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