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