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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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Saturday, 08 August 09
TWO / THREE YEAR CHARTER RATES FOR SUPRAMAX IS AROUND US$ 15,000-16,000 PER DAY - CAPT. REDDY
COALspot.com (Singapore): The dry bulk market tumbled this week and the BDI dropped by almost 17% and closed at 2,772 points.
The cape and panam ...
Saturday, 08 August 09
SULTAN MINING SIGNS P8-BILLION, 10-YEAR COAL-SUPPLY CONTRACT WITH KEPCO POWER CORP.
COAL developer Sultan Mining and Energy Development Corp. (SMEDC) reported on Thursday that its subsidiary MG Mining and Energy Corp. signed an P8-b ...
Friday, 07 August 09
NEED TO HIKE DOMESTIC PRICES - COAL INDIA
WSJ reported that, The chairman of Coal India Ltd., the country's biggest coal producer, Friday said there was a need to hike domestic coal prices ...
Friday, 07 August 09
INDONESIA COAL NEWS UPDATES
PTBA to Produce 13 Million Tons
President Director of Tambang Batubara Bukit Asam (PTBA), Sukrisno has estimated coal production of the company th ...
Friday, 07 August 09
BALTIC DRY INDEX HAS WORST WEEK SINCE OCTOBER AS DEMAND SLOWS
Bloomberg reported that, The Baltic Dry Index, a measure of shipping costs for commodities, had its worst week since October as Chinese demand for s ...
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- Bukit Asam (Persero) Tbk - Indonesia
- Bayan Resources Tbk. - Indonesia
- Banpu Public Company Limited - Thailand
- Meralco Power Generation, Philippines
- Sinarmas Energy and Mining - Indonesia
- Chettinad Cement Corporation Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Australian Coal Association
- Tamil Nadu electricity Board
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Riau Bara Harum - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Australian Commodity Traders Exchange
- Electricity Generating Authority of Thailand
- Gujarat Electricity Regulatory Commission - India
- Ceylon Electricity Board - Sri Lanka
- Bukit Makmur.PT - Indonesia
- Baramulti Group, Indonesia
- Tata Chemicals Ltd - India
- Wood Mackenzie - Singapore
- Kepco SPC Power Corporation, Philippines
- Siam City Cement - Thailand
- Bhoruka Overseas - Indonesia
- Central Java Power - Indonesia
- Essar Steel Hazira Ltd - India
- Wilmar Investment Holdings
- Deloitte Consulting - India
- Siam City Cement PLC, Thailand
- Ministry of Finance - Indonesia
- Petron Corporation, Philippines
- Singapore Mercantile Exchange
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Attock Cement Pakistan Limited
- Formosa Plastics Group - Taiwan
- Directorate Of Revenue Intelligence - India
- Ind-Barath Power Infra Limited - India
- Mercuria Energy - Indonesia
- IEA Clean Coal Centre - UK
- Electricity Authority, New Zealand
- Goldman Sachs - Singapore
- Merrill Lynch Commodities Europe
- Cigading International Bulk Terminal - Indonesia
- Grasim Industreis Ltd - India
- Sakthi Sugars Limited - India
- Savvy Resources Ltd - HongKong
- Rashtriya Ispat Nigam Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Georgia Ports Authority, United States
- Indogreen Group - Indonesia
- Trasteel International SA, Italy
- Oldendorff Carriers - Singapore
- Bhatia International Limited - India
- Metalloyd Limited - United Kingdom
- Planning Commission, India
- Holcim Trading Pte Ltd - Singapore
- Indian Oil Corporation Limited
- Minerals Council of Australia
- Sical Logistics Limited - India
- Iligan Light & Power Inc, Philippines
- Aditya Birla Group - India
- Coalindo Energy - Indonesia
- Makarim & Taira - Indonesia
- Binh Thuan Hamico - Vietnam
- SN Aboitiz Power Inc, Philippines
- Power Finance Corporation Ltd., India
- Latin American Coal - Colombia
- Globalindo Alam Lestari - Indonesia
- Kartika Selabumi Mining - Indonesia
- Kumho Petrochemical, South Korea
- Gujarat Sidhee Cement - India
- GVK Power & Infra Limited - India
- The Treasury - Australian Government
- Kapuas Tunggal Persada - Indonesia
- Posco Energy - South Korea
- New Zealand Coal & Carbon
- Energy Link Ltd, New Zealand
- Indian Energy Exchange, India
- Energy Development Corp, Philippines
- MS Steel International - UAE
- Toyota Tsusho Corporation, Japan
- Eastern Energy - Thailand
- Cement Manufacturers Association - India
- Gujarat Mineral Development Corp Ltd - India
- Global Business Power Corporation, Philippines
- Miang Besar Coal Terminal - Indonesia
- Standard Chartered Bank - UAE
- Sindya Power Generating Company Private Ltd
- Manunggal Multi Energi - Indonesia
- CNBM International Corporation - China
- Romanian Commodities Exchange
- Price Waterhouse Coopers - Russia
- Kohat Cement Company Ltd. - Pakistan
- Pendopo Energi Batubara - Indonesia
- Economic Council, Georgia
- Sarangani Energy Corporation, Philippines
- Ministry of Transport, Egypt
- Vijayanagar Sugar Pvt Ltd - India
- Global Green Power PLC Corporation, Philippines
- LBH Netherlands Bv - Netherlands
- Kalimantan Lumbung Energi - Indonesia
- Port Waratah Coal Services - Australia
- Mjunction Services Limited - India
- Edison Trading Spa - Italy
- Leighton Contractors Pty Ltd - Australia
- GAC Shipping (India) Pvt Ltd
- Vedanta Resources Plc - India
- Malabar Cements Ltd - India
- SMG Consultants - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Orica Australia Pty. Ltd.
