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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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Tuesday, 08 May 12
DRY BULK MARKET LOOKING FOR NEW DIRECTION THIS WEEK - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
With the BDI (Baltic Dry Index) the main benchmark of the dry bulk shipping industry not traded at the start of this week, traders, charterers and s ...
Monday, 07 May 12
INDONESIAN HBA FALL AGAIN IN MAY 2012
COALspot.com - Indonesian HBA fall again to lowest level since January 2011 in May 2012. The monthly coal reference price for coal sales in Ma ...
Sunday, 06 May 12
INDONESIAN SUB-BITUMINOUS COAL & CFR SOUTH CHINA SWAPS SLIGHTLY DROP THIS WEEK
COALspot.com - Indonesian sub-bituminous coal swaps and CFR South China coal contracts for June deliveries slightly dropped this week.
According ...
Sunday, 06 May 12
S7 & S8 ROUTES LIKELY TO BE FIRM NEXT WEEK VISTAAR SINGAPORE
COALspot.com - The BDI remained flat this week and was up just by 1 point closing at 1,157 points.
The cape size index was up by 5.14 pct closing ...
Sunday, 06 May 12
EXPORT DUTY ON MINERAL FINALLY TO BECOME EFFECTIVE NEXT WEEK
COALspot.com - Mineral ore exporters of Indonesia ( only IUP holders) are required to obtain recommendation letter from the energy and mineral ...
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- Billiton Holdings Pty Ltd - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Indonesian Coal Mining Association
- European Bulk Services B.V. - Netherlands
- Indika Energy - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Karaikal Port Pvt Ltd - India
- Therma Luzon, Inc, Philippines
- CIMB Investment Bank - Malaysia
- Latin American Coal - Colombia
- Marubeni Corporation - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Posco Energy - South Korea
- Planning Commission, India
- Metalloyd Limited - United Kingdom
- Renaissance Capital - South Africa
- Kobexindo Tractors - Indoneisa
- Orica Australia Pty. Ltd.
- Ministry of Finance - Indonesia
- Parliament of New Zealand
- Ministry of Mines - Canada
- Chamber of Mines of South Africa
- Barasentosa Lestari - Indonesia
- Sinarmas Energy and Mining - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- IHS Mccloskey Coal Group - USA
- Electricity Generating Authority of Thailand
- GAC Shipping (India) Pvt Ltd
- Vijayanagar Sugar Pvt Ltd - India
- OPG Power Generation Pvt Ltd - India
- Timah Investasi Mineral - Indoneisa
- Eastern Energy - Thailand
- Binh Thuan Hamico - Vietnam
- Vizag Seaport Private Limited - India
- Gujarat Sidhee Cement - India
- New Zealand Coal & Carbon
- Global Green Power PLC Corporation, Philippines
- Central Electricity Authority - India
- Tamil Nadu electricity Board
- Banpu Public Company Limited - Thailand
- Wilmar Investment Holdings
- Port Waratah Coal Services - Australia
- Carbofer General Trading SA - India
- Price Waterhouse Coopers - Russia
- GN Power Mariveles Coal Plant, Philippines
- Lanco Infratech Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- London Commodity Brokers - England
- Indogreen Group - Indonesia
- Thiess Contractors Indonesia
- McConnell Dowell - Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Rio Tinto Coal - Australia
- Cement Manufacturers Association - India
- Minerals Council of Australia
- Siam City Cement - Thailand
- Madhucon Powers Ltd - India
- Indian Energy Exchange, India
- Economic Council, Georgia
- The University of Queensland
- Riau Bara Harum - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Vedanta Resources Plc - India
- Kepco SPC Power Corporation, Philippines
- Thai Mozambique Logistica
- Interocean Group of Companies - India
- Semirara Mining and Power Corporation, Philippines
- Sindya Power Generating Company Private Ltd
- Malabar Cements Ltd - India
- Independent Power Producers Association of India
- Edison Trading Spa - Italy
- LBH Netherlands Bv - Netherlands
- Kartika Selabumi Mining - Indonesia
- The State Trading Corporation of India Ltd
- Ministry of Transport, Egypt
- Energy Development Corp, Philippines
- Merrill Lynch Commodities Europe
- Anglo American - United Kingdom
- Meenaskhi Energy Private Limited - India
- Trasteel International SA, Italy
- Globalindo Alam Lestari - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Semirara Mining Corp, Philippines
- GVK Power & Infra Limited - India
- Baramulti Group, Indonesia
- India Bulls Power Limited - India
- Kapuas Tunggal Persada - Indonesia
- Antam Resourcindo - Indonesia
- Larsen & Toubro Limited - India
- Tata Chemicals Ltd - India
