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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, 07 July 12
EXCESS SUPPLY & WEAK DEMAND KEEP COAL PRICES LOW
COALspot.com - SGX AsiaClear OTC Coal Swaps for August and Q4 deliveries slipped slightly this week. SGX’s Indonesian sub-bituminous coal swap ...
Saturday, 07 July 12
BALTIC INDEX UP ON STRONG CAPE, PANAMAX RATES - VISTAAR
COALspot.com - This week all the segments were firmed up with BDI up by 15.23 pct (up by 153 points) closing at 1,157 points.
The cape index also ...
Saturday, 07 July 12
DRY BULK MARKET NOT ABLE TO FIND SOLID GROUND SAY EXPERTS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
With the second half of each, traditionally looking the most active one, especially in terms of newbuildings being delivered, it's highly unlikely ...
Thursday, 05 July 12
GOVT GETS READY FOR $1.8B SUIT - THE JAKARTA POST
The Jakarta Post, one of the leading Indonesian English new papers reported that, several ministries and the Attorney General’s Office held a ...
Thursday, 05 July 12
DRY BULK MARKET MOVES FURTHER UP THE HILL - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market has kept its growth momentum by the middle of the week, as the BDI (Baltic Dry Index) rose by an additional 40 points to 1,103 p ...
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- Global Business Power Corporation, Philippines
- The University of Queensland
- Bulk Trading Sa - Switzerland
- LBH Netherlands Bv - Netherlands
- Commonwealth Bank - Australia
- VISA Power Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ministry of Transport, Egypt
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- Anglo American - United Kingdom
- Standard Chartered Bank - UAE
- Economic Council, Georgia
- Bukit Baiduri Energy - Indonesia
- Indogreen Group - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Ministry of Mines - Canada
- Australian Commodity Traders Exchange
- Bahari Cakrawala Sebuku - Indonesia
- GVK Power & Infra Limited - India
- Attock Cement Pakistan Limited
- Holcim Trading Pte Ltd - Singapore
- Parry Sugars Refinery, India
- Orica Mining Services - Indonesia
- Tata Chemicals Ltd - India
- European Bulk Services B.V. - Netherlands
- Deloitte Consulting - India
- Borneo Indobara - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Bharathi Cement Corporation - India
- Mercuria Energy - Indonesia
- Grasim Industreis Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Mercator Lines Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Electricity Generating Authority of Thailand
- Sinarmas Energy and Mining - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Karaikal Port Pvt Ltd - India
- PNOC Exploration Corporation - Philippines
- Indo Tambangraya Megah - Indonesia
- Electricity Authority, New Zealand
- Gujarat Sidhee Cement - India
- Kaltim Prima Coal - Indonesia
- SN Aboitiz Power Inc, Philippines
- Vizag Seaport Private Limited - India
- Banpu Public Company Limited - Thailand
- Merrill Lynch Commodities Europe
- Thai Mozambique Logistica
- Edison Trading Spa - Italy
- Kobexindo Tractors - Indoneisa
- Samtan Co., Ltd - South Korea
- Planning Commission, India
- Ceylon Electricity Board - Sri Lanka
- The Treasury - Australian Government
- Global Coal Blending Company Limited - Australia
- Coalindo Energy - Indonesia
- Cement Manufacturers Association - India
- Africa Commodities Group - South Africa
- Australian Coal Association
- PetroVietnam Power Coal Import and Supply Company
- Mintek Dendrill Indonesia
- Central Electricity Authority - India
- India Bulls Power Limited - India
- Cigading International Bulk Terminal - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Siam City Cement - Thailand
- Malabar Cements Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Posco Energy - South Korea
- Madhucon Powers Ltd - India
- Bhoruka Overseas - Indonesia
- Parliament of New Zealand
- Agrawal Coal Company - India
- GMR Energy Limited - India
- Kumho Petrochemical, South Korea
- Minerals Council of Australia
- Larsen & Toubro Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Orica Australia Pty. Ltd.
