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