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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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Saturday, 08 September 12
INDO INDIA ROUTE FREIGHT FOR SUPRAMAX REMAINS STRONG - CAPT. REDDY
COALspot.com - The freight market overall remained weak and except for cape index all other sectors were down. The biggest drop was in the Panamax s ...
Saturday, 08 September 12
RIO TINTO COMPLETES ACQUISITION OF BHP BILLITON'S INTERESTS IN RICHARDS BAY MINERALS
Rio Tinto has doubled its holding in Richards Bay Minerals (RBM) following the completion of its acquisition of BHP Billiton’s entire inte ...
Friday, 07 September 12
HBA GAINS $ 1.56 PER MT IN SEPTEMBER
COALspot.com - The Indonesian government’s declared coal reference price has gained US$ 1.56 per MT M-o-M. This is the first gain ...
Thursday, 06 September 12
SOME ANCHORED PANAMAX VESSELS WAITING FOR CARGOS TO COME
Handy
According to Fearnleys weekly report, in the smaller segments Fearnleys sees little to no changes since last week. There are still entering s ...
Thursday, 06 September 12
DRY BULK CARRIERS STILL IN HIGH DEMAND AMONG SHIP OWNERS, BUT NEWBUILDING ACTIVITY SLIDES IN AUGUST - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The slide of the dry bulk market this year hasn't abated ship owners' appetite for dry bulk carriers, as evidenced by the steady interest expresse ...
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- Rio Tinto Coal - Australia
- Marubeni Corporation - India
- PowerSource Philippines DevCo
- Mercuria Energy - Indonesia
- South Luzon Thermal Energy Corporation
- Edison Trading Spa - Italy
- Cigading International Bulk Terminal - Indonesia
- Karaikal Port Pvt Ltd - India
- Ministry of Finance - Indonesia
- Posco Energy - South Korea
- International Coal Ventures Pvt Ltd - India
- Aboitiz Power Corporation - Philippines
- Orica Mining Services - Indonesia
- PNOC Exploration Corporation - Philippines
- Mercator Lines Limited - India
- Xindia Steels Limited - India
- Manunggal Multi Energi - Indonesia
- OPG Power Generation Pvt Ltd - India
- Bangladesh Power Developement Board
- Heidelberg Cement - Germany
- LBH Netherlands Bv - Netherlands
- San Jose City I Power Corp, Philippines
- Orica Australia Pty. Ltd.
- Wilmar Investment Holdings
- Star Paper Mills Limited - India
- Jaiprakash Power Ventures ltd
- The University of Queensland
- Oldendorff Carriers - Singapore
- Rashtriya Ispat Nigam Limited - India
- Coastal Gujarat Power Limited - India
- Chamber of Mines of South Africa
- Semirara Mining and Power Corporation, Philippines
- Ambuja Cements Ltd - India
- Antam Resourcindo - Indonesia
- Siam City Cement - Thailand
- Energy Link Ltd, New Zealand
- Bayan Resources Tbk. - Indonesia
- Borneo Indobara - Indonesia
- Pendopo Energi Batubara - Indonesia
- Coal and Oil Company - UAE
- Indo Tambangraya Megah - Indonesia
- Semirara Mining Corp, Philippines
- Miang Besar Coal Terminal - Indonesia
- Kartika Selabumi Mining - Indonesia
- CIMB Investment Bank - Malaysia
- CNBM International Corporation - China
- Global Coal Blending Company Limited - Australia
- Metalloyd Limited - United Kingdom
- Indika Energy - Indonesia
- Salva Resources Pvt Ltd - India
- Thiess Contractors Indonesia
- New Zealand Coal & Carbon
- Savvy Resources Ltd - HongKong
- Offshore Bulk Terminal Pte Ltd, Singapore
- Commonwealth Bank - Australia
- Toyota Tsusho Corporation, Japan
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Madhucon Powers Ltd - India
- Sarangani Energy Corporation, Philippines
- Economic Council, Georgia
- Altura Mining Limited, Indonesia
- Kideco Jaya Agung - Indonesia
- Africa Commodities Group - South Africa
- Kumho Petrochemical, South Korea
- Lanco Infratech Ltd - India
- Vizag Seaport Private Limited - India
- Australian Coal Association
- GVK Power & Infra Limited - India
- ASAPP Information Group - India
- India Bulls Power Limited - India
- Electricity Generating Authority of Thailand
- McConnell Dowell - Australia
- Videocon Industries ltd - India
- Eastern Energy - Thailand
- Price Waterhouse Coopers - Russia
- SN Aboitiz Power Inc, Philippines
- Leighton Contractors Pty Ltd - Australia
- Meralco Power Generation, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Power Finance Corporation Ltd., India
- Petrochimia International Co. Ltd.- Taiwan
- Renaissance Capital - South Africa
- Global Business Power Corporation, Philippines
- Therma Luzon, Inc, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Globalindo Alam Lestari - Indonesia
- Interocean Group of Companies - India
- Bhushan Steel Limited - India
- Jindal Steel & Power Ltd - India
