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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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Monday, 28 May 12
COAL EXPORTS ARE JUMPING HIGHER, BUT PRICES ARE FALLING LOWER
COALspot.com: Indonesia, the world largest coal exporter, shipped 31.86* million tons of coal in April 2012, compared to 30.64* million tons i ...
Sunday, 27 May 12
THE FREIGHT MARKET FROM INDONESIA TO INDIA WAS WEAK - VISTAAR
COALspot.com - The BDI continued to fall for the fourth straight week and the BDI fell by 9.38 pct this week closing at 1,034 points.
The Cape Si ...
Sunday, 27 May 12
INDONESIAN SUB-BITUMINOUS COAL SWAPS HEADING TO SOUTH DIRECTION
COALspot.com - Indonesian sub-bituminous coal swaps and CFR South China coal contracts for July deliveries have dropped this week by 5.43 percent an ...
Saturday, 26 May 12
DRY BULK SHIP OWNERS LOOKING TO CUT BACK ON TONNAGE SUPPLY - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The oversupply of dry bulk carriers has been the most prominent problem in the market today, pushing down rates and ‘strangling’ profita ...
Thursday, 24 May 12
DRY BULK MARKET RETREATS ON LACK OF CHINA DEMAND - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market retreated yesterday on the back of lower Chinese demand for commodities such as coal and iron ore, typically hauled by dry bulk ...
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- Parliament of New Zealand
- Sindya Power Generating Company Private Ltd
- Essar Steel Hazira Ltd - India
- Kapuas Tunggal Persada - Indonesia
- India Bulls Power Limited - India
- Xindia Steels Limited - India
- Uttam Galva Steels Limited - India
- Holcim Trading Pte Ltd - Singapore
- Ceylon Electricity Board - Sri Lanka
- PetroVietnam Power Coal Import and Supply Company
- Bhushan Steel Limited - India
- Medco Energi Mining Internasional
- Kideco Jaya Agung - Indonesia
- Lanco Infratech Ltd - India
- GVK Power & Infra Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Mercator Lines Limited - India
- Edison Trading Spa - Italy
- Orica Australia Pty. Ltd.
- SMG Consultants - Indonesia
- Mjunction Services Limited - India
- Alfred C Toepfer International GmbH - Germany
- TNB Fuel Sdn Bhd - Malaysia
- Kartika Selabumi Mining - Indonesia
- CNBM International Corporation - China
- PNOC Exploration Corporation - Philippines
- Bukit Makmur.PT - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- AsiaOL BioFuels Corp., Philippines
- Meenaskhi Energy Private Limited - India
- Energy Development Corp, Philippines
- Port Waratah Coal Services - Australia
- Vijayanagar Sugar Pvt Ltd - India
- Savvy Resources Ltd - HongKong
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Trasteel International SA, Italy
- Interocean Group of Companies - India
- Electricity Generating Authority of Thailand
- Metalloyd Limited - United Kingdom
- Jindal Steel & Power Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Riau Bara Harum - Indonesia
- Petron Corporation, Philippines
- Indian Oil Corporation Limited
- Binh Thuan Hamico - Vietnam
- McConnell Dowell - Australia
- Mercuria Energy - Indonesia
- Romanian Commodities Exchange
- London Commodity Brokers - England
- Aditya Birla Group - India
- OPG Power Generation Pvt Ltd - India
- ASAPP Information Group - India
- Chettinad Cement Corporation Ltd - India
- Gujarat Sidhee Cement - India
- Minerals Council of Australia
- Australian Coal Association
- Eastern Coal Council - USA
- Formosa Plastics Group - Taiwan
- Central Java Power - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Indika Energy - Indonesia
- Ministry of Finance - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Carbofer General Trading SA - India
- Toyota Tsusho Corporation, Japan
- Wood Mackenzie - Singapore
- Simpson Spence & Young - Indonesia
- San Jose City I Power Corp, Philippines
- Krishnapatnam Port Company Ltd. - India
- GAC Shipping (India) Pvt Ltd
- Timah Investasi Mineral - Indoneisa
- European Bulk Services B.V. - Netherlands
- ICICI Bank Limited - India
- Heidelberg Cement - Germany
- Sakthi Sugars Limited - India
- Energy Link Ltd, New Zealand
- Eastern Energy - Thailand
- Karaikal Port Pvt Ltd - India
- Coal and Oil Company - UAE
- Wilmar Investment Holdings
- CIMB Investment Bank - Malaysia
- The University of Queensland
- Makarim & Taira - Indonesia
- Oldendorff Carriers - Singapore
- Altura Mining Limited, Indonesia
- LBH Netherlands Bv - Netherlands
- Aboitiz Power Corporation - Philippines
- Tata Chemicals Ltd - India
- Australian Commodity Traders Exchange
- Goldman Sachs - Singapore
