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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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Wednesday, 18 July 12
SHIP PRICES HAVE FALLEN RAPIDLY THIS YEAR, FAVORING INVESTORS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The price for a 5 year old Capesize dry bulk carrier of 172,000 dwt has fallen to about $33,4mil from $42.9 at the end of June 2011, while at end of ...
Saturday, 14 July 12
FREIGHT MARKET SEEMS TO BE QUITE VOLATILE - VISTAAR
COALspot.com - The market seems to be quite volatile with the trend changing almost every week. This week all the segments were down except for Pana ...
Friday, 13 July 12
TRANSCOAL MINERGY HAS RECEIVED PMA STATUS IN INDONESIA
COALspot.com - PT Transcoal Minergy (“TCM”) has received official foreign owned company status from the Capital Investment Coordinating ...
Thursday, 12 July 12
LACK OF CAPESIZE DEMAND DRAGS DRY BULK MARKET LOWER - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
A lack of demand for the larger Capesize dry bulk carriers had as a result the fall of the industry’s benchmark, the BDI (Baltic Dry Index), w ...
Thursday, 12 July 12
RIO TINTO'S SENIOR MANAGEMENT CHANGES
COALspot.com - Rio Tinto is making changes to its senior management team as chief financial officer (CFO) Guy Elliott has decided to retire at the e ...
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- Central Electricity Authority - India
- Bulk Trading Sa - Switzerland
- Sakthi Sugars Limited - India
- Meralco Power Generation, Philippines
- Petron Corporation, Philippines
- Kaltim Prima Coal - Indonesia
- Jaiprakash Power Ventures ltd
- European Bulk Services B.V. - Netherlands
- Global Coal Blending Company Limited - Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Lanco Infratech Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Parliament of New Zealand
- Directorate Of Revenue Intelligence - India
- Sojitz Corporation - Japan
- Cigading International Bulk Terminal - Indonesia
- Meenaskhi Energy Private Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Australian Commodity Traders Exchange
- Eastern Energy - Thailand
- Bhatia International Limited - India
- The University of Queensland
- TNB Fuel Sdn Bhd - Malaysia
- Xindia Steels Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Semirara Mining Corp, Philippines
- Samtan Co., Ltd - South Korea
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- GMR Energy Limited - India
- Electricity Authority, New Zealand
- Formosa Plastics Group - Taiwan
- New Zealand Coal & Carbon
- ICICI Bank Limited - India
- Heidelberg Cement - Germany
- Anglo American - United Kingdom
- Sinarmas Energy and Mining - Indonesia
- Jindal Steel & Power Ltd - India
- Agrawal Coal Company - India
- Africa Commodities Group - South Africa
- Price Waterhouse Coopers - Russia
- Latin American Coal - Colombia
- India Bulls Power Limited - India
- Miang Besar Coal Terminal - Indonesia
- Goldman Sachs - Singapore
- Bayan Resources Tbk. - Indonesia
- VISA Power Limited - India
- Mintek Dendrill Indonesia
- Marubeni Corporation - India
- Toyota Tsusho Corporation, Japan
- Bangladesh Power Developement Board
- Manunggal Multi Energi - Indonesia
- Aboitiz Power Corporation - Philippines
- Uttam Galva Steels Limited - India
- Chettinad Cement Corporation Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Ministry of Transport, Egypt
- Vizag Seaport Private Limited - India
- Edison Trading Spa - Italy
- Energy Link Ltd, New Zealand
- South Luzon Thermal Energy Corporation
- Thai Mozambique Logistica
- Gujarat Mineral Development Corp Ltd - India
- Medco Energi Mining Internasional
- Ambuja Cements Ltd - India
- Salva Resources Pvt Ltd - India
- Bukit Baiduri Energy - Indonesia
- Essar Steel Hazira Ltd - India
- Attock Cement Pakistan Limited
- Electricity Generating Authority of Thailand
- Georgia Ports Authority, United States
- Coal and Oil Company - UAE
- Rio Tinto Coal - Australia
- Grasim Industreis Ltd - India
- LBH Netherlands Bv - Netherlands
- Merrill Lynch Commodities Europe
- Interocean Group of Companies - India
- Leighton Contractors Pty Ltd - Australia
- Eastern Coal Council - USA
- Global Business Power Corporation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Coastal Gujarat Power Limited - India
- Kapuas Tunggal Persada - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Star Paper Mills Limited - India
- Mjunction Services Limited - India
- Indo Tambangraya Megah - Indonesia
- Oldendorff Carriers - Singapore
- Intertek Mineral Services - Indonesia
- IHS Mccloskey Coal Group - USA
- Simpson Spence & Young - Indonesia
- Orica Australia Pty. Ltd.
