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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, 26 October 12
DRY BULK MARKET FALLS ON WORRIES THAT RECENT RALLY WILL BE SHORTLIVED - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The dry bulk market retreated yesterday as a result of a plunge of the Capesize dry bulk carriers' segment, after their latest rally. As a result, ...
Tuesday, 23 October 12
INDONESIA SETS DMO FOR NEXT YEAR
COALspot.com - The Indonesian government has declared the quantity of coal to be supplied to domestic market in 2013 recently under DMO regulation. ...
Sunday, 21 October 12
BUMA HAS PRODUCED 25.0 MILLION TONS OF COAL YEAR TO DATE
COALspot.com - PT Delta Dunia Makmur Tbk., has removed 33.2 million bcm* (+5.5% YoY) of Overburden in September 2012 totaled while coal produc ...
Saturday, 20 October 12
SUPRAMAX FREIGHT EXPECTED TO BE FLAT - VISTAAR
COALspot.com - The shipping market continued to be quite active with quite lot of cargoes fixed for in the cape and panamax sector.
The BDI was ...
Thursday, 18 October 12
INDO-INDIA, LARGE ECO SUPRA FIXED AT USD 11000 - FEARNLEYS AS
Handy
Atlantic market remains quiet due to lack of cargoes and more supply of ships. Rates from Cont to East Med were around USD 14k and Black Sea ...
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- McConnell Dowell - Australia
- Karbindo Abesyapradhi - Indoneisa
- Jaiprakash Power Ventures ltd
- Independent Power Producers Association of India
- Maheswari Brothers Coal Limited - India
- Ministry of Finance - Indonesia
- Electricity Authority, New Zealand
- Kapuas Tunggal Persada - Indonesia
- Petron Corporation, Philippines
- Coastal Gujarat Power Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Energy Link Ltd, New Zealand
- Siam City Cement - Thailand
- Indo Tambangraya Megah - Indonesia
- Bukit Baiduri Energy - Indonesia
- Ambuja Cements Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Videocon Industries ltd - India
- Rashtriya Ispat Nigam Limited - India
- Semirara Mining and Power Corporation, Philippines
- Bangladesh Power Developement Board
- Offshore Bulk Terminal Pte Ltd, Singapore
- MS Steel International - UAE
- Gujarat Sidhee Cement - India
- GN Power Mariveles Coal Plant, Philippines
- London Commodity Brokers - England
- Madhucon Powers Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Jorong Barutama Greston.PT - Indonesia
- Central Electricity Authority - India
- SMG Consultants - Indonesia
- Commonwealth Bank - Australia
- LBH Netherlands Bv - Netherlands
- Thiess Contractors Indonesia
- CNBM International Corporation - China
- Australian Commodity Traders Exchange
- Kartika Selabumi Mining - Indonesia
- Samtan Co., Ltd - South Korea
- Cigading International Bulk Terminal - Indonesia
- Xindia Steels Limited - India
- IHS Mccloskey Coal Group - USA
- SMC Global Power, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Kaltim Prima Coal - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Rio Tinto Coal - Australia
- Economic Council, Georgia
- Ministry of Transport, Egypt
- Meenaskhi Energy Private Limited - India
- PTC India Limited - India
- Bhushan Steel Limited - India
- Anglo American - United Kingdom
- Marubeni Corporation - India
- Grasim Industreis Ltd - India
- Kumho Petrochemical, South Korea
- Global Coal Blending Company Limited - Australia
- Ministry of Mines - Canada
- Bukit Makmur.PT - Indonesia
- Toyota Tsusho Corporation, Japan
- Larsen & Toubro Limited - India
- Intertek Mineral Services - Indonesia
- Chamber of Mines of South Africa
- South Luzon Thermal Energy Corporation
- PetroVietnam Power Coal Import and Supply Company
- Formosa Plastics Group - Taiwan
- Eastern Energy - Thailand
- Maharashtra Electricity Regulatory Commission - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Indogreen Group - Indonesia
- Parliament of New Zealand
- Sinarmas Energy and Mining - Indonesia
- Central Java Power - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Georgia Ports Authority, United States
- Simpson Spence & Young - Indonesia
- Orica Australia Pty. Ltd.