- Siam City Cement PLC, Thailand
- Indonesian Coal Mining Association
- Central Electricity Authority - India
- Anglo American - United Kingdom
- Gujarat Electricity Regulatory Commission - India
- GMR Energy Limited - India
- Bulk Trading Sa - Switzerland
- Sojitz Corporation - Japan
- Price Waterhouse Coopers - Russia
- Baramulti Group, Indonesia
- Tamil Nadu electricity Board
- Bharathi Cement Corporation - India
- Directorate Of Revenue Intelligence - India
- Iligan Light & Power Inc, Philippines
- Bhoruka Overseas - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Globalindo Alam Lestari - Indonesia
- South Luzon Thermal Energy Corporation
- Thai Mozambique Logistica
- TeaM Sual Corporation - Philippines
- Leighton Contractors Pty Ltd - Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Parry Sugars Refinery, India
- Singapore Mercantile Exchange
- New Zealand Coal & Carbon
- Georgia Ports Authority, United States
- Rio Tinto Coal - Australia
- White Energy Company Limited
- Indian Energy Exchange, India
- Kumho Petrochemical, South Korea
- Larsen & Toubro Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Intertek Mineral Services - Indonesia
- Commonwealth Bank - Australia
- Salva Resources Pvt Ltd - India
- Dalmia Cement Bharat India
- MS Steel International - UAE
- Vedanta Resources Plc - India
- Star Paper Mills Limited - India
- Kaltim Prima Coal - Indonesia
- Deloitte Consulting - India
- Kohat Cement Company Ltd. - Pakistan
- Bahari Cakrawala Sebuku - Indonesia
- Planning Commission, India
- IEA Clean Coal Centre - UK
- Sarangani Energy Corporation, Philippines
- Sinarmas Energy and Mining - Indonesia
- Bayan Resources Tbk. - Indonesia
- Chamber of Mines of South Africa
- Kalimantan Lumbung Energi - Indonesia
- Ministry of Mines - Canada
- Cigading International Bulk Terminal - Indonesia
- Coastal Gujarat Power Limited - India
- Therma Luzon, Inc, Philippines
- Ind-Barath Power Infra Limited - India
- Rashtriya Ispat Nigam Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Samtan Co., Ltd - South Korea
- Semirara Mining Corp, Philippines
- The State Trading Corporation of India Ltd
- Pendopo Energi Batubara - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Ambuja Cements Ltd - India
- Maheswari Brothers Coal Limited - India
- Bangladesh Power Developement Board
- Global Green Power PLC Corporation, Philippines
- Vizag Seaport Private Limited - India
- Cement Manufacturers Association - India
- Banpu Public Company Limited - Thailand
- Antam Resourcindo - Indonesia
- Global Coal Blending Company Limited - Australia
- Indogreen Group - Indonesia
- SMC Global Power, Philippines
- The Treasury - Australian Government
- Videocon Industries ltd - India
- Meralco Power Generation, Philippines
- Africa Commodities Group - South Africa
- IHS Mccloskey Coal Group - USA
- Electricity Authority, New Zealand
- Barasentosa Lestari - Indonesia
- Semirara Mining and Power Corporation, Philippines
- SN Aboitiz Power Inc, Philippines
- Miang Besar Coal Terminal - Indonesia
- Bhatia International Limited - India
- Marubeni Corporation - India
- Latin American Coal - Colombia
- Sree Jayajothi Cements Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Economic Council, Georgia
- Mintek Dendrill Indonesia
- PTC India Limited - India
- Power Finance Corporation Ltd., India
- Neyveli Lignite Corporation Ltd, - India
- Directorate General of MIneral and Coal - Indonesia
- Renaissance Capital - South Africa
- Sical Logistics Limited - India
- Attock Cement Pakistan Limited
- Coalindo Energy - Indonesia
- Indo Tambangraya Megah - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Thiess Contractors Indonesia
- Global Business Power Corporation, Philippines
- Manunggal Multi Energi - Indonesia
- Merrill Lynch Commodities Europe
- Grasim Industreis Ltd - India
- Madhucon Powers Ltd - India
- Posco Energy - South Korea
- Independent Power Producers Association of India
- International Coal Ventures Pvt Ltd - India
- Jaiprakash Power Ventures ltd
- Asmin Koalindo Tuhup - Indonesia
- Orica Mining Services - Indonesia
- Malabar Cements Ltd - India
- Kepco SPC Power Corporation, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Borneo Indobara - Indonesia
- Straits Asia Resources Limited - Singapore
- Bukit Baiduri Energy - Indonesia
- Siam City Cement - Thailand
- Agrawal Coal Company - India
- VISA Power Limited - India
- Kobexindo Tractors - Indoneisa
- Standard Chartered Bank - UAE
- Ministry of Transport, Egypt
- Jorong Barutama Greston.PT - Indonesia
- PowerSource Philippines DevCo
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