- Global Business Power Corporation, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Makarim & Taira - Indonesia
- Coalindo Energy - Indonesia
- Directorate Of Revenue Intelligence - India
- Indo Tambangraya Megah - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Energy Link Ltd, New Zealand
- Orica Mining Services - Indonesia
- Toyota Tsusho Corporation, Japan
- Jaiprakash Power Ventures ltd
- Xindia Steels Limited - India
- Samtan Co., Ltd - South Korea
- PTC India Limited - India
- Electricity Authority, New Zealand
- Bhatia International Limited - India
- Parry Sugars Refinery, India
- Sical Logistics Limited - India
- MS Steel International - UAE
- Deloitte Consulting - India
- Sakthi Sugars Limited - India
- Central Java Power - Indonesia
- SN Aboitiz Power Inc, Philippines
- Gujarat Electricity Regulatory Commission - India
- Eastern Coal Council - USA
- Ceylon Electricity Board - Sri Lanka
- Kumho Petrochemical, South Korea
- Jorong Barutama Greston.PT - Indonesia
- Kideco Jaya Agung - Indonesia
- Bukit Makmur.PT - Indonesia
- IEA Clean Coal Centre - UK
- Wood Mackenzie - Singapore
- Bulk Trading Sa - Switzerland
- AsiaOL BioFuels Corp., Philippines
- Altura Mining Limited, Indonesia
- Agrawal Coal Company - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- South Luzon Thermal Energy Corporation
- Salva Resources Pvt Ltd - India
- Meralco Power Generation, Philippines
- Romanian Commodities Exchange
- CNBM International Corporation - China
- The Treasury - Australian Government
- PetroVietnam Power Coal Import and Supply Company
- Bharathi Cement Corporation - India
- Maheswari Brothers Coal Limited - India
- Coastal Gujarat Power Limited - India
- Star Paper Mills Limited - India
- Australian Coal Association
- Aboitiz Power Corporation - Philippines
- Medco Energi Mining Internasional
- PNOC Exploration Corporation - Philippines
- Georgia Ports Authority, United States
- Gujarat Mineral Development Corp Ltd - India
- Chettinad Cement Corporation Ltd - India
- Kaltim Prima Coal - Indonesia
- Bhoruka Overseas - Indonesia
- Heidelberg Cement - Germany
- ASAPP Information Group - India
- Africa Commodities Group - South Africa
- Singapore Mercantile Exchange
- Essar Steel Hazira Ltd - India
- Simpson Spence & Young - Indonesia
- Grasim Industreis Ltd - India
- Commonwealth Bank - Australia
- Mercuria Energy - Indonesia
- Mintek Dendrill Indonesia
- SMC Global Power, Philippines
- Mercator Lines Limited - India
- Pendopo Energi Batubara - Indonesia
- Sojitz Corporation - Japan
- Jindal Steel & Power Ltd - India
- Coal and Oil Company - UAE
- Miang Besar Coal Terminal - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Standard Chartered Bank - UAE
- Mjunction Services Limited - India
- Australian Commodity Traders Exchange
- Ambuja Cements Ltd - India
- Dalmia Cement Bharat India
- Alfred C Toepfer International GmbH - Germany
- Borneo Indobara - Indonesia
- PowerSource Philippines DevCo
- Straits Asia Resources Limited - Singapore
- Petrochimia International Co. Ltd.- Taiwan
- Krishnapatnam Port Company Ltd. - India
- Manunggal Multi Energi - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Sree Jayajothi Cements Limited - India
- VISA Power Limited - India
- Cigading International Bulk Terminal - Indonesia
- Bangladesh Power Developement Board
- Savvy Resources Ltd - HongKong
- Indian Oil Corporation Limited
- Directorate General of MIneral and Coal - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Bhushan Steel Limited - India
- TeaM Sual Corporation - Philippines
- Attock Cement Pakistan Limited
- Intertek Mineral Services - Indonesia
- Bukit Baiduri Energy - Indonesia
- Uttam Galva Steels Limited - India
- International Coal Ventures Pvt Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Iligan Light & Power Inc, Philippines
- White Energy Company Limited
- San Jose City I Power Corp, Philippines
- ICICI Bank Limited - India
- Oldendorff Carriers - Singapore
- GMR Energy Limited - India
- Global Coal Blending Company Limited - Australia
- Petron Corporation, Philippines
- Goldman Sachs - Singapore
- Aditya Birla Group - India
- Videocon Industries ltd - India
- Ind-Barath Power Infra Limited - India
- SMG Consultants - Indonesia
- Formosa Plastics Group - Taiwan
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bayan Resources Tbk. - Indonesia
- Power Finance Corporation Ltd., India
- Kalimantan Lumbung Energi - Indonesia
- Sarangani Energy Corporation, Philippines
- Siam City Cement PLC, Thailand
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
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