- GAC Shipping (India) Pvt Ltd
- International Coal Ventures Pvt Ltd - India
- Wilmar Investment Holdings
- Barasentosa Lestari - Indonesia
- Australian Coal Association
- Singapore Mercantile Exchange
- Cement Manufacturers Association - India
- Larsen & Toubro Limited - India
- Ind-Barath Power Infra Limited - India
- Gujarat Electricity Regulatory Commission - India
- Chamber of Mines of South Africa
- Tata Chemicals Ltd - India
- Mercator Lines Limited - India
- IEA Clean Coal Centre - UK
- Gujarat Sidhee Cement - India
- Indian Oil Corporation Limited
- Kideco Jaya Agung - Indonesia
- TeaM Sual Corporation - Philippines
- GVK Power & Infra Limited - India
- Posco Energy - South Korea
- Kartika Selabumi Mining - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Energy Development Corp, Philippines
- CIMB Investment Bank - Malaysia
- Global Green Power PLC Corporation, Philippines
- Videocon Industries ltd - India
- Minerals Council of Australia
- SMC Global Power, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Makarim & Taira - Indonesia
- Kobexindo Tractors - Indoneisa
- Borneo Indobara - Indonesia
- Trasteel International SA, Italy
- Power Finance Corporation Ltd., India
- Dalmia Cement Bharat India
- Mercuria Energy - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Sree Jayajothi Cements Limited - India
- Bhushan Steel Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Pendopo Energi Batubara - Indonesia
- Altura Mining Limited, Indonesia
- Antam Resourcindo - Indonesia
- Malabar Cements Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Ministry of Finance - Indonesia
- Kepco SPC Power Corporation, Philippines
- Timah Investasi Mineral - Indoneisa
- The State Trading Corporation of India Ltd
- SN Aboitiz Power Inc, Philippines
- Sarangani Energy Corporation, Philippines
- White Energy Company Limited
- MS Steel International - UAE
- Port Waratah Coal Services - Australia
- Parry Sugars Refinery, India
- Karbindo Abesyapradhi - Indoneisa
- Therma Luzon, Inc, Philippines
- Globalindo Alam Lestari - Indonesia
- Standard Chartered Bank - UAE
- San Jose City I Power Corp, Philippines
- PowerSource Philippines DevCo
- Thiess Contractors Indonesia
- Banpu Public Company Limited - Thailand
- Siam City Cement PLC, Thailand
- Maheswari Brothers Coal Limited - India
- Romanian Commodities Exchange
- Petrochimia International Co. Ltd.- Taiwan
- Planning Commission, India
- Sindya Power Generating Company Private Ltd
- Directorate General of MIneral and Coal - Indonesia
- CNBM International Corporation - China
- Tamil Nadu electricity Board
- Riau Bara Harum - Indonesia
- PNOC Exploration Corporation - Philippines
- Coalindo Energy - Indonesia
- Central Java Power - Indonesia
- Bukit Makmur.PT - Indonesia
- Sical Logistics Limited - India
- Bhoruka Overseas - Indonesia
- PTC India Limited - India
- Rashtriya Ispat Nigam Limited - India
- Commonwealth Bank - Australia
- Indonesian Coal Mining Association
- Holcim Trading Pte Ltd - Singapore
- Renaissance Capital - South Africa
- Indogreen Group - Indonesia
- Siam City Cement - Thailand
- Baramulti Group, Indonesia
- Orica Mining Services - Indonesia
- Alfred C Toepfer International GmbH - Germany
- London Commodity Brokers - England
- Iligan Light & Power Inc, Philippines
- Kumho Petrochemical, South Korea
- Indian Energy Exchange, India
- Vedanta Resources Plc - India
- Madhucon Powers Ltd - India
- ASAPP Information Group - India
- The Treasury - Australian Government
- SMG Consultants - Indonesia
- Indika Energy - Indonesia
- Aditya Birla Group - India
- Metalloyd Limited - United Kingdom
- Ministry of Mines - Canada
- Kalimantan Lumbung Energi - Indonesia
- Bharathi Cement Corporation - India
- Economic Council, Georgia
- Straits Asia Resources Limited - Singapore
- Deloitte Consulting - India
- Billiton Holdings Pty Ltd - Australia
- Independent Power Producers Association of India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- AsiaOL BioFuels Corp., Philippines
- Semirara Mining and Power Corporation, Philippines
- OPG Power Generation Pvt Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bank of Tokyo Mitsubishi UFJ Ltd
- Savvy Resources Ltd - HongKong
- Carbofer General Trading SA - India
- McConnell Dowell - Australia
- Ceylon Electricity Board - Sri Lanka
- Maharashtra Electricity Regulatory Commission - India
- Pipit Mutiara Jaya. PT, Indonesia
- Karaikal Port Pvt Ltd - India
- Wood Mackenzie - Singapore
- Binh Thuan Hamico - Vietnam
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