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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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Friday, 04 May 12
DEMOLITION KEY FOR DRY BULK MARKET RECOVERY - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The overflow of newbuilding vessels which “spilled over” into 2012 from 2011 brought the dry bulk market to a near collapse level at the ...
Thursday, 03 May 12
DRY BULK MARKET REMAINS INACTIVE, POSTING MILD DECREASE - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market has kept retreating this week, although at a very low pace, on the back of a lull in demand. The industry's benchmark, th ...
Thursday, 03 May 12
MINERS DEMAND LEGAL CERTAINTY ON PRE-BAN INTERIM POLICY - THE JAKARTA POST
The Jakarta Post reported that, Mining companies represented by the Indonesian Mining Association (IMA) welcomed the government’s plan to impo ...
Thursday, 03 May 12
HANDY EAST COAST INDIA - CHINA AROUND USD 7000 - FEARNLEYS AS
Handy - Stable demand in the Atlantic offered good rates for the tonnage.
USG/Cont was worth USD 17500 and more. Baltic and Black Sea appeared to ...
Wednesday, 02 May 12
CHINA BLACKOUTS HIGHLIGHT PRICING POLICY WEAKNESS - FITCH
Fitch reported that, the likelihood of further electricity blackouts in China this summer underlines Fitch's view of the basic problem f ...
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- Bhoruka Overseas - Indonesia
- SMC Global Power, Philippines
- Ministry of Finance - Indonesia
- PNOC Exploration Corporation - Philippines
- Latin American Coal - Colombia
- Rio Tinto Coal - Australia
- Lanco Infratech Ltd - India
- Vedanta Resources Plc - India
- CNBM International Corporation - China
- Sarangani Energy Corporation, Philippines
- Eastern Energy - Thailand
- MS Steel International - UAE
- Orica Mining Services - Indonesia
- Price Waterhouse Coopers - Russia
- Directorate Of Revenue Intelligence - India
- Anglo American - United Kingdom
- Deloitte Consulting - India
- Romanian Commodities Exchange
- Pipit Mutiara Jaya. PT, Indonesia
- Bulk Trading Sa - Switzerland
- Petron Corporation, Philippines
- Binh Thuan Hamico - Vietnam
- Indonesian Coal Mining Association
- Mercuria Energy - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Energy Development Corp, Philippines
- Sakthi Sugars Limited - India
- Australian Commodity Traders Exchange
- Chettinad Cement Corporation Ltd - India
- Jindal Steel & Power Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Neyveli Lignite Corporation Ltd, - India
- Central Electricity Authority - India
- Orica Australia Pty. Ltd.
- Borneo Indobara - Indonesia
- Jaiprakash Power Ventures ltd
- Aditya Birla Group - India
- Tamil Nadu electricity Board
- Georgia Ports Authority, United States
- Thai Mozambique Logistica
- Sical Logistics Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Dalmia Cement Bharat India
- Metalloyd Limited - United Kingdom
- GN Power Mariveles Coal Plant, Philippines
- Sojitz Corporation - Japan
- Port Waratah Coal Services - Australia
- Ceylon Electricity Board - Sri Lanka
- Kepco SPC Power Corporation, Philippines
- Gujarat Electricity Regulatory Commission - India
- Independent Power Producers Association of India
- OPG Power Generation Pvt Ltd - India
- Straits Asia Resources Limited - Singapore
- Riau Bara Harum - Indonesia
- Meralco Power Generation, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Merrill Lynch Commodities Europe
- Ambuja Cements Ltd - India
- Bayan Resources Tbk. - Indonesia
- Karaikal Port Pvt Ltd - India
- SN Aboitiz Power Inc, Philippines
- Indian Oil Corporation Limited
- Kideco Jaya Agung - Indonesia
- Salva Resources Pvt Ltd - India
- Attock Cement Pakistan Limited
- GMR Energy Limited - India
- Savvy Resources Ltd - HongKong
- Bank of Tokyo Mitsubishi UFJ Ltd
- Timah Investasi Mineral - Indoneisa
- Maharashtra Electricity Regulatory Commission - India
- South Luzon Thermal Energy Corporation
- Bhushan Steel Limited - India
- The State Trading Corporation of India Ltd
- London Commodity Brokers - England
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Makarim & Taira - Indonesia
- Medco Energi Mining Internasional
- Karbindo Abesyapradhi - Indoneisa
- Gujarat Sidhee Cement - India
- Ministry of Mines - Canada
- Videocon Industries ltd - India
- Central Java Power - Indonesia
- Parry Sugars Refinery, India
- Meenaskhi Energy Private Limited - India
- Edison Trading Spa - Italy
- Siam City Cement PLC, Thailand
- San Jose City I Power Corp, Philippines
- Africa Commodities Group - South Africa
