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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, 07 September 14
FREIGHT MARKET CONTINUED TO BE FIRM IN SPITE OF CAPE'S THIS WEEK'S WEAK PERFORMANCE
COALspot.com: BDI up by 0.7 pct week on week and closed at 1155 points this week. The Baltic Dry Index is a composite of three sub-indexes that mea ...
Sunday, 07 September 14
SHIPMANAGERS SUPERVISION CONTRACT FOR NEWBUILDS - BIMCO
Shipmanagers are frequently called upon by their owner clients to supervise newbuilding projects on their behalf. The scope of the manager’s ...
Saturday, 06 September 14
SLOW COAL EXPORT REGISTRATION RAISES CONCERNS - THE JAKARTA POST
Several coal mining companies have yet to receive the go-ahead from the Energy and Mineral Resources Ministry to obtain exporting licenses, leading ...
Saturday, 06 September 14
DRY BULK MARKET'S PROSPECTS ARE IMPROVING, DESPITE WEAK SECOND QUARTER - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The dry bulk market has been rebounding during the past month, with the Baltic Dry Index (BDI) ended the week on a high note, reaching 1,155 points ...
Saturday, 06 September 14
INDONESIA WANTS TO REGULATE COAL DEALS - THE TELEGRAPH INDIA
Indonesia has raised concerns about suspected coal deals struck between overseas buyers and its unregistered domestic miners, the telegraph India r ...
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- Sinarmas Energy and Mining - Indonesia
- Kaltim Prima Coal - Indonesia
- International Coal Ventures Pvt Ltd - India
- Standard Chartered Bank - UAE
- Gujarat Sidhee Cement - India
- Central Java Power - Indonesia
- Orica Mining Services - Indonesia
- Uttam Galva Steels Limited - India
- Global Coal Blending Company Limited - Australia
- Oldendorff Carriers - Singapore
- MS Steel International - UAE
- Meenaskhi Energy Private Limited - India
- Bhoruka Overseas - Indonesia
- VISA Power Limited - India
- Kumho Petrochemical, South Korea
- Bangladesh Power Developement Board
- Sree Jayajothi Cements Limited - India
- Bulk Trading Sa - Switzerland
- Straits Asia Resources Limited - Singapore
- Kapuas Tunggal Persada - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Baramulti Group, Indonesia
- LBH Netherlands Bv - Netherlands
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Medco Energi Mining Internasional
- Indo Tambangraya Megah - Indonesia
- Anglo American - United Kingdom
- Semirara Mining Corp, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Petrochimia International Co. Ltd.- Taiwan
- Binh Thuan Hamico - Vietnam
- Sarangani Energy Corporation, Philippines
- Thai Mozambique Logistica
- Indogreen Group - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Mercuria Energy - Indonesia
- Jaiprakash Power Ventures ltd
- Essar Steel Hazira Ltd - India
- Manunggal Multi Energi - Indonesia
- Goldman Sachs - Singapore
- ICICI Bank Limited - India
- IHS Mccloskey Coal Group - USA
- Jorong Barutama Greston.PT - Indonesia
- Central Electricity Authority - India
- Minerals Council of Australia
- Xindia Steels Limited - India
- Ministry of Mines - Canada
- Bahari Cakrawala Sebuku - Indonesia
- Larsen & Toubro Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Directorate Of Revenue Intelligence - India
- Australian Commodity Traders Exchange
- Makarim & Taira - Indonesia
- Metalloyd Limited - United Kingdom
- Electricity Generating Authority of Thailand
- Toyota Tsusho Corporation, Japan
- Energy Development Corp, Philippines
- Ind-Barath Power Infra Limited - India
- Georgia Ports Authority, United States
- White Energy Company Limited
- Therma Luzon, Inc, Philippines
- Riau Bara Harum - Indonesia
- Planning Commission, India
- Africa Commodities Group - South Africa
- Attock Cement Pakistan Limited
- Madhucon Powers Ltd - India
- Agrawal Coal Company - India
- Altura Mining Limited, Indonesia
- San Jose City I Power Corp, Philippines
- GAC Shipping (India) Pvt Ltd
- Deloitte Consulting - India
- PNOC Exploration Corporation - Philippines
- Timah Investasi Mineral - Indoneisa
- Borneo Indobara - Indonesia
- Indika Energy - Indonesia
- Bhushan Steel Limited - India
- Latin American Coal - Colombia
- South Luzon Thermal Energy Corporation
- Marubeni Corporation - India
- Bukit Makmur.PT - Indonesia
- Eastern Energy - Thailand
- Aboitiz Power Corporation - Philippines
- Kideco Jaya Agung - Indonesia
- TeaM Sual Corporation - Philippines
- Karaikal Port Pvt Ltd - India
- GMR Energy Limited - India
- Billiton Holdings Pty Ltd - Australia
- Sakthi Sugars Limited - India
- McConnell Dowell - Australia
- Interocean Group of Companies - India
- Barasentosa Lestari - Indonesia
- Banpu Public Company Limited - Thailand
- Heidelberg Cement - Germany
- Independent Power Producers Association of India
- New Zealand Coal & Carbon
- Rashtriya Ispat Nigam Limited - India
- Pendopo Energi Batubara - Indonesia
- Videocon Industries ltd - India
- Maheswari Brothers Coal Limited - India
- Wilmar Investment Holdings
- Ceylon Electricity Board - Sri Lanka
- Intertek Mineral Services - Indonesia
- PTC India Limited - India
- SMG Consultants - Indonesia
- Wood Mackenzie - Singapore
- Australian Coal Association
- Sojitz Corporation - Japan
- Miang Besar Coal Terminal - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Grasim Industreis Ltd - India
- Indian Oil Corporation Limited
- SMC Global Power, Philippines
- Edison Trading Spa - Italy
- Globalindo Alam Lestari - Indonesia
- Mintek Dendrill Indonesia
- Global Green Power PLC Corporation, Philippines
- OPG Power Generation Pvt Ltd - India
- Port Waratah Coal Services - Australia
- Bukit Baiduri Energy - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Semirara Mining and Power Corporation, Philippines
- IEA Clean Coal Centre - UK
- Orica Australia Pty. Ltd.