- SN Aboitiz Power Inc, Philippines
- Antam Resourcindo - Indonesia
- The State Trading Corporation of India Ltd
- Malabar Cements Ltd - India
- Uttam Galva Steels Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Minerals Council of Australia
- Bulk Trading Sa - Switzerland
- Aboitiz Power Corporation - Philippines
- Aditya Birla Group - India
- Sindya Power Generating Company Private Ltd
- Oldendorff Carriers - Singapore
- Altura Mining Limited, Indonesia
- Indika Energy - Indonesia
- Merrill Lynch Commodities Europe
- Medco Energi Mining Internasional
- Interocean Group of Companies - India
- Thai Mozambique Logistica
- ICICI Bank Limited - India
- Cement Manufacturers Association - India
- Makarim & Taira - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Pendopo Energi Batubara - Indonesia
- Iligan Light & Power Inc, Philippines
- Alfred C Toepfer International GmbH - Germany
- Kideco Jaya Agung - Indonesia
- India Bulls Power Limited - India
- Binh Thuan Hamico - Vietnam
- Borneo Indobara - Indonesia
- GAC Shipping (India) Pvt Ltd
- Star Paper Mills Limited - India
- Wood Mackenzie - Singapore
- Edison Trading Spa - Italy
- Directorate General of MIneral and Coal - Indonesia
- Renaissance Capital - South Africa
- Energy Development Corp, Philippines
- Globalindo Alam Lestari - Indonesia
- Baramulti Group, Indonesia
- Tamil Nadu electricity Board
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- PNOC Exploration Corporation - Philippines
- Coal and Oil Company - UAE
- Meralco Power Generation, Philippines
- Manunggal Multi Energi - Indonesia
- Salva Resources Pvt Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Africa Commodities Group - South Africa
- Karaikal Port Pvt Ltd - India
- Singapore Mercantile Exchange
- Bukit Asam (Persero) Tbk - Indonesia
- Banpu Public Company Limited - Thailand
- International Coal Ventures Pvt Ltd - India
- Timah Investasi Mineral - Indoneisa
- European Bulk Services B.V. - Netherlands
- Global Business Power Corporation, Philippines
- AsiaOL BioFuels Corp., Philippines
- Mercator Lines Limited - India
- Krishnapatnam Port Company Ltd. - India
- IEA Clean Coal Centre - UK
- Kalimantan Lumbung Energi - Indonesia
- Sarangani Energy Corporation, Philippines
- Price Waterhouse Coopers - Russia
- Miang Besar Coal Terminal - Indonesia
- Bayan Resources Tbk. - Indonesia
- Parry Sugars Refinery, India
- Kohat Cement Company Ltd. - Pakistan
- PowerSource Philippines DevCo
- Sree Jayajothi Cements Limited - India
- Sojitz Corporation - Japan
- Wilmar Investment Holdings
- Pipit Mutiara Jaya. PT, Indonesia
- Therma Luzon, Inc, Philippines
- Chettinad Cement Corporation Ltd - India
- Port Waratah Coal Services - Australia
- Dalmia Cement Bharat India
- Jindal Steel & Power Ltd - India
- Australian Coal Association
- TNB Fuel Sdn Bhd - Malaysia
- Eastern Coal Council - USA
- Posco Energy - South Korea
- GVK Power & Infra Limited - India
- Essar Steel Hazira Ltd - India
- Mintek Dendrill Indonesia
- Indian Oil Corporation Limited
- OPG Power Generation Pvt Ltd - India
- ASAPP Information Group - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Coalindo Energy - Indonesia
- The University of Queensland
- Indonesian Coal Mining Association
- Latin American Coal - Colombia
- GMR Energy Limited - India
- Deloitte Consulting - India
- Agrawal Coal Company - India
- Goldman Sachs - Singapore
- Lanco Infratech Ltd - India
- Tata Chemicals Ltd - India
- Holcim Trading Pte Ltd - Singapore
- San Jose City I Power Corp, Philippines
- Vizag Seaport Private Limited - India
- Bhoruka Overseas - Indonesia
- VISA Power Limited - India
- Attock Cement Pakistan Limited
- New Zealand Coal & Carbon
- Sakthi Sugars Limited - India
- Ind-Barath Power Infra Limited - India
- Directorate Of Revenue Intelligence - India
- Kobexindo Tractors - Indoneisa
- Metalloyd Limited - United Kingdom
- Siam City Cement PLC, Thailand
- Heidelberg Cement - Germany
- Orica Mining Services - Indonesia
- CIMB Investment Bank - Malaysia
- Kepco SPC Power Corporation, Philippines
- Vedanta Resources Plc - India
- Mercuria Energy - Indonesia
- Planning Commission, India
- Straits Asia Resources Limited - Singapore
- Savvy Resources Ltd - HongKong
- White Energy Company Limited
- Standard Chartered Bank - UAE
- Sical Logistics Limited - India
- Mjunction Services Limited - India
- Barasentosa Lestari - Indonesia
- Bhatia International Limited - India
- Indian Energy Exchange, India
- Leighton Contractors Pty Ltd - Australia
- Global Green Power PLC Corporation, Philippines
- Bharathi Cement Corporation - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Power Finance Corporation Ltd., India
- Romanian Commodities Exchange
- TeaM Sual Corporation - Philippines
- Electricity Generating Authority of Thailand
- Trasteel International SA, Italy
- Riau Bara Harum - Indonesia
- Carbofer General Trading SA - India
- Gujarat Mineral Development Corp Ltd - India
- Semirara Mining Corp, Philippines
- The Treasury - Australian Government
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