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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, 20 July 10
DRY BULK SHIPPING MARKET FINDING SOME SUPPORT, AS OWNERS TAKE CAPE SIZES OFF THE MARKET
With the Baltic Dry Index finally having reached bottom, at least according to market analysts, the dry bulk industry is looking to begin its long r ...
Monday, 19 July 10
INDONESIA EXPORTS 24.49 MILLION TONNES OF COAL IN JUNE 2010
COALspot.com: Indonesia, the world largest coal exporter, exported 141.249 million tons of coal in the first half of this year. In June 2010, Indone ...
Monday, 19 July 10
CHINA ONCE AGAIN DOMINATING SHIPPING FREIGHT RATES, WHILE OVERSUPPLY OF TONNAGE RAISES CONCERN
The ending of the week brought a cheerful note among dry bulk ship owners, as the sinking benchmark of the industry, the Baltic Dry Index (BDI) fina ...
Saturday, 17 July 10
THE DRY BULK MARKET CONTINUED THE DOWNWARD TREND - VISTAAR
COALspot.com: The indices continued the downward trend this week also with BDI at 1,720 points and cape size index at 1676 points and the charter ra ...
Saturday, 17 July 10
BULLISH OUTLOOK FOR COKING COAL - MINING MX & HELLENIC SHIPPING
Mining Mx reported that, the coking coal market has better long-term fundamentals than the iron ore market, according to a recent research rep ...
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- Ministry of Finance - Indonesia
- Carbofer General Trading SA - India
- Pipit Mutiara Jaya. PT, Indonesia
- CIMB Investment Bank - Malaysia
- Vedanta Resources Plc - India
- San Jose City I Power Corp, Philippines
- SMC Global Power, Philippines
- Makarim & Taira - Indonesia
- PowerSource Philippines DevCo
- Indian Oil Corporation Limited
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Miang Besar Coal Terminal - Indonesia
- Sinarmas Energy and Mining - Indonesia
- The Treasury - Australian Government
- AsiaOL BioFuels Corp., Philippines
- Electricity Authority, New Zealand
- Australian Commodity Traders Exchange
- Energy Development Corp, Philippines
- Semirara Mining Corp, Philippines
- Goldman Sachs - Singapore
- Global Green Power PLC Corporation, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Ambuja Cements Ltd - India
- Mintek Dendrill Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- OPG Power Generation Pvt Ltd - India
- Eastern Coal Council - USA
- Manunggal Multi Energi - Indonesia
- PTC India Limited - India
- Tata Chemicals Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Maheswari Brothers Coal Limited - India
- Riau Bara Harum - Indonesia
- GAC Shipping (India) Pvt Ltd
- Bhoruka Overseas - Indonesia
- Pendopo Energi Batubara - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Meralco Power Generation, Philippines
- Baramulti Group, Indonesia
- Cement Manufacturers Association - India
- PNOC Exploration Corporation - Philippines
- Indogreen Group - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Medco Energi Mining Internasional
- SMG Consultants - Indonesia
- European Bulk Services B.V. - Netherlands
- Port Waratah Coal Services - Australia
- Metalloyd Limited - United Kingdom
- Attock Cement Pakistan Limited
- Deloitte Consulting - India
- Ind-Barath Power Infra Limited - India
- Trasteel International SA, Italy
- Ministry of Mines - Canada
- Timah Investasi Mineral - Indoneisa
- Leighton Contractors Pty Ltd - Australia
- Larsen & Toubro Limited - India
- GVK Power & Infra Limited - India
- Jaiprakash Power Ventures ltd
- Central Java Power - Indonesia
- GMR Energy Limited - India
- Kartika Selabumi Mining - Indonesia
- Kumho Petrochemical, South Korea
- Iligan Light & Power Inc, Philippines
- Aboitiz Power Corporation - Philippines
- Orica Mining Services - Indonesia
- Wood Mackenzie - Singapore
- Cigading International Bulk Terminal - Indonesia
- Orica Australia Pty. Ltd.
