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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, 23 September 12
AN ANOTHER UNSTABLE WEEK FOR INDONESIAN COAL SWAPS
COALspot.com - Sub-Bit Indonesia coal swaps (FOB ) for November 2012 delivery lost 1.10 percent and 0.916 percent WOW and DOD respectively ...
Sunday, 23 September 12
INDIA IMPORTED 11.40 PERCENT MORE INDONESIAN COAL IN AUGUST
COALspot.com: Indonesia, the world largest multi grade coal exporter, shipped 26,451,565* tons of coal in August 2012, compared to 27.88* mill ...
Saturday, 22 September 12
SOFT BUNKER PRICES KEEP INDONESIA TO INDIA FREIGHTS STABLE - VISTAAR
COALspot.com - The freight market overall remained buoyant with all indices up except for Panamax index. The main effect seems to be increased shipm ...
Friday, 21 September 12
SHIP BREAKING ACTIVITY REACHES NEW RECORDS, AS ALREADY 2012 LEVELS HAVE SURPASSED THE WHOLE OF 2011 - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The vast oversupply of vessels, most notably in the dry bulk shipping sector, has forced ship owners to intensify their efforts towards recycling th ...
Thursday, 20 September 12
SUPRAMAX : INDO-INDIA ROUNDS WERE AROUND USD 12K - FEARNLEYS
Handy
Not a bad week for Supramax tonnage, if we compare Supramax developments to the bigger size tonnage. The rates have basically remained unchan ...
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- Kobexindo Tractors - Indoneisa
- Electricity Generating Authority of Thailand
- Alfred C Toepfer International GmbH - Germany
- MS Steel International - UAE
- Jaiprakash Power Ventures ltd
- Barasentosa Lestari - Indonesia
- Chettinad Cement Corporation Ltd - India
- Ind-Barath Power Infra Limited - India
- Indika Energy - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- International Coal Ventures Pvt Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- GVK Power & Infra Limited - India
- Directorate Of Revenue Intelligence - India
- Star Paper Mills Limited - India
- The University of Queensland
- Kohat Cement Company Ltd. - Pakistan
- Leighton Contractors Pty Ltd - Australia
- Simpson Spence & Young - Indonesia
- Vizag Seaport Private Limited - India
- Anglo American - United Kingdom
- Rio Tinto Coal - Australia
- Directorate General of MIneral and Coal - Indonesia
- Bharathi Cement Corporation - India
- Electricity Authority, New Zealand
- Carbofer General Trading SA - India
- Bhoruka Overseas - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Mercator Lines Limited - India
- Global Green Power PLC Corporation, Philippines
- Coastal Gujarat Power Limited - India
- Orica Australia Pty. Ltd.
- Central Electricity Authority - India
- Vijayanagar Sugar Pvt Ltd - India
- Global Coal Blending Company Limited - Australia
- The State Trading Corporation of India Ltd
- Vedanta Resources Plc - India
- Parliament of New Zealand
- Xindia Steels Limited - India
- Siam City Cement PLC, Thailand
- Georgia Ports Authority, United States
- Iligan Light & Power Inc, Philippines
- London Commodity Brokers - England
- Banpu Public Company Limited - Thailand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Timah Investasi Mineral - Indoneisa
- Semirara Mining and Power Corporation, Philippines
- Grasim Industreis Ltd - India
- Sarangani Energy Corporation, Philippines
- VISA Power Limited - India
- Bhatia International Limited - India
- Renaissance Capital - South Africa
- Lanco Infratech Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Global Business Power Corporation, Philippines
- Makarim & Taira - Indonesia
- Salva Resources Pvt Ltd - India
- Metalloyd Limited - United Kingdom
- Trasteel International SA, Italy
- Samtan Co., Ltd - South Korea
- Economic Council, Georgia
- Posco Energy - South Korea
- White Energy Company Limited
- Tata Chemicals Ltd - India
- Wilmar Investment Holdings
- Central Java Power - Indonesia
- Bulk Trading Sa - Switzerland
- Jindal Steel & Power Ltd - India
- PNOC Exploration Corporation - Philippines
- Kumho Petrochemical, South Korea
- Savvy Resources Ltd - HongKong
- Price Waterhouse Coopers - Russia
- India Bulls Power Limited - India
- Eastern Energy - Thailand
- Energy Development Corp, Philippines
- Uttam Galva Steels Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Petron Corporation, Philippines
- Ceylon Electricity Board - Sri Lanka
- Dalmia Cement Bharat India
- GMR Energy Limited - India
- Goldman Sachs - Singapore
- LBH Netherlands Bv - Netherlands
- Indonesian Coal Mining Association
- CIMB Investment Bank - Malaysia
- Sakthi Sugars Limited - India
- Merrill Lynch Commodities Europe
- TNB Fuel Sdn Bhd - Malaysia
