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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, 21 July 12
THE FREIGHT RATES ARE EXPECTED TO BE FLAT TO SOFT NEXT WEEK - VISTAAR
COALspot.com - The freight market was soft this week as all the segments were down.
The BDI was down by 6.58 pct closing at 1,037 points and the ...
Saturday, 21 July 12
INDONESIAN COMPANIES ABM INVESTAMA AND AVRA ASIA WORK OUT LONG-TERM CONTRACT - THE JAKARTA GLOBE
The Jakarta Globe, one of the leading English news papaer in Indonesia reported that, ABM Investama, a company with diversified interests in coal mi ...
Friday, 20 July 12
INDONESIA-INDIA SUPRAS BEING FIXED AT $ 10K
Handy
After a stable last week, the Handysize market has experienced softening rates in the Atlantic. Ships are ballasting from India into the Atla ...
Friday, 20 July 12
HANDYSIZES PROVE RATHER ATTRACTIVE AMONG OTHER SHIPS, IN TERMS OF FUTURE RETURNS ON INVESTMENT - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The Handysize segment of the dry bulk market appears to offer the best incentive among other ship types, for a ship owners to invest in, says Interm ...
Wednesday, 18 July 12
TAIWAN POWER COMPANY TO IMPORT 0.588 MILLION TONS OF LOW ASH AND EXTRA LOW SULFUR SUB-BITUMINOUS COAL
COALspot.com - Taiwan Power Company intends to procure 588,000 MT tons of extra low sulfur sub-bituminous coal for Taipower thermal power plant thro ...
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- San Jose City I Power Corp, Philippines
- Siam City Cement - Thailand
- Dalmia Cement Bharat India
- Standard Chartered Bank - UAE
- Metalloyd Limited - United Kingdom
- Energy Link Ltd, New Zealand
- Mercuria Energy - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Medco Energi Mining Internasional
- Rashtriya Ispat Nigam Limited - India
- Directorate Of Revenue Intelligence - India
- Aboitiz Power Corporation - Philippines
- Orica Australia Pty. Ltd.
- Directorate General of MIneral and Coal - Indonesia
- Indo Tambangraya Megah - Indonesia
- Toyota Tsusho Corporation, Japan
- Rio Tinto Coal - Australia
- Asmin Koalindo Tuhup - Indonesia
- GMR Energy Limited - India
- Parry Sugars Refinery, India
- ASAPP Information Group - India
- OPG Power Generation Pvt Ltd - India
- Goldman Sachs - Singapore
- Petron Corporation, Philippines
- Larsen & Toubro Limited - India
- Global Business Power Corporation, Philippines
- Chettinad Cement Corporation Ltd - India
- Uttam Galva Steels Limited - India
- CNBM International Corporation - China
- PowerSource Philippines DevCo
- Altura Mining Limited, Indonesia
- Independent Power Producers Association of India
- Orica Mining Services - Indonesia
- GAC Shipping (India) Pvt Ltd
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Xindia Steels Limited - India
- IEA Clean Coal Centre - UK
- Africa Commodities Group - South Africa
- Romanian Commodities Exchange
- Miang Besar Coal Terminal - Indonesia
- Star Paper Mills Limited - India
- Holcim Trading Pte Ltd - Singapore
- Indika Energy - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Mjunction Services Limited - India
- Interocean Group of Companies - India
- White Energy Company Limited
- Sarangani Energy Corporation, Philippines
- Global Green Power PLC Corporation, Philippines
- Leighton Contractors Pty Ltd - Australia
- Banpu Public Company Limited - Thailand
- Petrochimia International Co. Ltd.- Taiwan
- Alfred C Toepfer International GmbH - Germany
- Cigading International Bulk Terminal - Indonesia
- International Coal Ventures Pvt Ltd - India
- Maheswari Brothers Coal Limited - India
- Merrill Lynch Commodities Europe
- Wilmar Investment Holdings
- Gujarat Mineral Development Corp Ltd - India
- Indonesian Coal Mining Association
- Malabar Cements Ltd - India
- Bhatia International Limited - India
- VISA Power Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Indian Energy Exchange, India
- Renaissance Capital - South Africa
- Sojitz Corporation - Japan
- Bayan Resources Tbk. - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Agrawal Coal Company - India
- Timah Investasi Mineral - Indoneisa
- Power Finance Corporation Ltd., India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Formosa Plastics Group - Taiwan
- MS Steel International - UAE
- Ministry of Mines - Canada
- South Luzon Thermal Energy Corporation
- Tamil Nadu electricity Board
- Eastern Energy - Thailand
- Kapuas Tunggal Persada - Indonesia
- Thai Mozambique Logistica
- Kartika Selabumi Mining - Indonesia
- Bangladesh Power Developement Board
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Latin American Coal - Colombia
- PNOC Exploration Corporation - Philippines