- Sarangani Energy Corporation, Philippines
- Essar Steel Hazira Ltd - India
- ASAPP Information Group - India
- Asmin Koalindo Tuhup - Indonesia
- Directorate Of Revenue Intelligence - India
- Rio Tinto Coal - Australia
- Bhushan Steel Limited - India
- Wilmar Investment Holdings
- Kepco SPC Power Corporation, Philippines
- Semirara Mining and Power Corporation, Philippines
- Bukit Baiduri Energy - Indonesia
- Rashtriya Ispat Nigam Limited - India
- VISA Power Limited - India
- Coal and Oil Company - UAE
- Coalindo Energy - Indonesia
- Dalmia Cement Bharat India
- Bayan Resources Tbk. - Indonesia
- McConnell Dowell - Australia
- Bulk Trading Sa - Switzerland
- Commonwealth Bank - Australia
- Vizag Seaport Private Limited - India
- Interocean Group of Companies - India
- Independent Power Producers Association of India
- Billiton Holdings Pty Ltd - Australia
- Karaikal Port Pvt Ltd - India
- Parry Sugars Refinery, India
- Kapuas Tunggal Persada - Indonesia
- Power Finance Corporation Ltd., India
- Coastal Gujarat Power Limited - India
- South Luzon Thermal Energy Corporation
- Kideco Jaya Agung - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Therma Luzon, Inc, Philippines
- Directorate General of MIneral and Coal - Indonesia
- The State Trading Corporation of India Ltd
- Sical Logistics Limited - India
- Maharashtra Electricity Regulatory Commission - India
- The University of Queensland
- Planning Commission, India
- Bukit Asam (Persero) Tbk - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Economic Council, Georgia
- Anglo American - United Kingdom
- London Commodity Brokers - England
- Chamber of Mines of South Africa
- IEA Clean Coal Centre - UK
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Intertek Mineral Services - Indonesia
- Price Waterhouse Coopers - Russia
- Thai Mozambique Logistica
- Bukit Makmur.PT - Indonesia
- Africa Commodities Group - South Africa
- Straits Asia Resources Limited - Singapore
- Merrill Lynch Commodities Europe
- Gujarat Mineral Development Corp Ltd - India
- Samtan Co., Ltd - South Korea
- Eastern Energy - Thailand
- Heidelberg Cement - Germany
- Edison Trading Spa - Italy
- Petrochimia International Co. Ltd.- Taiwan
- White Energy Company Limited
- Central Electricity Authority - India
- Neyveli Lignite Corporation Ltd, - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Chettinad Cement Corporation Ltd - India
- Siam City Cement PLC, Thailand
- Salva Resources Pvt Ltd - India
- International Coal Ventures Pvt Ltd - India
- LBH Netherlands Bv - Netherlands
- Mercuria Energy - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Banpu Public Company Limited - Thailand
- Gujarat Sidhee Cement - India
- Ceylon Electricity Board - Sri Lanka
- Global Business Power Corporation, Philippines
- New Zealand Coal & Carbon
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Savvy Resources Ltd - HongKong
- Sree Jayajothi Cements Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Madhucon Powers Ltd - India
- Romanian Commodities Exchange
- Electricity Generating Authority of Thailand
- Globalindo Alam Lestari - Indonesia
- MS Steel International - UAE
- Georgia Ports Authority, United States
- Altura Mining Limited, Indonesia
- Formosa Plastics Group - Taiwan
- ICICI Bank Limited - India
- Aditya Birla Group - India
- Malabar Cements Ltd - India
- Indian Energy Exchange, India
- Bharathi Cement Corporation - India
- Vijayanagar Sugar Pvt Ltd - India
- Indika Energy - Indonesia
- Uttam Galva Steels Limited - India
- Thiess Contractors Indonesia
- Australian Coal Association
- Simpson Spence & Young - Indonesia
- Sindya Power Generating Company Private Ltd
- Binh Thuan Hamico - Vietnam
- Agrawal Coal Company - India
- Marubeni Corporation - India
- Oldendorff Carriers - Singapore
- Indo Tambangraya Megah - Indonesia
- Borneo Indobara - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Grasim Industreis Ltd - India
- Sakthi Sugars Limited - India
- IHS Mccloskey Coal Group - USA
- Toyota Tsusho Corporation, Japan
- Alfred C Toepfer International GmbH - Germany
- Minerals Council of Australia
- Posco Energy - South Korea
- Singapore Mercantile Exchange
- Krishnapatnam Port Company Ltd. - India
- Global Coal Blending Company Limited - Australia
- Bangladesh Power Developement Board
- Kobexindo Tractors - Indoneisa
- Mercator Lines Limited - India
- Ministry of Transport, Egypt
- Star Paper Mills Limited - India
- CNBM International Corporation - China
- Barasentosa Lestari - Indonesia
- Renaissance Capital - South Africa
- Bhatia International Limited - India
- Indonesian Coal Mining Association
- Parliament of New Zealand
- Meenaskhi Energy Private Limited - India
- Videocon Industries ltd - India
- Jindal Steel & Power Ltd - India
- Energy Link Ltd, New Zealand
- Antam Resourcindo - Indonesia
- SN Aboitiz Power Inc, Philippines
- Tamil Nadu electricity Board
- Sojitz Corporation - Japan
- Standard Chartered Bank - UAE
- TeaM Sual Corporation - Philippines
- Mjunction Services Limited - India
- India Bulls Power Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Latin American Coal - Colombia
- GN Power Mariveles Coal Plant, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Lanco Infratech Ltd - India
- Xindia Steels Limited - India
- Petron Corporation, Philippines
- Siam City Cement - Thailand
- Kaltim Prima Coal - Indonesia
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