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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, 20 April 12
PANAMAXES LEAD DRY BULK MARKET TO HIGHER GROUND - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
A rebound of demand for smaller dry bulk carriers has led the industry’s benchmark, the BDI (Baltic Dry Index) above the 1,000-point mark for ...
Friday, 20 April 12
BUMA HAS PRODUCED 2.6 MILLION TONS OF COAL IN MARCH 2012
COALspot.com - BUMA has removed 28.0 million bcm (+6.4% YoY) of overburden in March 2012 while coal production was at 2.6 million tons (+1.3% YoY).
...
Thursday, 19 April 12
FRESH COAL SALES FROM JATENERGYS JONGKANG MINES
COALspot.com - Energy company Jatenergy Ltd (ASX code JAT) announced today that it had signed a contract for an 11,000 tonne coal sale due for shipm ...
Thursday, 19 April 12
HANDY - 'POSITIVE TREND', PANAMAX - 'A FIRMER TENDENCY', CAPESIZE - 'AGAIN NEGATIVE'
Handy
The positive trend from last week continued, with more cargoes entering the market. Skaw/Passero del fixed tick above USD 4000 for US Gulf di ...
Thursday, 19 April 12
WILLIS MARINE MARKET REVIEW FORECASTS ANOTHER DIFFICULT YEAR - WILLIS GLOBAL MARINE / HELLENIC SHIPPING
After an inauspicious start, 2012 could well be "another difficult and uncertain year for the maritime industry faced with the aftermath of the ...
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- Dong Bac Coal Mineral Investment Coporation - Vietnam
- IHS Mccloskey Coal Group - USA
- Alfred C Toepfer International GmbH - Germany
- Indo Tambangraya Megah - Indonesia
- Eastern Energy - Thailand
- Sinarmas Energy and Mining - Indonesia
- Karaikal Port Pvt Ltd - India
- CNBM International Corporation - China
- Oldendorff Carriers - Singapore
- Kobexindo Tractors - Indoneisa
- Georgia Ports Authority, United States
- Standard Chartered Bank - UAE
- GAC Shipping (India) Pvt Ltd
- Videocon Industries ltd - India
- Dalmia Cement Bharat India
- Heidelberg Cement - Germany
- Holcim Trading Pte Ltd - Singapore
- Ministry of Mines - Canada
- India Bulls Power Limited - India
- Indian Energy Exchange, India
- Formosa Plastics Group - Taiwan
- Bangladesh Power Developement Board
- Agrawal Coal Company - India
- Port Waratah Coal Services - Australia
- Madhucon Powers Ltd - India
- Sarangani Energy Corporation, Philippines
- Karbindo Abesyapradhi - Indoneisa
- VISA Power Limited - India
- Altura Mining Limited, Indonesia
- Banpu Public Company Limited - Thailand
- Malabar Cements Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Intertek Mineral Services - Indonesia
- Lanco Infratech Ltd - India
- Singapore Mercantile Exchange
- Ambuja Cements Ltd - India
- Tamil Nadu electricity Board
- Kepco SPC Power Corporation, Philippines
- Indika Energy - Indonesia
- Uttam Galva Steels Limited - India
- PNOC Exploration Corporation - Philippines
- Grasim Industreis Ltd - India
- London Commodity Brokers - England
- Gujarat Mineral Development Corp Ltd - India
- Kumho Petrochemical, South Korea
- Neyveli Lignite Corporation Ltd, - India
- Global Business Power Corporation, Philippines
- OPG Power Generation Pvt Ltd - India
- Economic Council, Georgia
- Metalloyd Limited - United Kingdom
- Attock Cement Pakistan Limited
- Interocean Group of Companies - India
- Wilmar Investment Holdings
- Kideco Jaya Agung - Indonesia
- Indian Oil Corporation Limited
- Australian Commodity Traders Exchange
- Aditya Birla Group - India
- Coalindo Energy - Indonesia
- SN Aboitiz Power Inc, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Simpson Spence & Young - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Therma Luzon, Inc, Philippines
- Makarim & Taira - Indonesia
- Bayan Resources Tbk. - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Power Finance Corporation Ltd., India
- Salva Resources Pvt Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Merrill Lynch Commodities Europe
- Binh Thuan Hamico - Vietnam
- Leighton Contractors Pty Ltd - Australia
- Parliament of New Zealand
- Marubeni Corporation - India
- Bharathi Cement Corporation - India
- Chettinad Cement Corporation Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Thai Mozambique Logistica
- Pipit Mutiara Jaya. PT, Indonesia
- Bukit Makmur.PT - Indonesia
- Jindal Steel & Power Ltd - India
- Meralco Power Generation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Posco Energy - South Korea
- Orica Mining Services - Indonesia
- Bukit Baiduri Energy - Indonesia
- Parry Sugars Refinery, India
- Larsen & Toubro Limited - India
- Gujarat Sidhee Cement - India
- Gujarat Electricity Regulatory Commission - India
