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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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Thursday, 05 January 12
DRY BULK MARKET TAKES A PLUNGE OF LOW ACTIVITY - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
As was widely expected the first days of the new year are characterized by significantly low chartering across the board of the dry bulk market, pus ...
Wednesday, 04 January 12
NEWBUILDING ORDERS PICKED UP IN 2011, BUT 2012 EXPECTED TO BE A DIFFERENT STORY - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
With the BDI (Baltic Dry Index) starting the year on a sour note, losing 114 points and ending yesterday’s session, the first of the new year, ...
Wednesday, 04 January 12
MAHAGENCO TO IMPORT LOW MOISTURE COAL
COALspot.com - Maharashtra State Power Generation Co. Ltd. is the state power generation utility owned by Government of Maharashtra, intends to proc ...
Tuesday, 03 January 12
INDONESIA COAL REFERENCE PRICE FELL AGAIN
COALspot.com - Ministry of Energy and Mineral Resources of Indonesia has sets the January 2012 coal reference price at US$ 109.29 per ton or US$ 3.3 ...
Tuesday, 03 January 12
WHICH WAY WILL THE DRY BULK MARKET HEAD ON FIRST WEEK OF THE YEAR? - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
Dry bulk ship owners will be wondering which way will the BDI (Baltic Dry Index), the industry’s benchmark, will head during the first days of ...
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- Medco Energi Mining Internasional
- Pipit Mutiara Jaya. PT, Indonesia
- PetroVietnam Power Coal Import and Supply Company
- San Jose City I Power Corp, Philippines
- Riau Bara Harum - Indonesia
- SN Aboitiz Power Inc, Philippines
- Jindal Steel & Power Ltd - India
- Jaiprakash Power Ventures ltd
- Savvy Resources Ltd - HongKong
- Anglo American - United Kingdom
- Energy Link Ltd, New Zealand
- Georgia Ports Authority, United States
- Indonesian Coal Mining Association
- Maheswari Brothers Coal Limited - India
- Semirara Mining Corp, Philippines
- Makarim & Taira - Indonesia
- Ambuja Cements Ltd - India
- Mercator Lines Limited - India
- Carbofer General Trading SA - India
- Petron Corporation, Philippines
- European Bulk Services B.V. - Netherlands
- South Luzon Thermal Energy Corporation
- Eastern Coal Council - USA
- Australian Commodity Traders Exchange
- Uttam Galva Steels Limited - India
- Altura Mining Limited, Indonesia
- Billiton Holdings Pty Ltd - Australia
- Siam City Cement - Thailand
- Timah Investasi Mineral - Indoneisa
- Agrawal Coal Company - India
- Parliament of New Zealand
- OPG Power Generation Pvt Ltd - India
- TeaM Sual Corporation - Philippines
- Grasim Industreis Ltd - India
- Merrill Lynch Commodities Europe
- Kohat Cement Company Ltd. - Pakistan
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Directorate General of MIneral and Coal - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Africa Commodities Group - South Africa
- New Zealand Coal & Carbon
- Bank of Tokyo Mitsubishi UFJ Ltd
- Rio Tinto Coal - Australia
- Semirara Mining and Power Corporation, Philippines
- Baramulti Group, Indonesia
- GMR Energy Limited - India
- Energy Development Corp, Philippines
- MS Steel International - UAE
- Malabar Cements Ltd - India
- Parry Sugars Refinery, India
- Standard Chartered Bank - UAE
- Madhucon Powers Ltd - India
- Karaikal Port Pvt Ltd - India
- Ministry of Transport, Egypt
- Cement Manufacturers Association - India
- IHS Mccloskey Coal Group - USA
- Gujarat Electricity Regulatory Commission - India
- Singapore Mercantile Exchange
- IEA Clean Coal Centre - UK
- Power Finance Corporation Ltd., India
- Latin American Coal - Colombia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Global Business Power Corporation, Philippines
- AsiaOL BioFuels Corp., Philippines
- Electricity Authority, New Zealand
- Ceylon Electricity Board - Sri Lanka
- Oldendorff Carriers - Singapore
- Antam Resourcindo - Indonesia
- Coal and Oil Company - UAE
- Karbindo Abesyapradhi - Indoneisa
- Indogreen Group - Indonesia
- Metalloyd Limited - United Kingdom
- Vedanta Resources Plc - India
- SMG Consultants - Indonesia
- London Commodity Brokers - England
- Thiess Contractors Indonesia
- Bhatia International Limited - India
- Chamber of Mines of South Africa
- Tamil Nadu electricity Board
- Ministry of Mines - Canada
- Videocon Industries ltd - India
- Intertek Mineral Services - Indonesia
- Goldman Sachs - Singapore
- Port Waratah Coal Services - Australia
- International Coal Ventures Pvt Ltd - India
- SMC Global Power, Philippines
- Barasentosa Lestari - Indonesia
- PowerSource Philippines DevCo