- Coastal Gujarat Power Limited - India
- Singapore Mercantile Exchange
- TNB Fuel Sdn Bhd - Malaysia
- Sindya Power Generating Company Private Ltd
- Parliament of New Zealand
- Siam City Cement PLC, Thailand
- Mjunction Services Limited - India
- London Commodity Brokers - England
- The University of Queensland
- Savvy Resources Ltd - HongKong
- Antam Resourcindo - Indonesia
- Indian Energy Exchange, India
- Neyveli Lignite Corporation Ltd, - India
- CNBM International Corporation - China
- Kartika Selabumi Mining - Indonesia
- Price Waterhouse Coopers - Russia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Meralco Power Generation, Philippines
- Star Paper Mills Limited - India
- Maharashtra Electricity Regulatory Commission - India
- PowerSource Philippines DevCo
- Indonesian Coal Mining Association
- Parry Sugars Refinery, India
- Kalimantan Lumbung Energi - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Dalmia Cement Bharat India
- Cigading International Bulk Terminal - Indonesia
- Cement Manufacturers Association - India
- Rio Tinto Coal - Australia
- Lanco Infratech Ltd - India
- Coal and Oil Company - UAE
- GN Power Mariveles Coal Plant, Philippines
- Posco Energy - South Korea
- Mercator Lines Limited - India
- Gujarat Electricity Regulatory Commission - India
- Vedanta Resources Plc - India
- Ambuja Cements Ltd - India
- Aditya Birla Group - India
- Jindal Steel & Power Ltd - India
- Chamber of Mines of South Africa
- Energy Link Ltd, New Zealand
- Ministry of Finance - Indonesia
- Thiess Contractors Indonesia
- Sical Logistics Limited - India
- Iligan Light & Power Inc, Philippines
- Karbindo Abesyapradhi - Indoneisa
- ASAPP Information Group - India
- Kobexindo Tractors - Indoneisa
- Carbofer General Trading SA - India
- Leighton Contractors Pty Ltd - Australia
- Commonwealth Bank - Australia
- Electricity Authority, New Zealand
- Trasteel International SA, Italy
- The State Trading Corporation of India Ltd
- Chettinad Cement Corporation Ltd - India
- The Treasury - Australian Government
- Merrill Lynch Commodities Europe
- Ministry of Transport, Egypt
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Eastern Coal Council - USA
- Bayan Resources Tbk. - Indonesia
- Global Business Power Corporation, Philippines
- GVK Power & Infra Limited - India
- Tamil Nadu electricity Board
- Petron Corporation, Philippines
- AsiaOL BioFuels Corp., Philippines
- Samtan Co., Ltd - South Korea
- CIMB Investment Bank - Malaysia
- India Bulls Power Limited - India
- European Bulk Services B.V. - Netherlands
- Gujarat Mineral Development Corp Ltd - India
- Malabar Cements Ltd - India
- Power Finance Corporation Ltd., India
- SN Aboitiz Power Inc, Philippines
- Formosa Plastics Group - Taiwan
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kepco SPC Power Corporation, Philippines
- Bharathi Cement Corporation - India
- Tata Chemicals Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Siam City Cement - Thailand
- Renaissance Capital - South Africa
- Simpson Spence & Young - Indonesia
- Salva Resources Pvt Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Bhatia International Limited - India
- Economic Council, Georgia
- Coalindo Energy - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Vizag Seaport Private Limited - India
- Romanian Commodities Exchange
- Pipit Mutiara Jaya. PT, Indonesia
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