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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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Sunday, 18 April 10
GOVT FORMS PANEL FOR RS 12,000-CR (US$ 2.711 BILLION) COAL INDIA IPO - ECONOMIC TIMES
Economic Times reported that, the government has formed an inter-ministerial panel to carry forward the proposed Rs 12,000-crore (US$ 2.711 billion) ...
Sunday, 18 April 10
THE FUTURES FOR THREE YEARS (2010-2012) FOR PANAMAX WAS AT AROUND US$ 21500 PER DAY - VISTAAR
COALspot.com: The BDI indices up by 3.30 pct and overall market continued to be firm except for India to Fareast.
“The cape index for the f ...
Saturday, 17 April 10
DRY BULK SHIPPING MARKET ANALYSIS - BIMCO
Strong Chinese steel market is set to cushion the flood of new Capesize vessels entering the dry bulk fleet Demand: The first quarter of 2010 saw up ...
Saturday, 17 April 10
DRY BULK MARKET EDGES HIGHER ON STRONGER DEMAND
The dry bulk market managed to inch higher by the end of the week as brokers indicated that stronger cargo demand pushed freight rates that much hig ...
Friday, 16 April 10
KRISHNAPATNAM PORT IS IRONING ITS WAY INTO RECORD BOOKS
COALspot.com: Krishnapatnam Port achieved a new benchmark by loading 60,021 MT of Iron Ore fines in just 24 hrs surpassing its previous record of 54 ...
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- Straits Asia Resources Limited - Singapore
- Interocean Group of Companies - India
- Gujarat Electricity Regulatory Commission - India
- Indian Oil Corporation Limited
- Parry Sugars Refinery, India
- Kapuas Tunggal Persada - Indonesia
- Central Electricity Authority - India
- LBH Netherlands Bv - Netherlands
- Gujarat Sidhee Cement - India
- Asmin Koalindo Tuhup - Indonesia
- New Zealand Coal & Carbon
- Planning Commission, India
- Mintek Dendrill Indonesia
- Semirara Mining Corp, Philippines
- Economic Council, Georgia
- Salva Resources Pvt Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Global Coal Blending Company Limited - Australia
- Madhucon Powers Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Coalindo Energy - Indonesia
- Bhoruka Overseas - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Aboitiz Power Corporation - Philippines
- Formosa Plastics Group - Taiwan
- Vedanta Resources Plc - India
- Coal and Oil Company - UAE
- Simpson Spence & Young - Indonesia
- Attock Cement Pakistan Limited
- Ind-Barath Power Infra Limited - India
- The Treasury - Australian Government
- Makarim & Taira - Indonesia
- PowerSource Philippines DevCo
- Aditya Birla Group - India
- Carbofer General Trading SA - India
- Cement Manufacturers Association - India
- TNB Fuel Sdn Bhd - Malaysia
- Ministry of Finance - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Lanco Infratech Ltd - India
- Malabar Cements Ltd - India
- ASAPP Information Group - India
- Wilmar Investment Holdings
- Heidelberg Cement - Germany
- Grasim Industreis Ltd - India
- Posco Energy - South Korea
- Sarangani Energy Corporation, Philippines
- Kepco SPC Power Corporation, Philippines
- Miang Besar Coal Terminal - Indonesia
- Dalmia Cement Bharat India
- GMR Energy Limited - India
- White Energy Company Limited
- Marubeni Corporation - India
- Sindya Power Generating Company Private Ltd
- South Luzon Thermal Energy Corporation
- Bhushan Steel Limited - India
- Therma Luzon, Inc, Philippines
- Siam City Cement - Thailand
- Agrawal Coal Company - India
- Jorong Barutama Greston.PT - Indonesia
- Samtan Co., Ltd - South Korea
- Vijayanagar Sugar Pvt Ltd - India
- Thai Mozambique Logistica
- Tamil Nadu electricity Board
- AsiaOL BioFuels Corp., Philippines
- Renaissance Capital - South Africa
- CNBM International Corporation - China
- International Coal Ventures Pvt Ltd - India
- Independent Power Producers Association of India
- Cigading International Bulk Terminal - Indonesia
- Pendopo Energi Batubara - Indonesia
- Global Business Power Corporation, Philippines
- Parliament of New Zealand
- Sinarmas Energy and Mining - Indonesia
- SN Aboitiz Power Inc, Philippines
- Goldman Sachs - Singapore
- Mercator Lines Limited - India
- IEA Clean Coal Centre - UK
- Sree Jayajothi Cements Limited - India
- Sical Logistics Limited - India
- Merrill Lynch Commodities Europe
- Anglo American - United Kingdom
- Petron Corporation, Philippines
- Karbindo Abesyapradhi - Indoneisa
- San Jose City I Power Corp, Philippines
- Bulk Trading Sa - Switzerland
- Bangladesh Power Developement Board
- Kohat Cement Company Ltd. - Pakistan
- Maharashtra Electricity Regulatory Commission - India