- Interocean Group of Companies - India
- Bayan Resources Tbk. - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kideco Jaya Agung - Indonesia
- Intertek Mineral Services - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Madhucon Powers Ltd - India
- Bangladesh Power Developement Board
- Karaikal Port Pvt Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Manunggal Multi Energi - Indonesia
- Sojitz Corporation - Japan
- Australian Coal Association
- Siam City Cement - Thailand
- Eastern Coal Council - USA
- Bukit Makmur.PT - Indonesia
- Standard Chartered Bank - UAE
- Agrawal Coal Company - India
- Cigading International Bulk Terminal - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sical Logistics Limited - India
- Sindya Power Generating Company Private Ltd
- Toyota Tsusho Corporation, Japan
- Wood Mackenzie - Singapore
- Edison Trading Spa - Italy
- Chamber of Mines of South Africa
- Bukit Baiduri Energy - Indonesia
- Oldendorff Carriers - Singapore
- Thai Mozambique Logistica
- Ambuja Cements Ltd - India
- Kaltim Prima Coal - Indonesia
- Maheswari Brothers Coal Limited - India
- Ministry of Finance - Indonesia
- Aditya Birla Group - India
- SMC Global Power, Philippines
- Latin American Coal - Colombia
- IHS Mccloskey Coal Group - USA
- Cement Manufacturers Association - India
- Riau Bara Harum - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- TeaM Sual Corporation - Philippines
- Kapuas Tunggal Persada - Indonesia
- The Treasury - Australian Government
- PowerSource Philippines DevCo
- Attock Cement Pakistan Limited
- Kartika Selabumi Mining - Indonesia
- Minerals Council of Australia
- Essar Steel Hazira Ltd - India
- ICICI Bank Limited - India
- Africa Commodities Group - South Africa
- Larsen & Toubro Limited - India
- Meenaskhi Energy Private Limited - India
- Rashtriya Ispat Nigam Limited - India
- Planning Commission, India
- Formosa Plastics Group - Taiwan
- Offshore Bulk Terminal Pte Ltd, Singapore
- Commonwealth Bank - Australia
- Aboitiz Power Corporation - Philippines
- Maharashtra Electricity Regulatory Commission - India
- Port Waratah Coal Services - Australia
- Mintek Dendrill Indonesia
- Energy Link Ltd, New Zealand
- CNBM International Corporation - China
- Globalindo Alam Lestari - Indonesia
- Singapore Mercantile Exchange
- Bhushan Steel Limited - India
- South Luzon Thermal Energy Corporation
- New Zealand Coal & Carbon
- Kalimantan Lumbung Energi - Indonesia
- Ministry of Mines - Canada
- GAC Shipping (India) Pvt Ltd
- Asmin Koalindo Tuhup - Indonesia
- Coal and Oil Company - UAE
- Deloitte Consulting - India
- Ministry of Transport, Egypt
- Petrochimia International Co. Ltd.- Taiwan
- GN Power Mariveles Coal Plant, Philippines
- Indogreen Group - Indonesia
- Gujarat Sidhee Cement - India
- Power Finance Corporation Ltd., India
- Mercuria Energy - Indonesia
- Malabar Cements Ltd - India
- Pendopo Energi Batubara - Indonesia
- Videocon Industries ltd - India
- ASAPP Information Group - India
- Coalindo Energy - Indonesia
- Mjunction Services Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Baramulti Group, Indonesia
- Meralco Power Generation, Philippines
- Indian Energy Exchange, India
- Jorong Barutama Greston.PT - Indonesia
- PTC India Limited - India
- Miang Besar Coal Terminal - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Semirara Mining Corp, Philippines
- Romanian Commodities Exchange
- Indian Oil Corporation Limited
- IEA Clean Coal Centre - UK
- Altura Mining Limited, Indonesia
- Gujarat Electricity Regulatory Commission - India
- Therma Luzon, Inc, Philippines
- McConnell Dowell - Australia
- Parry Sugars Refinery, India
- Independent Power Producers Association of India
- Holcim Trading Pte Ltd - Singapore
- Indo Tambangraya Megah - Indonesia
- Heidelberg Cement - Germany
- European Bulk Services B.V. - Netherlands
- Tamil Nadu electricity Board
- Orica Mining Services - Indonesia
- Straits Asia Resources Limited - Singapore
- Neyveli Lignite Corporation Ltd, - India
- Marubeni Corporation - India
- Billiton Holdings Pty Ltd - Australia
- Kepco SPC Power Corporation, Philippines
- SMG Consultants - Indonesia
- Sree Jayajothi Cements Limited - India
- San Jose City I Power Corp, Philippines
- Thiess Contractors Indonesia
- Antam Resourcindo - Indonesia
- OPG Power Generation Pvt Ltd - India
- Borneo Indobara - Indonesia
- Medco Energi Mining Internasional
- SN Aboitiz Power Inc, Philippines
- Sinarmas Energy and Mining - Indonesia
- Binh Thuan Hamico - Vietnam
- PetroVietnam Power Coal Import and Supply Company
- Australian Commodity Traders Exchange
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