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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, 05 April 10
RI TO SET REFERENCE FOR COMMODITIES - THE JAKARTA POST
The Jakarta Post reported that, Indonesia is set to help establish global reference prices for mining and agricultural commodities, with the establi ...
Monday, 05 April 10
MARCO POLO MARINE SECURES US$20 MILLION 4-YEAR COAL TRANSSHIPMENT CONTRACT
COALspot.com: Accordign to Mraco Polo Marine website, Singapore Exchange Mainboard-listed Marco Polo Marine Ltd, a growing integrated marine logisti ...
Saturday, 03 April 10
SHIPS OPENING FAREAST CONTINUE TO BE STRUGGLING FOR CARGOES - VISTAAR
COALspot.com: The dry bulk freight market continues to be under pressure and all the indices were down this week except for Cape size index which wa ...
Friday, 02 April 10
XSTRATA RAISES BENCHMARK COAL PRICE AS MUCH AS 40% - BLOOMBERG
Bloomberg reported that, Xstrata Plc, the world’s largest exporter of coal used for power, raised benchmark prices for the fuel to an unidenti ...
Thursday, 01 April 10
OWNERS WERE STILL BULLISH ON SHORT PERIOD NUMBERS, BUT CHARTERERS IN GENERAL WERE NOT READY TO PAY - BRS
SUPRA / HANDY
After several weeks of a rising market, the BSI lost 9% last week to close on Friday at US$ 27,677 per day for the TC routes. ...
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- Merrill Lynch Commodities Europe
- Globalindo Alam Lestari - Indonesia
- Essar Steel Hazira Ltd - India
- Georgia Ports Authority, United States
- Bharathi Cement Corporation - India
- Deloitte Consulting - India
- South Luzon Thermal Energy Corporation
- Xindia Steels Limited - India
- Posco Energy - South Korea
- SMG Consultants - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Ministry of Finance - Indonesia
- Directorate Of Revenue Intelligence - India
- Chamber of Mines of South Africa
- Cement Manufacturers Association - India
- Medco Energi Mining Internasional
- Indogreen Group - Indonesia
- Intertek Mineral Services - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Ind-Barath Power Infra Limited - India
- Economic Council, Georgia
- Mercuria Energy - Indonesia
- Coalindo Energy - Indonesia
- Energy Development Corp, Philippines
- Coastal Gujarat Power Limited - India
- Bhatia International Limited - India
- Renaissance Capital - South Africa
- Karaikal Port Pvt Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Singapore Mercantile Exchange
- International Coal Ventures Pvt Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Orica Australia Pty. Ltd.
- Holcim Trading Pte Ltd - Singapore
- Bahari Cakrawala Sebuku - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- GAC Shipping (India) Pvt Ltd
- Central Java Power - Indonesia
- Salva Resources Pvt Ltd - India
- Malabar Cements Ltd - India
- Indo Tambangraya Megah - Indonesia
- Bukit Baiduri Energy - Indonesia
- Kartika Selabumi Mining - Indonesia
- Gujarat Sidhee Cement - India
- Videocon Industries ltd - India
- VISA Power Limited - India
- Aboitiz Power Corporation - Philippines
- Metalloyd Limited - United Kingdom
- Global Green Power PLC Corporation, Philippines
- San Jose City I Power Corp, Philippines
- Makarim & Taira - Indonesia
- Mintek Dendrill Indonesia
- Kaltim Prima Coal - Indonesia
- Vedanta Resources Plc - India
- Kohat Cement Company Ltd. - Pakistan
- Attock Cement Pakistan Limited
- The Treasury - Australian Government
- Minerals Council of Australia
- Samtan Co., Ltd - South Korea
- Borneo Indobara - Indonesia
- Power Finance Corporation Ltd., India
- CNBM International Corporation - China
- Indian Energy Exchange, India
- Anglo American - United Kingdom
- PowerSource Philippines DevCo
- Port Waratah Coal Services - Australia
- Bayan Resources Tbk. - Indonesia
- PNOC Exploration Corporation - Philippines
- Parliament of New Zealand
- The State Trading Corporation of India Ltd
- Commonwealth Bank - Australia
- Karbindo Abesyapradhi - Indoneisa
- Parry Sugars Refinery, India
- Jaiprakash Power Ventures ltd
- Bhushan Steel Limited - India
- White Energy Company Limited
- Indika Energy - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Larsen & Toubro Limited - India
- Mjunction Services Limited - India
- Timah Investasi Mineral - Indoneisa
- Sree Jayajothi Cements Limited - India
- Electricity Authority, New Zealand
- Africa Commodities Group - South Africa
- SMC Global Power, Philippines
- Vizag Seaport Private Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Banpu Public Company Limited - Thailand
- Lanco Infratech Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Iligan Light & Power Inc, Philippines