- Rashtriya Ispat Nigam Limited - India
- Kalimantan Lumbung Energi - Indonesia
- GMR Energy Limited - India
- Billiton Holdings Pty Ltd - Australia
- Central Electricity Authority - India
- Sakthi Sugars Limited - India
- The State Trading Corporation of India Ltd
- TNB Fuel Sdn Bhd - Malaysia
- Global Coal Blending Company Limited - Australia
- Vizag Seaport Private Limited - India
- SMC Global Power, Philippines
- ICICI Bank Limited - India
- SMG Consultants - Indonesia
- TeaM Sual Corporation - Philippines
- MS Steel International - UAE
- Kartika Selabumi Mining - Indonesia
- European Bulk Services B.V. - Netherlands
- Commonwealth Bank - Australia
- Romanian Commodities Exchange
- Sojitz Corporation - Japan
- Anglo American - United Kingdom
- Mercator Lines Limited - India
- LBH Netherlands Bv - Netherlands
- Siam City Cement PLC, Thailand
- Tata Chemicals Ltd - India
- Global Green Power PLC Corporation, Philippines
- Trasteel International SA, Italy
- Riau Bara Harum - Indonesia
- Electricity Generating Authority of Thailand
- Siam City Cement - Thailand
- Australian Coal Association
- Edison Trading Spa - Italy
- Central Java Power - Indonesia
- Minerals Council of Australia
- Baramulti Group, Indonesia
- Borneo Indobara - Indonesia
- Bhushan Steel Limited - India
- Electricity Authority, New Zealand
- Maharashtra Electricity Regulatory Commission - India
- Bahari Cakrawala Sebuku - Indonesia
- Mjunction Services Limited - India
- Mintek Dendrill Indonesia
- Ceylon Electricity Board - Sri Lanka
- South Luzon Thermal Energy Corporation
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Iligan Light & Power Inc, Philippines
- Ind-Barath Power Infra Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Energy Development Corp, Philippines
- Straits Asia Resources Limited - Singapore
- Bukit Asam (Persero) Tbk - Indonesia
- Samtan Co., Ltd - South Korea
- Manunggal Multi Energi - Indonesia
- CIMB Investment Bank - Malaysia
- Deloitte Consulting - India
- New Zealand Coal & Carbon
- Xindia Steels Limited - India
- The University of Queensland
- PTC India Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Coastal Gujarat Power Limited - India
- Savvy Resources Ltd - HongKong
- Directorate Of Revenue Intelligence - India
- Chamber of Mines of South Africa
- Ministry of Finance - Indonesia
- Essar Steel Hazira Ltd - India
- Planning Commission, India
- Vedanta Resources Plc - India
- The Treasury - Australian Government
- Petron Corporation, Philippines
- Indonesian Coal Mining Association
- Toyota Tsusho Corporation, Japan
- Sree Jayajothi Cements Limited - India
- Star Paper Mills Limited - India
- Semirara Mining Corp, Philippines
- Aboitiz Power Corporation - Philippines
- Mercuria Energy - Indonesia
- Ministry of Transport, Egypt
- Africa Commodities Group - South Africa
- Kohat Cement Company Ltd. - Pakistan
- Maheswari Brothers Coal Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Timah Investasi Mineral - Indoneisa
- Vijayanagar Sugar Pvt Ltd - India
- Bhatia International Limited - India
- Coal and Oil Company - UAE
- Bank of Tokyo Mitsubishi UFJ Ltd
- Pendopo Energi Batubara - Indonesia
- Carbofer General Trading SA - India
- Thiess Contractors Indonesia
- Wood Mackenzie - Singapore
- Rio Tinto Coal - Australia
- Semirara Mining and Power Corporation, Philippines
- Antam Resourcindo - Indonesia
- Sindya Power Generating Company Private Ltd
- GVK Power & Infra Limited - India
- Eastern Coal Council - USA
- AsiaOL BioFuels Corp., Philippines
- Globalindo Alam Lestari - Indonesia
- White Energy Company Limited
- Orica Australia Pty. Ltd.
- Goldman Sachs - Singapore
- Independent Power Producers Association of India
- Latin American Coal - Colombia
- PetroVietnam Power Coal Import and Supply Company
- Medco Energi Mining Internasional
- IEA Clean Coal Centre - UK
- International Coal Ventures Pvt Ltd - India
- Meenaskhi Energy Private Limited - India
- Kaltim Prima Coal - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Jaiprakash Power Ventures ltd
- PowerSource Philippines DevCo
- Energy Link Ltd, New Zealand
- McConnell Dowell - Australia
- Cement Manufacturers Association - India
- Barasentosa Lestari - Indonesia
- Renaissance Capital - South Africa
- San Jose City I Power Corp, Philippines
- ASAPP Information Group - India
- Indogreen Group - Indonesia
- Sical Logistics Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Price Waterhouse Coopers - Russia
- Bulk Trading Sa - Switzerland
- Bhoruka Overseas - Indonesia
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