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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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Friday, 30 November 12
IS INDONESIAN COAL INDUSTRY DEPENDS HEAVILY ON INDIA AND CHINA?
COALspot.com: Indonesia, the world largest multi grade coal exporter, shipped 35,143,587* tons of coal in October 2012. October exports are 19 ...
Thursday, 29 November 12
BUMI TO PRODUCE 100 MILLION TONS OF COAL BY 2014
COALspot.com - Expansions on both BUMI’ s subsidiaries, PT Kaltim Prima Coal (KPC) and PT Arutmin Indonesia ( Arutmin) , are ...
Thursday, 29 November 12
PANAMAX : A FAIRLY STEADY MARKET WITH USD 8.5-9K/DAY FOR 2 LADEN LEGS IN ATLANTIC - FEARNLEYS
Handy
The Atlantic market continues to remain quiet due to more supply of ships. Rates from USG to Far East were around USD 18k and Black Sea to Fa ...
Thursday, 29 November 12
DRY BULK MARKET SLIGHTLY HIGHER DESPITE LULL ACTIVITY - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The dry bulk market was marginally higher yesterday, according to the industry's benchmark, the Baltic Dry Index (BDI), which rose by 7 points to 1 ...
Wednesday, 28 November 12
NEWBUILDING ORDERING PICKS UP AS SHIP OWNERS LOOK TO CLOSE DEALS BEFORE THE END OF THE YEAR - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
Ship owners are active once again in the newbuilding ordering market, as they look to clinch deals ahead of the end of the year. Once again their fo ...
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- Essar Steel Hazira Ltd - India
- Minerals Council of Australia
- Romanian Commodities Exchange
- LBH Netherlands Bv - Netherlands
- Maharashtra Electricity Regulatory Commission - India
- Jorong Barutama Greston.PT - Indonesia
- Bharathi Cement Corporation - India
- Oldendorff Carriers - Singapore
- Mercator Lines Limited - India
- Manunggal Multi Energi - Indonesia
- Edison Trading Spa - Italy
- Indian Energy Exchange, India
- Thiess Contractors Indonesia
- Sical Logistics Limited - India
- Makarim & Taira - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Salva Resources Pvt Ltd - India
- Port Waratah Coal Services - Australia
- Energy Development Corp, Philippines
- Directorate Of Revenue Intelligence - India
- MS Steel International - UAE
- Central Java Power - Indonesia
- Meenaskhi Energy Private Limited - India
- Grasim Industreis Ltd - India
- Cement Manufacturers Association - India
- Eastern Coal Council - USA
- Commonwealth Bank - Australia
- Cigading International Bulk Terminal - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Altura Mining Limited, Indonesia
- Sojitz Corporation - Japan
- Borneo Indobara - Indonesia
- PowerSource Philippines DevCo
- Planning Commission, India
- Indogreen Group - Indonesia
- IHS Mccloskey Coal Group - USA
- GN Power Mariveles Coal Plant, Philippines
- Alfred C Toepfer International GmbH - Germany
- Anglo American - United Kingdom
- Bhushan Steel Limited - India
- Sarangani Energy Corporation, Philippines
- Uttam Galva Steels Limited - India
- Malabar Cements Ltd - India
- Kideco Jaya Agung - Indonesia
- Heidelberg Cement - Germany
- New Zealand Coal & Carbon
- OPG Power Generation Pvt Ltd - India
- Coastal Gujarat Power Limited - India
- Semirara Mining Corp, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Gujarat Electricity Regulatory Commission - India
- Bangladesh Power Developement Board
- Bahari Cakrawala Sebuku - Indonesia
- Pendopo Energi Batubara - Indonesia
- Savvy Resources Ltd - HongKong
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Global Business Power Corporation, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- White Energy Company Limited
- South Luzon Thermal Energy Corporation
- Carbofer General Trading SA - India
- Marubeni Corporation - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- European Bulk Services B.V. - Netherlands
- Offshore Bulk Terminal Pte Ltd, Singapore
- PetroVietnam Power Coal Import and Supply Company
- Electricity Authority, New Zealand
- Singapore Mercantile Exchange
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Metalloyd Limited - United Kingdom
- Banpu Public Company Limited - Thailand
- Global Coal Blending Company Limited - Australia
- Pipit Mutiara Jaya. PT, Indonesia
- CNBM International Corporation - China
- Rio Tinto Coal - Australia
- Simpson Spence & Young - Indonesia
- McConnell Dowell - Australia
- Bukit Asam (Persero) Tbk - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Ministry of Finance - Indonesia
- Global Green Power PLC Corporation, Philippines
- Chettinad Cement Corporation Ltd - India
- Therma Luzon, Inc, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bukit Baiduri Energy - Indonesia
