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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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- PNOC Exploration Corporation - Philippines
- Kalimantan Lumbung Energi - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Orica Australia Pty. Ltd.
- Rashtriya Ispat Nigam Limited - India
- Indonesian Coal Mining Association
- Semirara Mining and Power Corporation, Philippines
- OPG Power Generation Pvt Ltd - India
- Coastal Gujarat Power Limited - India
- Bhatia International Limited - India
- Ministry of Finance - Indonesia
- Directorate Of Revenue Intelligence - India
- Port Waratah Coal Services - Australia
- Oldendorff Carriers - Singapore
- Dalmia Cement Bharat India
- Cigading International Bulk Terminal - Indonesia
- The State Trading Corporation of India Ltd
- Manunggal Multi Energi - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- GVK Power & Infra Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Bukit Makmur.PT - Indonesia
- Antam Resourcindo - Indonesia
- Siam City Cement - Thailand
- Sakthi Sugars Limited - India
- Energy Link Ltd, New Zealand
- Bhoruka Overseas - Indonesia
- Timah Investasi Mineral - Indoneisa
- GAC Shipping (India) Pvt Ltd
- Australian Coal Association
- Bahari Cakrawala Sebuku - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Ministry of Transport, Egypt
- PetroVietnam Power Coal Import and Supply Company
- Posco Energy - South Korea
- Kohat Cement Company Ltd. - Pakistan
- Africa Commodities Group - South Africa
- Miang Besar Coal Terminal - Indonesia
- Trasteel International SA, Italy
- Thai Mozambique Logistica
- PTC India Limited - India
- Rio Tinto Coal - Australia
- Mercator Lines Limited - India
- Sarangani Energy Corporation, Philippines
- Siam City Cement PLC, Thailand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Minerals Council of Australia
- Gujarat Mineral Development Corp Ltd - India
- Altura Mining Limited, Indonesia
- GMR Energy Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Price Waterhouse Coopers - Russia
- Ceylon Electricity Board - Sri Lanka
- Parliament of New Zealand
- Attock Cement Pakistan Limited
- Agrawal Coal Company - India
- Bukit Asam (Persero) Tbk - Indonesia
- Indian Oil Corporation Limited
- Simpson Spence & Young - Indonesia
- Orica Mining Services - Indonesia
- Marubeni Corporation - India
- Karbindo Abesyapradhi - Indoneisa
- Neyveli Lignite Corporation Ltd, - India
- Sree Jayajothi Cements Limited - India
- Iligan Light & Power Inc, Philippines
- Videocon Industries ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Goldman Sachs - Singapore
- Kobexindo Tractors - Indoneisa
- Coal and Oil Company - UAE
- Barasentosa Lestari - Indonesia
- Riau Bara Harum - Indonesia
- Formosa Plastics Group - Taiwan
- SMG Consultants - Indonesia
- Petron Corporation, Philippines
- Eastern Coal Council - USA
- Latin American Coal - Colombia
- Jaiprakash Power Ventures ltd
- Pipit Mutiara Jaya. PT, Indonesia
- Global Coal Blending Company Limited - Australia
- Cement Manufacturers Association - India
- Meralco Power Generation, Philippines
- Malabar Cements Ltd - India
- South Luzon Thermal Energy Corporation
- Vedanta Resources Plc - India
- Economic Council, Georgia
- Leighton Contractors Pty Ltd - Australia
- Krishnapatnam Port Company Ltd. - India
- Romanian Commodities Exchange
- Borneo Indobara - Indonesia
- Deloitte Consulting - India
- Edison Trading Spa - Italy
- Xindia Steels Limited - India
- LBH Netherlands Bv - Netherlands
- Commonwealth Bank - Australia
- Indogreen Group - Indonesia
- Makarim & Taira - Indonesia
- Global Green Power PLC Corporation, Philippines
- Mintek Dendrill Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Tata Chemicals Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Therma Luzon, Inc, Philippines
- Electricity Generating Authority of Thailand
- Coalindo Energy - Indonesia
- CIMB Investment Bank - Malaysia
