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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, 09 March 12
SHIP OWNERS LOOKING TO CHINA FOR REVIVAL, WHILE THEY KEEP SELLING OLD SHIPS FOR SCRAP - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
With China’s economic policy plan for the future on every ship owner’s mind, at least those involved in the dry bulk industry, the lates ...
Thursday, 08 March 12
INDONESIA'S COAL SECTOR CAN BENEFIT FROM CLEARER REGULATIONS - FITCH RATINGS
Fitch Ratings says Indonesia's coal mining sector should continue to see strong growth prospects but can benefit from clearer and more predictable ...
Thursday, 08 March 12
DRY BULK MARKET ON THE RISE; CHINAS COAL IMPORTS COULD INCREASE - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market kept on rising back to healthier levels yesterday, with the BDI (Baltic Dry Index) the industry’s benchmark, marking its 8 ...
Wednesday, 07 March 12
INDONESIA COAL BENCHMARK PRICE GAINS FOR SECOND MONTH
COALspot.com - Indonesia raised the monthly coal reference price for sales in March by 1.15 percent, the second increase since February.
The Mini ...
Wednesday, 07 March 12
INDONESIA TO LIMIT FOREIGN OWNERSHIP IN MINES TO 49 PERCENT WITHIN 10 YEARS OF PRODUCTION
COALspot.com - Foreign holders of mining licenses in Indonesia have to divert 51% of their stakes to Indonesian government or domestic entitie ...
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- Indian Oil Corporation Limited
- Kohat Cement Company Ltd. - Pakistan
- SMC Global Power, Philippines
- PTC India Limited - India
- Alfred C Toepfer International GmbH - Germany
- Romanian Commodities Exchange
- Eastern Coal Council - USA
- Medco Energi Mining Internasional
- Bahari Cakrawala Sebuku - Indonesia
- Uttam Galva Steels Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Billiton Holdings Pty Ltd - Australia
- Baramulti Group, Indonesia
- Jaiprakash Power Ventures ltd
- IEA Clean Coal Centre - UK
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Heidelberg Cement - Germany
- Chettinad Cement Corporation Ltd - India
- Global Coal Blending Company Limited - Australia
- Bukit Makmur.PT - Indonesia
- MS Steel International - UAE
- Videocon Industries ltd - India
- Ministry of Transport, Egypt
- Meenaskhi Energy Private Limited - India
- International Coal Ventures Pvt Ltd - India
- ICICI Bank Limited - India
- Standard Chartered Bank - UAE
- Ind-Barath Power Infra Limited - India
- Madhucon Powers Ltd - India
- Planning Commission, India
- Intertek Mineral Services - Indonesia
- Pendopo Energi Batubara - Indonesia
- CNBM International Corporation - China
- Gujarat Sidhee Cement - India
- Essar Steel Hazira Ltd - India
- Indogreen Group - Indonesia
- Tamil Nadu electricity Board
- SN Aboitiz Power Inc, Philippines
- Goldman Sachs - Singapore
- Kapuas Tunggal Persada - Indonesia
- Toyota Tsusho Corporation, Japan
- Mercator Lines Limited - India
- CIMB Investment Bank - Malaysia
- LBH Netherlands Bv - Netherlands
- Mintek Dendrill Indonesia
- Grasim Industreis Ltd - India
- Bhushan Steel Limited - India
- Indo Tambangraya Megah - Indonesia
- Jindal Steel & Power Ltd - India
- PNOC Exploration Corporation - Philippines
- Semirara Mining and Power Corporation, Philippines
- Indonesian Coal Mining Association
- Interocean Group of Companies - India
- Sical Logistics Limited - India
- Carbofer General Trading SA - India
- Trasteel International SA, Italy
- GVK Power & Infra Limited - India
- Kideco Jaya Agung - Indonesia
- Minerals Council of Australia
- Krishnapatnam Port Company Ltd. - India
- Posco Energy - South Korea
- India Bulls Power Limited - India
- Ministry of Mines - Canada
- Xindia Steels Limited - India
- Dalmia Cement Bharat India
- Salva Resources Pvt Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Independent Power Producers Association of India
- McConnell Dowell - Australia
- Makarim & Taira - Indonesia
- Sarangani Energy Corporation, Philippines
- London Commodity Brokers - England
- Australian Coal Association
- Indian Energy Exchange, India
- Sree Jayajothi Cements Limited - India
- SMG Consultants - Indonesia
- Power Finance Corporation Ltd., India
- Marubeni Corporation - India
- Siam City Cement PLC, Thailand
- Tata Chemicals Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- The Treasury - Australian Government
- Sinarmas Energy and Mining - Indonesia
- Malabar Cements Ltd - India
- GMR Energy Limited - India
- Anglo American - United Kingdom
- Economic Council, Georgia
- Petron Corporation, Philippines
- Bulk Trading Sa - Switzerland
- Electricity Generating Authority of Thailand
- TNB Fuel Sdn Bhd - Malaysia
- Antam Resourcindo - Indonesia
- Borneo Indobara - Indonesia
- The University of Queensland
- Star Paper Mills Limited - India
- Meralco Power Generation, Philippines
- Chamber of Mines of South Africa
- Timah Investasi Mineral - Indoneisa
- Simpson Spence & Young - Indonesia
- Sojitz Corporation - Japan
- Karbindo Abesyapradhi - Indoneisa
- Larsen & Toubro Limited - India
- Maheswari Brothers Coal Limited - India
- Orica Mining Services - Indonesia
- Kobexindo Tractors - Indoneisa
- Bangladesh Power Developement Board
- Therma Luzon, Inc, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kepco SPC Power Corporation, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- South Luzon Thermal Energy Corporation
- Iligan Light & Power Inc, Philippines
- Parry Sugars Refinery, India
- Wilmar Investment Holdings
- Cement Manufacturers Association - India
- Barasentosa Lestari - Indonesia
- Edison Trading Spa - Italy
- Global Green Power PLC Corporation, Philippines
- Sakthi Sugars Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Bharathi Cement Corporation - India
- Aditya Birla Group - India
- Wood Mackenzie - Singapore
- Aboitiz Power Corporation - Philippines
- Orica Australia Pty. Ltd.