- London Commodity Brokers - England
- Larsen & Toubro Limited - India
- Kepco SPC Power Corporation, Philippines
- Bukit Makmur.PT - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Neyveli Lignite Corporation Ltd, - India
- Riau Bara Harum - Indonesia
- Bukit Baiduri Energy - Indonesia
- Ministry of Transport, Egypt
- IHS Mccloskey Coal Group - USA
- ICICI Bank Limited - India
- Kapuas Tunggal Persada - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Binh Thuan Hamico - Vietnam
- Global Green Power PLC Corporation, Philippines
- Baramulti Group, Indonesia
- Dalmia Cement Bharat India
- Medco Energi Mining Internasional
- Kobexindo Tractors - Indoneisa
- Romanian Commodities Exchange
- Grasim Industreis Ltd - India
- Intertek Mineral Services - Indonesia
- Bhoruka Overseas - Indonesia
- Malabar Cements Ltd - India
- Indogreen Group - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Ind-Barath Power Infra Limited - India
- GAC Shipping (India) Pvt Ltd
- Barasentosa Lestari - Indonesia
- Thai Mozambique Logistica
- Maharashtra Electricity Regulatory Commission - India
- Eastern Coal Council - USA
- Vijayanagar Sugar Pvt Ltd - India
- Sakthi Sugars Limited - India
- Aditya Birla Group - India
- Bahari Cakrawala Sebuku - Indonesia
- PTC India Limited - India
- AsiaOL BioFuels Corp., Philippines
- TeaM Sual Corporation - Philippines
- Parry Sugars Refinery, India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Parliament of New Zealand
- Trasteel International SA, Italy
- Billiton Holdings Pty Ltd - Australia
- Directorate Of Revenue Intelligence - India
- Standard Chartered Bank - UAE
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Jorong Barutama Greston.PT - Indonesia
- Gujarat Sidhee Cement - India
- Energy Development Corp, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Independent Power Producers Association of India
- Ceylon Electricity Board - Sri Lanka
- Chettinad Cement Corporation Ltd - India
- Iligan Light & Power Inc, Philippines
- Essar Steel Hazira Ltd - India
- Siam City Cement PLC, Thailand
- Cement Manufacturers Association - India
- VISA Power Limited - India
- Latin American Coal - Colombia
- Vedanta Resources Plc - India
- Asmin Koalindo Tuhup - Indonesia
- MS Steel International - UAE
- Uttam Galva Steels Limited - India
- Bharathi Cement Corporation - India
- Indian Energy Exchange, India
- Indian Oil Corporation Limited
- SMG Consultants - Indonesia
- Ministry of Mines - Canada
- Port Waratah Coal Services - Australia
- Bhatia International Limited - India
- Mjunction Services Limited - India
- Kaltim Prima Coal - Indonesia
- GMR Energy Limited - India
- SMC Global Power, Philippines
- Coalindo Energy - Indonesia
- Deloitte Consulting - India
- Georgia Ports Authority, United States
- Maheswari Brothers Coal Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Makarim & Taira - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- The Treasury - Australian Government
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Sree Jayajothi Cements Limited - India
- Alfred C Toepfer International GmbH - Germany
- Kohat Cement Company Ltd. - Pakistan
- The State Trading Corporation of India Ltd
- Tata Chemicals Ltd - India
- Wood Mackenzie - Singapore
- Formosa Plastics Group - Taiwan
- Singapore Mercantile Exchange
- Indonesian Coal Mining Association
- Central Java Power - Indonesia
- Electricity Authority, New Zealand
- Attock Cement Pakistan Limited
- Agrawal Coal Company - India
- Timah Investasi Mineral - Indoneisa
- Mintek Dendrill Indonesia
- Sindya Power Generating Company Private Ltd
- Samtan Co., Ltd - South Korea
- Bulk Trading Sa - Switzerland
- Banpu Public Company Limited - Thailand
- European Bulk Services B.V. - Netherlands
- Tamil Nadu electricity Board
- Sinarmas Energy and Mining - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Central Electricity Authority - India
- Merrill Lynch Commodities Europe
- Karbindo Abesyapradhi - Indoneisa
- Anglo American - United Kingdom
- Straits Asia Resources Limited - Singapore
- Simpson Spence & Young - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Sical Logistics Limited - India
- Holcim Trading Pte Ltd - Singapore
- Directorate General of MIneral and Coal - Indonesia
- Minerals Council of Australia
- Planning Commission, India
- White Energy Company Limited
- Petron Corporation, Philippines
- Sojitz Corporation - Japan
- Meenaskhi Energy Private Limited - India
- IEA Clean Coal Centre - UK
- Goldman Sachs - Singapore
- Carbofer General Trading SA - India
- GN Power Mariveles Coal Plant, Philippines
- Australian Commodity Traders Exchange
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