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