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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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Monday, 27 February 12
INDONESIAN COAL EXPORTS TO CHINA DROPS 39.76 PERCENT IN JANUARY 2012
COALspot.com: Indonesia, the world largest coal exporter, shipped 28.21* mln mt of coal in January 2012, slightly lower than its December 2011 ...
Monday, 27 February 12
WEEKLY DRY MARKET OVERVIEW - MARIA BERTZELETOU, HELLENIC SHIPPING
The pessimism in the dry market persists with the Baltic Dry Index still trying to find a steady pace of growth and average time charter earnings fo ...
Sunday, 26 February 12
THE FREIGHT RATES FOR INDONESIA TO INDIA IS LIKELY TO BE FIRM FOR NEXT 2/3 WEEKS - VISTAAR
COALspot.com – “There was not much change in the BDI and other indices this week except for the Panamax which was down by 11.91 pc ...
Friday, 24 February 12
DRY BULK MARKET POSTS FIRST REBOUND IN A WEEK - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
As was expected since mid-week, the dry bulk market's benchmark, the BDI (Baltic Dry Index) has managed to put a stop in a 6-day losing rally, endi ...
Thursday, 23 February 12
2.5 PANAMAX VESSELS PER AVAILABLE CARGO FOR MARCH DATES - FEARN BULK
Handy
Another depressing week for Supras in both basins. Lack of fresh business and over-supply of tonnage in the Atlantic pushed rates south. Cont ...
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- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Karbindo Abesyapradhi - Indoneisa
- Bhatia International Limited - India
- Kumho Petrochemical, South Korea
- Minerals Council of Australia
- Global Coal Blending Company Limited - Australia
- Mjunction Services Limited - India
- Therma Luzon, Inc, Philippines
- Karaikal Port Pvt Ltd - India
- Metalloyd Limited - United Kingdom
- GAC Shipping (India) Pvt Ltd
- Bahari Cakrawala Sebuku - Indonesia
- PTC India Limited - India
- Tamil Nadu electricity Board
- Energy Link Ltd, New Zealand
- Sojitz Corporation - Japan
- Sical Logistics Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Indian Oil Corporation Limited
- Toyota Tsusho Corporation, Japan
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Romanian Commodities Exchange
- Interocean Group of Companies - India
- CIMB Investment Bank - Malaysia
- Agrawal Coal Company - India
- Xindia Steels Limited - India
- The State Trading Corporation of India Ltd
- Barasentosa Lestari - Indonesia
- Standard Chartered Bank - UAE
- European Bulk Services B.V. - Netherlands
- PNOC Exploration Corporation - Philippines
- Carbofer General Trading SA - India
- ASAPP Information Group - India
- Asmin Koalindo Tuhup - Indonesia
- Indogreen Group - Indonesia
- Orica Australia Pty. Ltd.
- Gujarat Electricity Regulatory Commission - India
- Kepco SPC Power Corporation, Philippines
- Bayan Resources Tbk. - Indonesia
- Eastern Coal Council - USA
- Jindal Steel & Power Ltd - India
- Heidelberg Cement - Germany
- Cement Manufacturers Association - India
- Thai Mozambique Logistica
- Simpson Spence & Young - Indonesia
- Mintek Dendrill Indonesia
- Ministry of Transport, Egypt
- Global Green Power PLC Corporation, Philippines
- Baramulti Group, Indonesia
- Indo Tambangraya Megah - Indonesia
- Indika Energy - Indonesia
- LBH Netherlands Bv - Netherlands
- Bangladesh Power Developement Board
- Electricity Generating Authority of Thailand
- Makarim & Taira - Indonesia
- Australian Commodity Traders Exchange
- Indonesian Coal Mining Association
- Tata Chemicals Ltd - India
- Jaiprakash Power Ventures ltd
- VISA Power Limited - India
- Edison Trading Spa - Italy
- Salva Resources Pvt Ltd - India
- Anglo American - United Kingdom
- Posco Energy - South Korea
- Meralco Power Generation, Philippines
- Directorate Of Revenue Intelligence - India
- OPG Power Generation Pvt Ltd - India
- Merrill Lynch Commodities Europe
- Dalmia Cement Bharat India
- Coalindo Energy - Indonesia
- Trasteel International SA, Italy
- Madhucon Powers Ltd - India
- The Treasury - Australian Government
- Parry Sugars Refinery, India
- Commonwealth Bank - Australia
- Central Electricity Authority - India
- Maharashtra Electricity Regulatory Commission - India
- Star Paper Mills Limited - India
- Independent Power Producers Association of India
- Sree Jayajothi Cements Limited - India
- Ambuja Cements Ltd - India
- Port Waratah Coal Services - Australia
- Chettinad Cement Corporation Ltd - India
- Intertek Mineral Services - Indonesia
- Mercuria Energy - Indonesia
- Siam City Cement - Thailand
- Straits Asia Resources Limited - Singapore