- Kumho Petrochemical, South Korea
- Central Electricity Authority - India
- Mintek Dendrill Indonesia
- Indogreen Group - Indonesia
- Sinarmas Energy and Mining - Indonesia
- GVK Power & Infra Limited - India
- Bukit Baiduri Energy - Indonesia
- London Commodity Brokers - England
- Chamber of Mines of South Africa
- Semirara Mining and Power Corporation, Philippines
- Makarim & Taira - Indonesia
- Sree Jayajothi Cements Limited - India
- Meenaskhi Energy Private Limited - India
- Indian Oil Corporation Limited
- Siam City Cement PLC, Thailand
- Georgia Ports Authority, United States
- Marubeni Corporation - India
- Economic Council, Georgia
- Bahari Cakrawala Sebuku - Indonesia
- Heidelberg Cement - Germany
- Therma Luzon, Inc, Philippines
- Cement Manufacturers Association - India
- Bukit Asam (Persero) Tbk - Indonesia
- Oldendorff Carriers - Singapore
- Essar Steel Hazira Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Singapore Mercantile Exchange
- Price Waterhouse Coopers - Russia
- Bharathi Cement Corporation - India
- Jorong Barutama Greston.PT - Indonesia
- Port Waratah Coal Services - Australia
- Grasim Industreis Ltd - India
- Madhucon Powers Ltd - India
- European Bulk Services B.V. - Netherlands
- McConnell Dowell - Australia
- SN Aboitiz Power Inc, Philippines
- Kobexindo Tractors - Indoneisa
- Bulk Trading Sa - Switzerland
- Bukit Makmur.PT - Indonesia
- Salva Resources Pvt Ltd - India
- Energy Development Corp, Philippines
- Sindya Power Generating Company Private Ltd
- Tata Chemicals Ltd - India
- Simpson Spence & Young - Indonesia
- Thiess Contractors Indonesia
- Bhushan Steel Limited - India
- Jaiprakash Power Ventures ltd
- Parliament of New Zealand
- Commonwealth Bank - Australia
- Carbofer General Trading SA - India
- Antam Resourcindo - Indonesia
- Mercator Lines Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Kaltim Prima Coal - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Semirara Mining Corp, Philippines
- Gujarat Electricity Regulatory Commission - India
- Vedanta Resources Plc - India
- Central Java Power - Indonesia
- Global Coal Blending Company Limited - Australia
- Australian Commodity Traders Exchange
- Deloitte Consulting - India
- Pendopo Energi Batubara - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Electricity Authority, New Zealand
- Planning Commission, India
- Wood Mackenzie - Singapore
- Karbindo Abesyapradhi - Indoneisa
- Savvy Resources Ltd - HongKong
- Binh Thuan Hamico - Vietnam
- Iligan Light & Power Inc, Philippines
- Sical Logistics Limited - India
- Baramulti Group, Indonesia
- Sakthi Sugars Limited - India
- ICICI Bank Limited - India
- Karaikal Port Pvt Ltd - India
- Gujarat Sidhee Cement - India
- TNB Fuel Sdn Bhd - Malaysia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Electricity Generating Authority of Thailand
- Coalindo Energy - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Trasteel International SA, Italy
- Edison Trading Spa - Italy
- Riau Bara Harum - Indonesia
- Kideco Jaya Agung - Indonesia
- The Treasury - Australian Government
- Barasentosa Lestari - Indonesia
- Samtan Co., Ltd - South Korea
- SMC Global Power, Philippines
- CIMB Investment Bank - Malaysia
- SMG Consultants - Indonesia
- Coal and Oil Company - UAE
- Minerals Council of Australia
- Kepco SPC Power Corporation, Philippines
- Australian Coal Association
- Anglo American - United Kingdom
- Vizag Seaport Private Limited - India
- Videocon Industries ltd - India
- Posco Energy - South Korea
- Aditya Birla Group - India
- Meralco Power Generation, Philippines
- Bhoruka Overseas - Indonesia
- Manunggal Multi Energi - Indonesia
- The State Trading Corporation of India Ltd
- Lanco Infratech Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Ministry of Finance - Indonesia
- New Zealand Coal & Carbon
- India Bulls Power Limited - India
- Krishnapatnam Port Company Ltd. - India
- Straits Asia Resources Limited - Singapore
- IHS Mccloskey Coal Group - USA
- LBH Netherlands Bv - Netherlands
- Maharashtra Electricity Regulatory Commission - India
- Jindal Steel & Power Ltd - India
- Ministry of Transport, Egypt
- Ceylon Electricity Board - Sri Lanka
- Ind-Barath Power Infra Limited - India
- Globalindo Alam Lestari - Indonesia
- Borneo Indobara - Indonesia
- PTC India Limited - India
- Eastern Coal Council - USA
- Offshore Bulk Terminal Pte Ltd, Singapore
- The University of Queensland
- TeaM Sual Corporation - Philippines
- Coastal Gujarat Power Limited - India
- Intertek Mineral Services - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Ambuja Cements Ltd - India
- Attock Cement Pakistan Limited
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