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