- Bhoruka Overseas - Indonesia
- Directorate Of Revenue Intelligence - India
- ASAPP Information Group - India
- Petrochimia International Co. Ltd.- Taiwan
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Deloitte Consulting - India
- Thiess Contractors Indonesia
- Sindya Power Generating Company Private Ltd
- Gujarat Mineral Development Corp Ltd - India
- Commonwealth Bank - Australia
- New Zealand Coal & Carbon
- VISA Power Limited - India
- Attock Cement Pakistan Limited
- GAC Shipping (India) Pvt Ltd
- Rashtriya Ispat Nigam Limited - India
- Energy Link Ltd, New Zealand
- Siam City Cement - Thailand
- Rio Tinto Coal - Australia
- Energy Development Corp, Philippines
- Straits Asia Resources Limited - Singapore
- Coalindo Energy - Indonesia
- Vedanta Resources Plc - India
- Semirara Mining Corp, Philippines
- Mjunction Services Limited - India
- Bayan Resources Tbk. - Indonesia
- Formosa Plastics Group - Taiwan
- Bukit Asam (Persero) Tbk - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Africa Commodities Group - South Africa
- Latin American Coal - Colombia
- Eastern Energy - Thailand
- Ceylon Electricity Board - Sri Lanka
- Port Waratah Coal Services - Australia
- Jorong Barutama Greston.PT - Indonesia
- Oldendorff Carriers - Singapore
- Vizag Seaport Private Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Kaltim Prima Coal - Indonesia
- PowerSource Philippines DevCo
- OPG Power Generation Pvt Ltd - India
- Kartika Selabumi Mining - Indonesia
- Singapore Mercantile Exchange
- Electricity Authority, New Zealand
- Asmin Koalindo Tuhup - Indonesia
- Indika Energy - Indonesia
- Australian Commodity Traders Exchange
- Central Electricity Authority - India
- Vijayanagar Sugar Pvt Ltd - India
- White Energy Company Limited
- Leighton Contractors Pty Ltd - Australia
- Pipit Mutiara Jaya. PT, Indonesia
- The State Trading Corporation of India Ltd
- Bhatia International Limited - India
- Karaikal Port Pvt Ltd - India
- IHS Mccloskey Coal Group - USA
- Kumho Petrochemical, South Korea
- TeaM Sual Corporation - Philippines
- Price Waterhouse Coopers - Russia
- Ambuja Cements Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Metalloyd Limited - United Kingdom
- Ministry of Finance - Indonesia
- Globalindo Alam Lestari - Indonesia
- Parliament of New Zealand
- Georgia Ports Authority, United States
- Gujarat Electricity Regulatory Commission - India
- Coastal Gujarat Power Limited - India
- Holcim Trading Pte Ltd - Singapore
- Global Business Power Corporation, Philippines
- AsiaOL BioFuels Corp., Philippines
- PetroVietnam Power Coal Import and Supply Company
- Riau Bara Harum - Indonesia
- Bukit Baiduri Energy - Indonesia
- Mercuria Energy - Indonesia
- San Jose City I Power Corp, Philippines
- Manunggal Multi Energi - Indonesia
- Savvy Resources Ltd - HongKong
- European Bulk Services B.V. - Netherlands
- Banpu Public Company Limited - Thailand
- Altura Mining Limited, Indonesia
- Renaissance Capital - South Africa
- Merrill Lynch Commodities Europe
- Coal and Oil Company - UAE
- Miang Besar Coal Terminal - Indonesia
- Thai Mozambique Logistica
- Central Java Power - Indonesia
- Binh Thuan Hamico - Vietnam
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Lanco Infratech Ltd - India
- Agrawal Coal Company - India
- Samtan Co., Ltd - South Korea
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