- Malabar Cements Ltd - India
- Vizag Seaport Private Limited - India
- Essar Steel Hazira Ltd - India
- The Treasury - Australian Government
- PowerSource Philippines DevCo
- Sree Jayajothi Cements Limited - India
- Mercator Lines Limited - India
- Global Business Power Corporation, Philippines
- Bangladesh Power Developement Board
- Maheswari Brothers Coal Limited - India
- IHS Mccloskey Coal Group - USA
- India Bulls Power Limited - India
- Kumho Petrochemical, South Korea
- Simpson Spence & Young - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- GAC Shipping (India) Pvt Ltd
- Toyota Tsusho Corporation, Japan
- GVK Power & Infra Limited - India
- Ministry of Transport, Egypt
- White Energy Company Limited
- Madhucon Powers Ltd - India
- Trasteel International SA, Italy
- Mintek Dendrill Indonesia
- Agrawal Coal Company - India
- Bharathi Cement Corporation - India
- Interocean Group of Companies - India
- Samtan Co., Ltd - South Korea
- Baramulti Group, Indonesia
- Posco Energy - South Korea
- Carbofer General Trading SA - India
- Indogreen Group - Indonesia
- Commonwealth Bank - Australia
- ASAPP Information Group - India
- Krishnapatnam Port Company Ltd. - India
- Indo Tambangraya Megah - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Tata Chemicals Ltd - India
- Globalindo Alam Lestari - Indonesia
- IEA Clean Coal Centre - UK
- Mjunction Services Limited - India
- Aboitiz Power Corporation - Philippines
- Ind-Barath Power Infra Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Jorong Barutama Greston.PT - Indonesia
- Global Coal Blending Company Limited - Australia
- Heidelberg Cement - Germany
- Coal and Oil Company - UAE
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Electricity Generating Authority of Thailand
- Larsen & Toubro Limited - India
- Kobexindo Tractors - Indoneisa
- Manunggal Multi Energi - Indonesia
- Formosa Plastics Group - Taiwan
- Cement Manufacturers Association - India
- Kalimantan Lumbung Energi - Indonesia
- Power Finance Corporation Ltd., India
- Global Green Power PLC Corporation, Philippines
- Wilmar Investment Holdings
- Eastern Coal Council - USA
- Holcim Trading Pte Ltd - Singapore
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Cigading International Bulk Terminal - Indonesia
- Thiess Contractors Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Economic Council, Georgia
- TeaM Sual Corporation - Philippines
- PTC India Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kapuas Tunggal Persada - Indonesia
- Oldendorff Carriers - Singapore
- New Zealand Coal & Carbon
- Indika Energy - Indonesia
- Intertek Mineral Services - Indonesia
- VISA Power Limited - India
- Kaltim Prima Coal - Indonesia
- Wood Mackenzie - Singapore
- SMG Consultants - Indonesia
- Chamber of Mines of South Africa
- Goldman Sachs - Singapore
- Billiton Holdings Pty Ltd - Australia
- Altura Mining Limited, Indonesia
- Singapore Mercantile Exchange
- Renaissance Capital - South Africa
- LBH Netherlands Bv - Netherlands
- Bukit Makmur.PT - Indonesia
- Star Paper Mills Limited - India
- ICICI Bank Limited - India
- Energy Link Ltd, New Zealand
- Indian Energy Exchange, India
- Siam City Cement - Thailand
- Grasim Industreis Ltd - India
- McConnell Dowell - Australia
- The University of Queensland
- Barasentosa Lestari - Indonesia
- Pendopo Energi Batubara - Indonesia
- Coalindo Energy - Indonesia
- Coastal Gujarat Power Limited - India
- Marubeni Corporation - India
- Rashtriya Ispat Nigam Limited - India
- Xindia Steels Limited - India
- International Coal Ventures Pvt Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Standard Chartered Bank - UAE
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Australian Coal Association
- Minerals Council of Australia
- European Bulk Services B.V. - Netherlands
- Bhatia International Limited - India
- CIMB Investment Bank - Malaysia
- Iligan Light & Power Inc, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Kartika Selabumi Mining - Indonesia
- Sindya Power Generating Company Private Ltd
- Parliament of New Zealand
- Uttam Galva Steels Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Banpu Public Company Limited - Thailand
- Electricity Authority, New Zealand
- Bukit Baiduri Energy - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Therma Luzon, Inc, Philippines
- Miang Besar Coal Terminal - Indonesia
- Planning Commission, India
- AsiaOL BioFuels Corp., Philippines
- Alfred C Toepfer International GmbH - Germany
- Semirara Mining Corp, Philippines
- Antam Resourcindo - Indonesia
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