- CNBM International Corporation - China
- Siam City Cement PLC, Thailand
- Semirara Mining and Power Corporation, Philippines
- Wilmar Investment Holdings
- Straits Asia Resources Limited - Singapore
- Sakthi Sugars Limited - India
- Kartika Selabumi Mining - Indonesia
- OPG Power Generation Pvt Ltd - India
- Eastern Energy - Thailand
- GAC Shipping (India) Pvt Ltd
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Therma Luzon, Inc, Philippines
- Baramulti Group, Indonesia
- AsiaOL BioFuels Corp., Philippines
- Indika Energy - Indonesia
- Romanian Commodities Exchange
- Billiton Holdings Pty Ltd - Australia
- Energy Link Ltd, New Zealand
- Riau Bara Harum - Indonesia
- CIMB Investment Bank - Malaysia
- Directorate Of Revenue Intelligence - India
- Makarim & Taira - Indonesia
- PTC India Limited - India
- IHS Mccloskey Coal Group - USA
- Chamber of Mines of South Africa
- PowerSource Philippines DevCo
- Indian Energy Exchange, India
- Kideco Jaya Agung - Indonesia
- Rio Tinto Coal - Australia
- Sree Jayajothi Cements Limited - India
- Indian Oil Corporation Limited
- Star Paper Mills Limited - India
- SMG Consultants - Indonesia
- Interocean Group of Companies - India
- MS Steel International - UAE
- Essar Steel Hazira Ltd - India
- London Commodity Brokers - England
- Ministry of Finance - Indonesia
- Medco Energi Mining Internasional
- Oldendorff Carriers - Singapore
- Global Green Power PLC Corporation, Philippines
- Semirara Mining Corp, Philippines
- Coastal Gujarat Power Limited - India
- Singapore Mercantile Exchange
- Bhatia International Limited - India
- Mjunction Services Limited - India
- Renaissance Capital - South Africa
- Lanco Infratech Ltd - India
- Metalloyd Limited - United Kingdom
- Karbindo Abesyapradhi - Indoneisa
- Globalindo Alam Lestari - Indonesia
- Goldman Sachs - Singapore
- Jaiprakash Power Ventures ltd
- Latin American Coal - Colombia
- Iligan Light & Power Inc, Philippines
- Intertek Mineral Services - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Altura Mining Limited, Indonesia
- Miang Besar Coal Terminal - Indonesia
- Krishnapatnam Port Company Ltd. - India
- IEA Clean Coal Centre - UK
- TNB Fuel Sdn Bhd - Malaysia
- Pendopo Energi Batubara - Indonesia
- Maheswari Brothers Coal Limited - India
- Thiess Contractors Indonesia
- Manunggal Multi Energi - Indonesia
- Chettinad Cement Corporation Ltd - India
- McConnell Dowell - Australia
- Heidelberg Cement - Germany
- Independent Power Producers Association of India
- Videocon Industries ltd - India
- ASAPP Information Group - India
- Sindya Power Generating Company Private Ltd
- Jindal Steel & Power Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Barasentosa Lestari - Indonesia
- Uttam Galva Steels Limited - India
- Dalmia Cement Bharat India
- Timah Investasi Mineral - Indoneisa
- Georgia Ports Authority, United States
- Kepco SPC Power Corporation, Philippines
- Energy Development Corp, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Jorong Barutama Greston.PT - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Sarangani Energy Corporation, Philippines
- Coal and Oil Company - UAE
- International Coal Ventures Pvt Ltd - India
- Vedanta Resources Plc - India
- Trasteel International SA, Italy
- Wood Mackenzie - Singapore
- Bangladesh Power Developement Board
- Toyota Tsusho Corporation, Japan
- Vijayanagar Sugar Pvt Ltd - India
- Tamil Nadu electricity Board
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Price Waterhouse Coopers - Russia
- Savvy Resources Ltd - HongKong
- Formosa Plastics Group - Taiwan
- Bukit Makmur.PT - Indonesia
- SMC Global Power, Philippines
- The State Trading Corporation of India Ltd
- TeaM Sual Corporation - Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kohat Cement Company Ltd. - Pakistan
- South Luzon Thermal Energy Corporation
- Meralco Power Generation, Philippines
- Port Waratah Coal Services - Australia
- Central Java Power - Indonesia
- Simpson Spence & Young - Indonesia
- San Jose City I Power Corp, Philippines
- Aboitiz Power Corporation - Philippines
- Bayan Resources Tbk. - Indonesia
- Ambuja Cements Ltd - India
- Antam Resourcindo - Indonesia
- ICICI Bank Limited - India
- Petron Corporation, Philippines
- White Energy Company Limited
- Gujarat Mineral Development Corp Ltd - India
- Eastern Coal Council - USA
- Sojitz Corporation - Japan
- Carbofer General Trading SA - India
- New Zealand Coal & Carbon
- Binh Thuan Hamico - Vietnam
- Ind-Barath Power Infra Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Indonesian Coal Mining Association
- Marubeni Corporation - India
- Sical Logistics Limited - India
- Bhushan Steel Limited - India
- Salva Resources Pvt Ltd - India
- Aditya Birla Group - India
- Power Finance Corporation Ltd., India
- Petrochimia International Co. Ltd.- Taiwan
- Meenaskhi Energy Private Limited - India
- Xindia Steels Limited - India
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