- Miang Besar Coal Terminal - Indonesia
- Aboitiz Power Corporation - Philippines
- Bukit Makmur.PT - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Thai Mozambique Logistica
- Simpson Spence & Young - Indonesia
- Banpu Public Company Limited - Thailand
- Straits Asia Resources Limited - Singapore
- GAC Shipping (India) Pvt Ltd
- Ind-Barath Power Infra Limited - India
- Sojitz Corporation - Japan
- Ministry of Finance - Indonesia
- Iligan Light & Power Inc, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Xindia Steels Limited - India
- Tata Chemicals Ltd - India
- Bulk Trading Sa - Switzerland
- India Bulls Power Limited - India
- Directorate Of Revenue Intelligence - India
- Mercuria Energy - Indonesia
- Global Coal Blending Company Limited - Australia
- Mintek Dendrill Indonesia
- Vizag Seaport Private Limited - India
- McConnell Dowell - Australia
- Heidelberg Cement - Germany
- Independent Power Producers Association of India
- Central Java Power - Indonesia
- GVK Power & Infra Limited - India
- ICICI Bank Limited - India
- Romanian Commodities Exchange
- Larsen & Toubro Limited - India
- Wilmar Investment Holdings
- Jorong Barutama Greston.PT - Indonesia
- Marubeni Corporation - India
- Essar Steel Hazira Ltd - India
- Sindya Power Generating Company Private Ltd
- The State Trading Corporation of India Ltd
- Bhoruka Overseas - Indonesia
- Price Waterhouse Coopers - Russia
- CNBM International Corporation - China
- The Treasury - Australian Government
- Central Electricity Authority - India
- GN Power Mariveles Coal Plant, Philippines
- Commonwealth Bank - Australia
- Minerals Council of Australia
- Deloitte Consulting - India
- Meralco Power Generation, Philippines
- Lanco Infratech Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Gujarat Mineral Development Corp Ltd - India
- The University of Queensland
- Dalmia Cement Bharat India
- Gujarat Sidhee Cement - India
- PTC India Limited - India
- Edison Trading Spa - Italy
- Indian Energy Exchange, India
- Bayan Resources Tbk. - Indonesia
- CIMB Investment Bank - Malaysia
- Kepco SPC Power Corporation, Philippines
- Indika Energy - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Orica Mining Services - Indonesia
- Toyota Tsusho Corporation, Japan
- Offshore Bulk Terminal Pte Ltd, Singapore
- Chettinad Cement Corporation Ltd - India
- Sarangani Energy Corporation, Philippines
- Alfred C Toepfer International GmbH - Germany
- Therma Luzon, Inc, Philippines
- Economic Council, Georgia
- Bhushan Steel Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Binh Thuan Hamico - Vietnam
- Bharathi Cement Corporation - India
- Global Green Power PLC Corporation, Philippines
- Sinarmas Energy and Mining - Indonesia
- Indian Oil Corporation Limited
- Maharashtra Electricity Regulatory Commission - India
- White Energy Company Limited
- Krishnapatnam Port Company Ltd. - India
- Salva Resources Pvt Ltd - India
- Kideco Jaya Agung - Indonesia
- Bukit Baiduri Energy - Indonesia
- Coalindo Energy - Indonesia
- Planning Commission, India
- Kumho Petrochemical, South Korea
- Kalimantan Lumbung Energi - Indonesia
- Eastern Energy - Thailand
- Posco Energy - South Korea
- Leighton Contractors Pty Ltd - Australia
- PNOC Exploration Corporation - Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Kobexindo Tractors - Indoneisa
- Star Paper Mills Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Orica Australia Pty. Ltd.
- Globalindo Alam Lestari - Indonesia
- Borneo Indobara - Indonesia
- Electricity Generating Authority of Thailand
- Trasteel International SA, Italy
- Siam City Cement PLC, Thailand
- Holcim Trading Pte Ltd - Singapore
- Kaltim Prima Coal - Indonesia
- Sakthi Sugars Limited - India
- Bangladesh Power Developement Board
- Attock Cement Pakistan Limited
- Indo Tambangraya Megah - Indonesia
- LBH Netherlands Bv - Netherlands
- Pendopo Energi Batubara - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- ASAPP Information Group - India
- Formosa Plastics Group - Taiwan
- Interocean Group of Companies - India
- Australian Coal Association
- Meenaskhi Energy Private Limited - India
- VISA Power Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Renaissance Capital - South Africa
- Cigading International Bulk Terminal - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Kartika Selabumi Mining - Indonesia
- Samtan Co., Ltd - South Korea
- Sical Logistics Limited - India
- Kapuas Tunggal Persada - Indonesia
- Sree Jayajothi Cements Limited - India
- Coastal Gujarat Power Limited - India
- Manunggal Multi Energi - Indonesia
- Wood Mackenzie - Singapore
- Mjunction Services Limited - India
- Aditya Birla Group - India
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