- European Bulk Services B.V. - Netherlands
- Edison Trading Spa - Italy
- Bhatia International Limited - India
- Sojitz Corporation - Japan
- Standard Chartered Bank - UAE
- OPG Power Generation Pvt Ltd - India
- The State Trading Corporation of India Ltd
- PNOC Exploration Corporation - Philippines
- Oldendorff Carriers - Singapore
- Kumho Petrochemical, South Korea
- India Bulls Power Limited - India
- Central Java Power - Indonesia
- Jaiprakash Power Ventures ltd
- GVK Power & Infra Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- London Commodity Brokers - England
- Jindal Steel & Power Ltd - India
- Energy Link Ltd, New Zealand
- Price Waterhouse Coopers - Russia
- Toyota Tsusho Corporation, Japan
- Australian Commodity Traders Exchange
- Electricity Generating Authority of Thailand
- Mjunction Services Limited - India
- Indonesian Coal Mining Association
- Bukit Makmur.PT - Indonesia
- Indika Energy - Indonesia
- Binh Thuan Hamico - Vietnam
- Siam City Cement PLC, Thailand
- Kaltim Prima Coal - Indonesia
- Larsen & Toubro Limited - India
- TeaM Sual Corporation - Philippines
- Essar Steel Hazira Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Kideco Jaya Agung - Indonesia
- Barasentosa Lestari - Indonesia
- Singapore Mercantile Exchange
- Maheswari Brothers Coal Limited - India
- Iligan Light & Power Inc, Philippines
- Africa Commodities Group - South Africa
- Minerals Council of Australia
- Rio Tinto Coal - Australia
- Chamber of Mines of South Africa
- SMG Consultants - Indonesia
- Thiess Contractors Indonesia
- Vizag Seaport Private Limited - India
- Timah Investasi Mineral - Indoneisa
- Semirara Mining and Power Corporation, Philippines
- Intertek Mineral Services - Indonesia
- PTC India Limited - India
- Globalindo Alam Lestari - Indonesia
- Chettinad Cement Corporation Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Ambuja Cements Ltd - India
- Medco Energi Mining Internasional
- Savvy Resources Ltd - HongKong
- Power Finance Corporation Ltd., India
- Neyveli Lignite Corporation Ltd, - India
- Coastal Gujarat Power Limited - India
- Bharathi Cement Corporation - India
- Tata Chemicals Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Latin American Coal - Colombia
- Trasteel International SA, Italy
- Xindia Steels Limited - India
- Electricity Authority, New Zealand
- The University of Queensland
- McConnell Dowell - Australia
- Riau Bara Harum - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Karaikal Port Pvt Ltd - India
- Leighton Contractors Pty Ltd - Australia
- GAC Shipping (India) Pvt Ltd
- Antam Resourcindo - Indonesia
- IHS Mccloskey Coal Group - USA
- Ministry of Mines - Canada
- Holcim Trading Pte Ltd - Singapore
- Georgia Ports Authority, United States
- Ceylon Electricity Board - Sri Lanka
- Eastern Energy - Thailand
- Directorate Of Revenue Intelligence - India
- Commonwealth Bank - Australia
- Pipit Mutiara Jaya. PT, Indonesia
- Orica Australia Pty. Ltd.
- Indian Energy Exchange, India
- VISA Power Limited - India
- Eastern Coal Council - USA
- Kartika Selabumi Mining - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Australian Coal Association
- CIMB Investment Bank - Malaysia
- Orica Mining Services - Indonesia
- Videocon Industries ltd - India
- Krishnapatnam Port Company Ltd. - India
- Borneo Indobara - Indonesia
- Star Paper Mills Limited - India
- Bayan Resources Tbk. - Indonesia
- Energy Development Corp, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Manunggal Multi Energi - Indonesia
- SMC Global Power, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Ministry of Transport, Egypt
- Directorate General of MIneral and Coal - Indonesia
- Mercuria Energy - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Meralco Power Generation, Philippines
- Indo Tambangraya Megah - Indonesia
- Baramulti Group, Indonesia
- MS Steel International - UAE
- Deloitte Consulting - India
- Gujarat Mineral Development Corp Ltd - India
- Indogreen Group - Indonesia
- Romanian Commodities Exchange
- Uttam Galva Steels Limited - India
- Bukit Baiduri Energy - Indonesia
- Metalloyd Limited - United Kingdom
- Sakthi Sugars Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Port Waratah Coal Services - Australia
- Banpu Public Company Limited - Thailand
- Meenaskhi Energy Private Limited - India
- Altura Mining Limited, Indonesia
- Global Green Power PLC Corporation, Philippines
- Wood Mackenzie - Singapore
- Billiton Holdings Pty Ltd - Australia
- Kobexindo Tractors - Indoneisa
- ICICI Bank Limited - India
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