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