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