- ICICI Bank Limited - India
- Power Finance Corporation Ltd., India
- Directorate General of MIneral and Coal - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Sakthi Sugars Limited - India
- Petron Corporation, Philippines
- Mjunction Services Limited - India
- Kepco SPC Power Corporation, Philippines
- Dalmia Cement Bharat India
- Karaikal Port Pvt Ltd - India
- Straits Asia Resources Limited - Singapore
- Jaiprakash Power Ventures ltd
- CIMB Investment Bank - Malaysia
- The Treasury - Australian Government
- Mintek Dendrill Indonesia
- Deloitte Consulting - India
- Chamber of Mines of South Africa
- India Bulls Power Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Timah Investasi Mineral - Indoneisa
- Baramulti Group, Indonesia
- Globalindo Alam Lestari - Indonesia
- Sinarmas Energy and Mining - Indonesia
- London Commodity Brokers - England
- GAC Shipping (India) Pvt Ltd
- Renaissance Capital - South Africa
- Iligan Light & Power Inc, Philippines
- Samtan Co., Ltd - South Korea
- Aboitiz Power Corporation - Philippines
- Indonesian Coal Mining Association
- Kartika Selabumi Mining - Indonesia
- ASAPP Information Group - India
- Gujarat Sidhee Cement - India
- Ceylon Electricity Board - Sri Lanka
- Kaltim Prima Coal - Indonesia
- Star Paper Mills Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Bhatia International Limited - India
- Formosa Plastics Group - Taiwan
- Aditya Birla Group - India
- Ind-Barath Power Infra Limited - India
- Jindal Steel & Power Ltd - India
- Interocean Group of Companies - India
- San Jose City I Power Corp, Philippines
- Attock Cement Pakistan Limited
- Australian Commodity Traders Exchange
- Ministry of Mines - Canada
- Kobexindo Tractors - Indoneisa
- Toyota Tsusho Corporation, Japan
- Kumho Petrochemical, South Korea
- Vijayanagar Sugar Pvt Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Kapuas Tunggal Persada - Indonesia
- Price Waterhouse Coopers - Russia
- SMG Consultants - Indonesia
- Meralco Power Generation, Philippines
- Georgia Ports Authority, United States
- Goldman Sachs - Singapore
- Holcim Trading Pte Ltd - Singapore
- Eastern Energy - Thailand
- Agrawal Coal Company - India
- Independent Power Producers Association of India
- Sindya Power Generating Company Private Ltd
- Sree Jayajothi Cements Limited - India
- Vedanta Resources Plc - India
- Trasteel International SA, Italy
- Tata Chemicals Ltd - India
- SN Aboitiz Power Inc, Philippines
- Vizag Seaport Private Limited - India
- Neyveli Lignite Corporation Ltd, - India
- VISA Power Limited - India
- Larsen & Toubro Limited - India
- Bukit Makmur.PT - Indonesia
- Maheswari Brothers Coal Limited - India
- Wilmar Investment Holdings
- Medco Energi Mining Internasional
- Merrill Lynch Commodities Europe
- Ambuja Cements Ltd - India
- Parry Sugars Refinery, India
- Economic Council, Georgia
- Central Electricity Authority - India
- GMR Energy Limited - India
- Bhoruka Overseas - Indonesia
- Binh Thuan Hamico - Vietnam
- Indian Oil Corporation Limited
- Electricity Generating Authority of Thailand
- GVK Power & Infra Limited - India
- Parliament of New Zealand
- Ministry of Transport, Egypt
- Thai Mozambique Logistica
- Standard Chartered Bank - UAE
- Asmin Koalindo Tuhup - Indonesia
- Wood Mackenzie - Singapore
- AsiaOL BioFuels Corp., Philippines
- Xindia Steels Limited - India
- Latin American Coal - Colombia
- Krishnapatnam Port Company Ltd. - India
- Miang Besar Coal Terminal - Indonesia
- Indika Energy - Indonesia
- The University of Queensland
- Energy Link Ltd, New Zealand
- Orica Mining Services - Indonesia
- Lanco Infratech Ltd - India
- IEA Clean Coal Centre - UK
- Siam City Cement PLC, Thailand
- Madhucon Powers Ltd - India
- Africa Commodities Group - South Africa
- Coalindo Energy - Indonesia
- Bayan Resources Tbk. - Indonesia
- TeaM Sual Corporation - Philippines
- International Coal Ventures Pvt Ltd - India
- Tamil Nadu electricity Board
- Orica Australia Pty. Ltd.
- Bulk Trading Sa - Switzerland
- Posco Energy - South Korea
- Indo Tambangraya Megah - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Intertek Mineral Services - Indonesia
- PNOC Exploration Corporation - Philippines
- Antam Resourcindo - Indonesia
- The State Trading Corporation of India Ltd
- PTC India Limited - India
- Videocon Industries ltd - India
- Coal and Oil Company - UAE
- Australian Coal Association
- Semirara Mining and Power Corporation, Philippines
- Mercuria Energy - Indonesia
- Barasentosa Lestari - Indonesia
- Riau Bara Harum - Indonesia
- SMC Global Power, Philippines
- Siam City Cement - Thailand
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