- Jorong Barutama Greston.PT - Indonesia
- Uttam Galva Steels Limited - India
- TeaM Sual Corporation - Philippines
- Indo Tambangraya Megah - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Lanco Infratech Ltd - India
- Timah Investasi Mineral - Indoneisa
- Carbofer General Trading SA - India
- Sree Jayajothi Cements Limited - India
- Chamber of Mines of South Africa
- AsiaOL BioFuels Corp., Philippines
- Maheswari Brothers Coal Limited - India
- Jaiprakash Power Ventures ltd
- Thai Mozambique Logistica
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- European Bulk Services B.V. - Netherlands
- India Bulls Power Limited - India
- Dalmia Cement Bharat India
- PTC India Limited - India
- Parliament of New Zealand
- Independent Power Producers Association of India
- Coal and Oil Company - UAE
- Thiess Contractors Indonesia
- Larsen & Toubro Limited - India
- OPG Power Generation Pvt Ltd - India
- Barasentosa Lestari - Indonesia
- ASAPP Information Group - India
- PNOC Exploration Corporation - Philippines
- South Luzon Thermal Energy Corporation
- Kobexindo Tractors - Indoneisa
- Bulk Trading Sa - Switzerland
- Ambuja Cements Ltd - India
- Indonesian Coal Mining Association
- Africa Commodities Group - South Africa
- San Jose City I Power Corp, Philippines
- Meenaskhi Energy Private Limited - India
- Medco Energi Mining Internasional
- IHS Mccloskey Coal Group - USA
- Anglo American - United Kingdom
- Pipit Mutiara Jaya. PT, Indonesia
- Rio Tinto Coal - Australia
- International Coal Ventures Pvt Ltd - India
- Krishnapatnam Port Company Ltd. - India
- CIMB Investment Bank - Malaysia
- PowerSource Philippines DevCo
- Salva Resources Pvt Ltd - India
- GMR Energy Limited - India
- Straits Asia Resources Limited - Singapore
- Agrawal Coal Company - India
- SMC Global Power, Philippines
- Heidelberg Cement - Germany
- Eastern Coal Council - USA
- Karaikal Port Pvt Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Jindal Steel & Power Ltd - India
- Aboitiz Power Corporation - Philippines
- McConnell Dowell - Australia
- TNB Fuel Sdn Bhd - Malaysia
- Kideco Jaya Agung - Indonesia
- Global Coal Blending Company Limited - Australia
- Intertek Mineral Services - Indonesia
- Marubeni Corporation - India
- Antam Resourcindo - Indonesia
- Vizag Seaport Private Limited - India
- Simpson Spence & Young - Indonesia
- Bangladesh Power Developement Board
- The State Trading Corporation of India Ltd
- Ministry of Mines - Canada
- Mintek Dendrill Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Renaissance Capital - South Africa
- Mercator Lines Limited - India
- Xindia Steels Limited - India
- Madhucon Powers Ltd - India
- Videocon Industries ltd - India
- Commonwealth Bank - Australia
- ICICI Bank Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Bhushan Steel Limited - India
- Asmin Koalindo Tuhup - Indonesia
- VISA Power Limited - India
- Coastal Gujarat Power Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Indika Energy - Indonesia
- Interocean Group of Companies - India
- Karbindo Abesyapradhi - Indoneisa
- Samtan Co., Ltd - South Korea
- Offshore Bulk Terminal Pte Ltd, Singapore
- The University of Queensland
- White Energy Company Limited
- Bukit Baiduri Energy - Indonesia
- Kaltim Prima Coal - Indonesia
- Borneo Indobara - Indonesia
- Altura Mining Limited, Indonesia
- Bharathi Cement Corporation - India
- Petrochimia International Co. Ltd.- Taiwan
- Central Electricity Authority - India
- Orica Mining Services - Indonesia
- Parry Sugars Refinery, India
- Sojitz Corporation - Japan
- Therma Luzon, Inc, Philippines
- Star Paper Mills Limited - India
- London Commodity Brokers - England
- Maharashtra Electricity Regulatory Commission - India
- Semirara Mining Corp, Philippines
- Billiton Holdings Pty Ltd - Australia
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