corporation, Japan
- GVK Power & Infra Limited - India
- Malabar Cements Ltd - India
- Uttam Galva Steels Limited - India
- Parliament of New Zealand
- Barasentosa Lestari - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Goldman Sachs - Singapore
- Aditya Birla Group - India
- Electricity Authority, New Zealand
- Savvy Resources Ltd - HongKong
- Directorate General of MIneral and Coal - Indonesia
- Bulk Trading Sa - Switzerland
- Maheswari Brothers Coal Limited - India
- Carbofer General Trading SA - India
- Globalindo Alam Lestari - Indonesia
- Metalloyd Limited - United Kingdom
- Marubeni Corporation - India
- Kartika Selabumi Mining - Indonesia
- Ind-Barath Power Infra Limited - India
- Thai Mozambique Logistica
- India Bulls Power Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- San Jose City I Power Corp, Philippines
- Independent Power Producers Association of India
- Kohat Cement Company Ltd. - Pakistan
- Larsen & Toubro Limited - India
- Minerals Council of Australia
- Sarangani Energy Corporation, Philippines
- Mintek Dendrill Indonesia
- Bhatia International Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Manunggal Multi Energi - Indonesia
- Eastern Coal Council - USA
- Cement Manufacturers Association - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Makarim & Taira - Indonesia
- Trasteel International SA, Italy
- New Zealand Coal & Carbon
- Semirara Mining and Power Corporation, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Central Electricity Authority - India
- Indika Energy - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Banpu Public Company Limited - Thailand
- SN Aboitiz Power Inc, Philippines
- Jindal Steel & Power Ltd - India
- PNOC Exploration Corporation - Philippines
- Global Green Power PLC Corporation, Philippines
- Semirara Mining Corp, Philippines
- Price Waterhouse Coopers - Russia
- Kumho Petrochemical, South Korea
- Indo Tambangraya Megah - Indonesia
- Vizag Seaport Private Limited - India
- Jorong Barutama Greston.PT - Indonesia
- SMG Consultants - Indonesia
- Thiess Contractors Indonesia
- TeaM Sual Corporation - Philippines
- GMR Energy Limited - India
- Vedanta Resources Plc - India
- Bayan Resources Tbk. - Indonesia
- Bhushan Steel Limited - India
- CIMB Investment Bank - Malaysia
- Directorate Of Revenue Intelligence - India
- The State Trading Corporation of India Ltd
- Kepco SPC Power Corporation, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Interocean Group of Companies - India
- Karaikal Port Pvt Ltd - India
- Aboitiz Power Corporation - Philippines
- Iligan Light & Power Inc, Philippines
- Borneo Indobara - Indonesia
- Therma Luzon, Inc, Philippines
- Merrill Lynch Commodities Europe
- The University of Queensland
- Global Coal Blending Company Limited - Australia
- Meralco Power Generation, Philippines
- Standard Chartered Bank - UAE
- Pipit Mutiara Jaya. PT, Indonesia
- OPG Power Generation Pvt Ltd - India
- Indogreen Group - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Ministry of Mines - Canada
- Cigading International Bulk Terminal - Indonesia
- McConnell Dowell - Australia
- Sical Logistics Limited - India
- Commonwealth Bank - Australia
- Heidelberg Cement - Germany
- Economic Council, Georgia
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