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