- Electricity Generating Authority of Thailand
- Standard Chartered Bank - UAE
- Independent Power Producers Association of India
- Straits Asia Resources Limited - Singapore
- Bulk Trading Sa - Switzerland
- Semirara Mining Corp, Philippines
- Trasteel International SA, Italy
- Mercator Lines Limited - India
- Sinarmas Energy and Mining - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- The University of Queensland
- McConnell Dowell - Australia
- Gujarat Mineral Development Corp Ltd - India
- India Bulls Power Limited - India
- Altura Mining Limited, Indonesia
- Baramulti Group, Indonesia
- Oldendorff Carriers - Singapore
- European Bulk Services B.V. - Netherlands
- London Commodity Brokers - England
- Ministry of Transport, Egypt
- Tamil Nadu electricity Board
- Barasentosa Lestari - Indonesia
- CIMB Investment Bank - Malaysia
- Asmin Koalindo Tuhup - Indonesia
- Formosa Plastics Group - Taiwan
- New Zealand Coal & Carbon
- Sojitz Corporation - Japan
- ASAPP Information Group - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Coal and Oil Company - UAE
- Pipit Mutiara Jaya. PT, Indonesia
- MS Steel International - UAE
- Pendopo Energi Batubara - Indonesia
- Manunggal Multi Energi - Indonesia
- Star Paper Mills Limited - India
- Bhoruka Overseas - Indonesia
- Indian Oil Corporation Limited
- Thai Mozambique Logistica
- Kumho Petrochemical, South Korea
- Rashtriya Ispat Nigam Limited - India
- Price Waterhouse Coopers - Russia
- Ambuja Cements Ltd - India
- Savvy Resources Ltd - HongKong
- LBH Netherlands Bv - Netherlands
- Bangladesh Power Developement Board
- Meenaskhi Energy Private Limited - India
- Toyota Tsusho Corporation, Japan
- Bukit Makmur.PT - Indonesia
- Latin American Coal - Colombia
- Carbofer General Trading SA - India
- Interocean Group of Companies - India
- Heidelberg Cement - Germany
- Riau Bara Harum - Indonesia
- Wood Mackenzie - Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- Thiess Contractors Indonesia
- IEA Clean Coal Centre - UK
- Vijayanagar Sugar Pvt Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Uttam Galva Steels Limited - India
- Eastern Coal Council - USA
- Kepco SPC Power Corporation, Philippines
- Goldman Sachs - Singapore
- Semirara Mining and Power Corporation, Philippines
- Grasim Industreis Ltd - India
- Siam City Cement - Thailand
- Sarangani Energy Corporation, Philippines
- Dalmia Cement Bharat India
- Directorate General of MIneral and Coal - Indonesia
- Edison Trading Spa - Italy
- Kideco Jaya Agung - Indonesia
- ICICI Bank Limited - India
- Central Electricity Authority - India
- Kapuas Tunggal Persada - Indonesia
- Rio Tinto Coal - Australia
- Petron Corporation, Philippines
- Australian Commodity Traders Exchange
- Petrochimia International Co. Ltd.- Taiwan
- Therma Luzon, Inc, Philippines
- Miang Besar Coal Terminal - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Global Coal Blending Company Limited - Australia
- Planning Commission, India
- Meralco Power Generation, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Australian Coal Association
- GN Power Mariveles Coal Plant, Philippines
- Global Business Power Corporation, Philippines
- Sical Logistics Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Jindal Steel & Power Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Sindya Power Generating Company Private Ltd
- Leighton Contractors Pty Ltd - Australia
- PetroVietnam Power Coal Import and Supply Company
- Marubeni Corporation - India
- Neyveli Lignite Corporation Ltd, - India
- Orica Mining Services - Indonesia
- Binh Thuan Hamico - Vietnam
- Energy Link Ltd, New Zealand
- Chettinad Cement Corporation Ltd - India
- Simpson Spence & Young - Indonesia
- OPG Power Generation Pvt Ltd - India
- Tata Chemicals Ltd - India
- Romanian Commodities Exchange
- Gujarat Electricity Regulatory Commission - India
- GVK Power & Infra Limited - India
- Wilmar Investment Holdings
- SN Aboitiz Power Inc, Philippines
- Siam City Cement PLC, Thailand
- Agrawal Coal Company - India
- Ministry of Mines - Canada
- PTC India Limited - India
- Sakthi Sugars Limited - India
- Indonesian Coal Mining Association
- TeaM Sual Corporation - Philippines
- Eastern Energy - Thailand
- Kobexindo Tractors - Indoneisa
- Aditya Birla Group - India
- Madhucon Powers Ltd - India
- IHS Mccloskey Coal Group - USA
- Krishnapatnam Port Company Ltd. - India
- Maheswari Brothers Coal Limited - India
- Antam Resourcindo - Indonesia
- GMR Energy Limited - India
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