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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, 16 January 12
BUMA MINED 2.7 MILLION TONS COAL LAST MONTH
COALspot.com - BUMA has mined 2.7 million tons (-14.1% YoY) coal last month and removed 25.8 million bcm (-5.6% YoY) overburden, according to compan ...
Sunday, 15 January 12
THE FREIGHT MARKET CONTINUED TO BLEED - VISTAAR
COALspot.com - "The markets continued to bleed with BDI touching almost 1000 points , almost reaching the collapse of 2008 levels," said C ...
Saturday, 14 January 12
GOLDEN MINES TO SUPPLY 4 MIO TONS - INSIDER STORIES
Insider Stories reported that, Coal miner under Sinarmas Group PT Golden Energy Mines Tbk (GEMS), a subsidiary of PT Dian Swastatika Sentosa Tbk (DS ...
Friday, 13 January 12
DIFFICULT START OF 2012 FOR DRY BULK MARKET SEEN HARD TO CHANGE IN THE COURSE OF THE YEAR, UNLESS DEMOLITION PICKS UP
The dry bulk market has been on a freefall this week after a rocky start to the new year. Yesterday, the BDI (Baltic Dry Index) the industry's benc ...
Thursday, 12 January 12
DRY BULK MARKET CRASHING AT START OF THE YEAR - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market has kept being on freefall mode yesterday, with the industry's benchmark, the BDI (Baltic Dry Index) losing a massive 5.17% on ...
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- Mintek Dendrill Indonesia
- Tamil Nadu electricity Board
- Chamber of Mines of South Africa
- VISA Power Limited - India
- Medco Energi Mining Internasional
- Tata Chemicals Ltd - India
- Salva Resources Pvt Ltd - India
- Madhucon Powers Ltd - India
- Eastern Coal Council - USA
- Commonwealth Bank - Australia
- Billiton Holdings Pty Ltd - Australia
- Sical Logistics Limited - India
- Kartika Selabumi Mining - Indonesia
- Timah Investasi Mineral - Indoneisa
- Orica Mining Services - Indonesia
- Latin American Coal - Colombia
- Deloitte Consulting - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- New Zealand Coal & Carbon
- Marubeni Corporation - India
- Alfred C Toepfer International GmbH - Germany
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Baramulti Group, Indonesia
- LBH Netherlands Bv - Netherlands
- Kohat Cement Company Ltd. - Pakistan
- Riau Bara Harum - Indonesia
- Bhushan Steel Limited - India
- Karbindo Abesyapradhi - Indoneisa
- White Energy Company Limited
- Bhoruka Overseas - Indonesia
- Energy Link Ltd, New Zealand
- Straits Asia Resources Limited - Singapore
- Miang Besar Coal Terminal - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Pendopo Energi Batubara - Indonesia
- Gujarat Sidhee Cement - India
- Siam City Cement PLC, Thailand
- PNOC Exploration Corporation - Philippines
- Energy Development Corp, Philippines
- Bhatia International Limited - India
- Coalindo Energy - Indonesia
- Port Waratah Coal Services - Australia
- Iligan Light & Power Inc, Philippines
- Trasteel International SA, Italy
- McConnell Dowell - Australia
- Savvy Resources Ltd - HongKong
- Star Paper Mills Limited - India
- Africa Commodities Group - South Africa
- Semirara Mining and Power Corporation, Philippines
- Toyota Tsusho Corporation, Japan
- AsiaOL BioFuels Corp., Philippines
- Sinarmas Energy and Mining - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Asmin Koalindo Tuhup - Indonesia
- Independent Power Producers Association of India
- Essar Steel Hazira Ltd - India
- Attock Cement Pakistan Limited
- Carbofer General Trading SA - India
- Globalindo Alam Lestari - Indonesia
- Heidelberg Cement - Germany
- European Bulk Services B.V. - Netherlands
- Bahari Cakrawala Sebuku - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- SN Aboitiz Power Inc, Philippines
- Jindal Steel & Power Ltd - India
- Sindya Power Generating Company Private Ltd
- Ceylon Electricity Board - Sri Lanka
- CNBM International Corporation - China
- Maheswari Brothers Coal Limited - India
- Eastern Energy - Thailand
- Standard Chartered Bank - UAE
- Gujarat Mineral Development Corp Ltd - India
- Renaissance Capital - South Africa
- Merrill Lynch Commodities Europe
- Mercator Lines Limited - India
- IEA Clean Coal Centre - UK
- PowerSource Philippines DevCo
- TNB Fuel Sdn Bhd - Malaysia
- Manunggal Multi Energi - Indonesia
- Indian Energy Exchange, India
- Borneo Indobara - Indonesia
- Petron Corporation, Philippines
- Rio Tinto Coal - Australia
- Electricity Generating Authority of Thailand
- Ministry of Finance - Indonesia
- India Bulls Power Limited - India
- Sakthi Sugars Limited - India
- Aboitiz Power Corporation - Philippines
- SMC Global Power, Philippines
- Minerals Council of Australia