- Africa Commodities Group - South Africa
- Kideco Jaya Agung - Indonesia
- IEA Clean Coal Centre - UK
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bhoruka Overseas - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Rashtriya Ispat Nigam Limited - India
- IHS Mccloskey Coal Group - USA
- Ministry of Mines - Canada
- Pendopo Energi Batubara - Indonesia
- Price Waterhouse Coopers - Russia
- Parliament of New Zealand
- Billiton Holdings Pty Ltd - Australia
- Coastal Gujarat Power Limited - India
- SN Aboitiz Power Inc, Philippines
- Krishnapatnam Port Company Ltd. - India
- Ceylon Electricity Board - Sri Lanka
- SMC Global Power, Philippines
- Banpu Public Company Limited - Thailand
- Grasim Industreis Ltd - India
- Samtan Co., Ltd - South Korea
- Planning Commission, India
- Alfred C Toepfer International GmbH - Germany
- CNBM International Corporation - China
- Wood Mackenzie - Singapore
- International Coal Ventures Pvt Ltd - India
- Essar Steel Hazira Ltd - India
- Kaltim Prima Coal - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Leighton Contractors Pty Ltd - Australia
- Malabar Cements Ltd - India
- Globalindo Alam Lestari - Indonesia
- Timah Investasi Mineral - Indoneisa
- Vedanta Resources Plc - India
- Marubeni Corporation - India
- Sinarmas Energy and Mining - Indonesia
- Australian Coal Association
- Renaissance Capital - South Africa
- Antam Resourcindo - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Maheswari Brothers Coal Limited - India
- Semirara Mining Corp, Philippines
- Videocon Industries ltd - India
- Gujarat Sidhee Cement - India
- PetroVietnam Power Coal Import and Supply Company
- Vizag Seaport Private Limited - India
- Medco Energi Mining Internasional
- White Energy Company Limited
- Kalimantan Lumbung Energi - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Ind-Barath Power Infra Limited - India
- GMR Energy Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Deloitte Consulting - India
- Sakthi Sugars Limited - India
- Wilmar Investment Holdings
- Cigading International Bulk Terminal - Indonesia
- Borneo Indobara - Indonesia
- PowerSource Philippines DevCo
- Petron Corporation, Philippines
- South Luzon Thermal Energy Corporation
- Indian Energy Exchange, India
- McConnell Dowell - Australia
- Holcim Trading Pte Ltd - Singapore
- New Zealand Coal & Carbon
- Uttam Galva Steels Limited - India
- Chamber of Mines of South Africa
- Lanco Infratech Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Coal and Oil Company - UAE
- Vijayanagar Sugar Pvt Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- SMG Consultants - Indonesia
- Attock Cement Pakistan Limited
- Bank of Tokyo Mitsubishi UFJ Ltd
- Central Java Power - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Formosa Plastics Group - Taiwan
- Kobexindo Tractors - Indoneisa
- The University of Queensland
- Manunggal Multi Energi - Indonesia
- Oldendorff Carriers - Singapore
- Orica Mining Services - Indonesia
- Meenaskhi Energy Private Limited - India
- Bukit Baiduri Energy - Indonesia
- Altura Mining Limited, Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Rio Tinto Coal - Australia
- Jorong Barutama Greston.PT - Indonesia
- Siam City Cement PLC, Thailand
- Goldman Sachs - Singapore
- Energy Development Corp, Philippines
- Mercator Lines Limited - India
- Kohat Cement Company Ltd. - Pakistan
- TeaM Sual Corporation - Philippines
- India Bulls Power Limited - India
- GVK Power & Infra Limited - India
- Binh Thuan Hamico - Vietnam
- Savvy Resources Ltd - HongKong
- Larsen & Toubro Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- London Commodity Brokers - England
- Bukit Makmur.PT - Indonesia
- Riau Bara Harum - Indonesia
- Bhushan Steel Limited - India
- Bulk Trading Sa - Switzerland
- Bharathi Cement Corporation - India
- Singapore Mercantile Exchange
- Aboitiz Power Corporation - Philippines
- Aditya Birla Group - India
- Iligan Light & Power Inc, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Global Business Power Corporation, Philippines
- Eastern Energy - Thailand
- MS Steel International - UAE
- Kartika Selabumi Mining - Indonesia
- Latin American Coal - Colombia
- Sindya Power Generating Company Private Ltd
- Electricity Authority, New Zealand
- Thiess Contractors Indonesia
- Georgia Ports Authority, United States
- ICICI Bank Limited - India
- San Jose City I Power Corp, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Power Finance Corporation Ltd., India
- Sarangani Energy Corporation, Philippines
- Ministry of Finance - Indonesia
- Economic Council, Georgia
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