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