- Vedanta Resources Plc - India
- CIMB Investment Bank - Malaysia
- Ministry of Mines - Canada
- Directorate Of Revenue Intelligence - India
- Videocon Industries ltd - India
- GVK Power & Infra Limited - India
- Binh Thuan Hamico - Vietnam
- Bulk Trading Sa - Switzerland
- International Coal Ventures Pvt Ltd - India
- Intertek Mineral Services - Indonesia
- Indika Energy - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Price Waterhouse Coopers - Russia
- Mjunction Services Limited - India
- Central Java Power - Indonesia
- Kepco SPC Power Corporation, Philippines
- Agrawal Coal Company - India
- Sojitz Corporation - Japan
- Meralco Power Generation, Philippines
- Global Green Power PLC Corporation, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Indogreen Group - Indonesia
- Grasim Industreis Ltd - India
- Thai Mozambique Logistica
- ICICI Bank Limited - India
- Coal and Oil Company - UAE
- Antam Resourcindo - Indonesia
- Barasentosa Lestari - Indonesia
- Kaltim Prima Coal - Indonesia
- Semirara Mining Corp, Philippines
- Indonesian Coal Mining Association
- Vizag Seaport Private Limited - India
- Bukit Makmur.PT - Indonesia
- Thiess Contractors Indonesia
- Interocean Group of Companies - India
- Larsen & Toubro Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Bharathi Cement Corporation - India
- Global Coal Blending Company Limited - Australia
- Maharashtra Electricity Regulatory Commission - India
- Parry Sugars Refinery, India
- Leighton Contractors Pty Ltd - Australia
- Samtan Co., Ltd - South Korea
- Australian Commodity Traders Exchange
- Cement Manufacturers Association - India
- Orica Australia Pty. Ltd.
- OPG Power Generation Pvt Ltd - India
- Sree Jayajothi Cements Limited - India
- Lanco Infratech Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Wood Mackenzie - Singapore
- Kumho Petrochemical, South Korea
- The University of Queensland
- Altura Mining Limited, Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Indian Oil Corporation Limited
- Xindia Steels Limited - India
- Global Business Power Corporation, Philippines
- Chettinad Cement Corporation Ltd - India
- Romanian Commodities Exchange
- Indo Tambangraya Megah - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Parliament of New Zealand
- Bukit Baiduri Energy - Indonesia
- Banpu Public Company Limited - Thailand
- IHS Mccloskey Coal Group - USA
- Malabar Cements Ltd - India
- Anglo American - United Kingdom
- Kapuas Tunggal Persada - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Bayan Resources Tbk. - Indonesia
- GAC Shipping (India) Pvt Ltd
- Georgia Ports Authority, United States
- Kideco Jaya Agung - Indonesia
- Edison Trading Spa - Italy
- Directorate General of MIneral and Coal - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- SMG Consultants - Indonesia
- Simpson Spence & Young - Indonesia
- Electricity Authority, New Zealand
- South Luzon Thermal Energy Corporation
- Wilmar Investment Holdings
- The Treasury - Australian Government
- Singapore Mercantile Exchange
- TeaM Sual Corporation - Philippines
- Siam City Cement - Thailand
- Posco Energy - South Korea
- Goldman Sachs - Singapore
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Formosa Plastics Group - Taiwan
- Australian Coal Association
- Metalloyd Limited - United Kingdom
- Kobexindo Tractors - Indoneisa
- Ministry of Transport, Egypt
- Karaikal Port Pvt Ltd - India
- Oldendorff Carriers - Singapore
- Economic Council, Georgia
- Central Electricity Authority - India
- GMR Energy Limited - India
- Mercuria Energy - Indonesia
- London Commodity Brokers - England
- Dalmia Cement Bharat India
- Ambuja Cements Ltd - India
- Power Finance Corporation Ltd., India
- Sarangani Energy Corporation, Philippines
- Jaiprakash Power Ventures ltd
- Ind-Barath Power Infra Limited - India
- Aditya Birla Group - India
- Bangladesh Power Developement Board
- Uttam Galva Steels Limited - India
- PetroVietnam Power Coal Import and Supply Company
- MS Steel International - UAE
- Krishnapatnam Port Company Ltd. - India
- Petrochimia International Co. Ltd.- Taiwan
- Gujarat Electricity Regulatory Commission - India
- Coastal Gujarat Power Limited - India
- Holcim Trading Pte Ltd - Singapore
- Meenaskhi Energy Private Limited - India
- Makarim & Taira - Indonesia
- PTC India Limited - India
- ASAPP Information Group - India
- Rashtriya Ispat Nigam Limited - India
- Therma Luzon, Inc, Philippines
- San Jose City I Power Corp, Philippines
- The State Trading Corporation of India Ltd
- Planning Commission, India
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