- TeaM Sual Corporation - Philippines
- Anglo American - United Kingdom
- Kumho Petrochemical, South Korea
- Bhushan Steel Limited - India
- Gujarat Electricity Regulatory Commission - India
- Standard Chartered Bank - UAE
- ASAPP Information Group - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- VISA Power Limited - India
- Uttam Galva Steels Limited - India
- Bangladesh Power Developement Board
- Aditya Birla Group - India
- India Bulls Power Limited - India
- Kepco SPC Power Corporation, Philippines
- Globalindo Alam Lestari - Indonesia
- Metalloyd Limited - United Kingdom
- The University of Queensland
- Binh Thuan Hamico - Vietnam
- Australian Commodity Traders Exchange
- Straits Asia Resources Limited - Singapore
- Pendopo Energi Batubara - Indonesia
- Chettinad Cement Corporation Ltd - India
- MS Steel International - UAE
- The Treasury - Australian Government
- Vizag Seaport Private Limited - India
- Salva Resources Pvt Ltd - India
- Parry Sugars Refinery, India
- Ind-Barath Power Infra Limited - India
- Indo Tambangraya Megah - Indonesia
- Wilmar Investment Holdings
- IEA Clean Coal Centre - UK
- Energy Development Corp, Philippines
- SMC Global Power, Philippines
- Madhucon Powers Ltd - India
- Jindal Steel & Power Ltd - India
- Bharathi Cement Corporation - India
- Eastern Energy - Thailand
- Sindya Power Generating Company Private Ltd
- Georgia Ports Authority, United States
- Mercuria Energy - Indonesia
- Gujarat Sidhee Cement - India
- London Commodity Brokers - England
- Sical Logistics Limited - India
- Mjunction Services Limited - India
- ICICI Bank Limited - India
- Lanco Infratech Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Alfred C Toepfer International GmbH - Germany
- Essar Steel Hazira Ltd - India
- Kapuas Tunggal Persada - Indonesia
- European Bulk Services B.V. - Netherlands
- Indika Energy - Indonesia
- SN Aboitiz Power Inc, Philippines
- Wood Mackenzie - Singapore
- Sinarmas Energy and Mining - Indonesia
- Ministry of Mines - Canada
- Heidelberg Cement - Germany
- PowerSource Philippines DevCo
- Carbofer General Trading SA - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Central Java Power - Indonesia
- Semirara Mining Corp, Philippines
- CNBM International Corporation - China
- Global Business Power Corporation, Philippines
- Baramulti Group, Indonesia
- Star Paper Mills Limited - India
- Power Finance Corporation Ltd., India
- Medco Energi Mining Internasional
- International Coal Ventures Pvt Ltd - India
- Ambuja Cements Ltd - India
- Renaissance Capital - South Africa
- Electricity Authority, New Zealand
- Kartika Selabumi Mining - Indonesia
- Grasim Industreis Ltd - India
- White Energy Company Limited
- Thiess Contractors Indonesia
- Merrill Lynch Commodities Europe
- Aboitiz Power Corporation - Philippines
- Holcim Trading Pte Ltd - Singapore
- San Jose City I Power Corp, Philippines
- Indian Energy Exchange, India
- Intertek Mineral Services - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- IHS Mccloskey Coal Group - USA
- Bayan Resources Tbk. - Indonesia
- Karaikal Port Pvt Ltd - India
- Interocean Group of Companies - India
- Meenaskhi Energy Private Limited - India
- McConnell Dowell - Australia
- Sojitz Corporation - Japan
- Planning Commission, India
- Larsen & Toubro Limited - India
- Central Electricity Authority - India
- Toyota Tsusho Corporation, Japan
- Independent Power Producers Association of India
- New Zealand Coal & Carbon
- Bulk Trading Sa - Switzerland
- Billiton Holdings Pty Ltd - Australia
- Maheswari Brothers Coal Limited - India
- Tamil Nadu electricity Board
- GN Power Mariveles Coal Plant, Philippines
- Kaltim Prima Coal - Indonesia
- Savvy Resources Ltd - HongKong
- Banpu Public Company Limited - Thailand
- Kideco Jaya Agung - Indonesia
- Bukit Baiduri Energy - Indonesia
- Chamber of Mines of South Africa
- Singapore Mercantile Exchange
- Samtan Co., Ltd - South Korea
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