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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, 19 December 11
PLN WILL NO LONGER BUY COAL FROM TRADERS
COALspot.com - Indonesia's state electricity company PT Perusahaan Listrik Negara will no longer allow traders to become their suppliers, said, its ...
Saturday, 17 December 11
THE FREIGHT MARKET SEEMS TO HAVE ALMOST BOTTOMED OUT AND MAY REMAIN STEADY AT THESE LEVELS CAPT REDDY
COALspot.com - The BDI and Cape index closed lower this week with BDI closing at 1,888 points (down by 1.76 pct) and Cape index at 3,572 points (dow ...
Friday, 16 December 11
DRY BULK MARKET LOSES TRACK ON CAPESIZE LOSSES, SHIP FINANCING REMAINS TROUBLESOME - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market didn’t manage to sustain earlier gains, losing track yesterday, on reduced Capesize demand and persisting troubles in smal ...
Thursday, 15 December 11
BERAU SEES INDIA AS POTENTIAL MARKET FOR LOW-CALORIE COAL - THE JAKARTA POST
The Jakarta Post reported that, Publicly listed coal mining company PT Berau Coal Energy (BRAU), the fifth largest coal producer in Indonesia, sees ...
Thursday, 15 December 11
PANAMAX HARDLY AFFECTED BY THE RECENT FIRMER TENDENCY FOR THE BIG SISTERS - FEARNBULK
Handy
The rates are more or less the same as last week. Continent/US Gulf fixing at tick below USD 10k and Gulf/Continent levels at USD 25k. Trips ...
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- Port Waratah Coal Services - Australia
- Marubeni Corporation - India
- Neyveli Lignite Corporation Ltd, - India
- Eastern Coal Council - USA
- Indonesian Coal Mining Association
- Indian Oil Corporation Limited
- GMR Energy Limited - India
- Singapore Mercantile Exchange
- Therma Luzon, Inc, Philippines
- Semirara Mining Corp, Philippines
- Africa Commodities Group - South Africa
- Australian Commodity Traders Exchange
- Mintek Dendrill Indonesia
- Madhucon Powers Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Pendopo Energi Batubara - Indonesia
- Alfred C Toepfer International GmbH - Germany
- MS Steel International - UAE
- White Energy Company Limited
- Attock Cement Pakistan Limited
- Bhoruka Overseas - Indonesia
- Wilmar Investment Holdings
- Billiton Holdings Pty Ltd - Australia
- Price Waterhouse Coopers - Russia
- Jaiprakash Power Ventures ltd
- Borneo Indobara - Indonesia
- Bangladesh Power Developement Board
- Vijayanagar Sugar Pvt Ltd - India
- Mercuria Energy - Indonesia
- Thai Mozambique Logistica
- Georgia Ports Authority, United States
- South Luzon Thermal Energy Corporation
- Electricity Authority, New Zealand
- Kalimantan Lumbung Energi - Indonesia
- San Jose City I Power Corp, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Carbofer General Trading SA - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- GVK Power & Infra Limited - India
- Ministry of Transport, Egypt
- OPG Power Generation Pvt Ltd - India
- Sojitz Corporation - Japan
- Manunggal Multi Energi - Indonesia
- Malabar Cements Ltd - India
- Rio Tinto Coal - Australia
- Global Coal Blending Company Limited - Australia
- Meenaskhi Energy Private Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Larsen & Toubro Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Sarangani Energy Corporation, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- IEA Clean Coal Centre - UK
- Ministry of Mines - Canada
- Goldman Sachs - Singapore
- Ind-Barath Power Infra Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- McConnell Dowell - Australia
- Energy Link Ltd, New Zealand
- Planning Commission, India
- PNOC Exploration Corporation - Philippines
- India Bulls Power Limited - India
- Meralco Power Generation, Philippines
- Kepco SPC Power Corporation, Philippines
- Miang Besar Coal Terminal - Indonesia
- Altura Mining Limited, Indonesia
- Merrill Lynch Commodities Europe
- Edison Trading Spa - Italy
- European Bulk Services B.V. - Netherlands
- Aboitiz Power Corporation - Philippines
- Orica Australia Pty. Ltd.
- Coastal Gujarat Power Limited - India
- Vedanta Resources Plc - India
- Star Paper Mills Limited - India
- Kapuas Tunggal Persada - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Tata Chemicals Ltd - India
- Coalindo Energy - Indonesia
- Cement Manufacturers Association - India
- Riau Bara Harum - Indonesia
- Kideco Jaya Agung - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Thiess Contractors Indonesia
- SMC Global Power, Philippines
- Posco Energy - South Korea
- Formosa Plastics Group - Taiwan
- SMG Consultants - Indonesia
- Samtan Co., Ltd - South Korea
- PowerSource Philippines DevCo
- Bukit Baiduri Energy - Indonesia
- Timah Investasi Mineral - Indoneisa
- Sinarmas Energy and Mining - Indonesia
- Metalloyd Limited - United Kingdom
- Mercator Lines Limited - India
- Straits Asia Resources Limited - Singapore
- Deloitte Consulting - India
- Directorate General of MIneral and Coal - Indonesia
- Heidelberg Cement - Germany
- Petrochimia International Co. Ltd.- Taiwan
- Essar Steel Hazira Ltd - India
- Leighton Contractors Pty Ltd - Australia
- The Treasury - Australian Government
- Aditya Birla Group - India
- Asmin Koalindo Tuhup - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Directorate Of Revenue Intelligence - India
- Central Electricity Authority - India
- CNBM International Corporation - China
- Trasteel International SA, Italy
- Bharathi Cement Corporation - India
- Mjunction Services Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Kobexindo Tractors - Indoneisa
- Kumho Petrochemical, South Korea
- Australian Coal Association
- Tamil Nadu electricity Board
- Maheswari Brothers Coal Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Oldendorff Carriers - Singapore
- Offshore Bulk Terminal Pte Ltd, Singapore
- The University of Queensland
- Ceylon Electricity Board - Sri Lanka
- Global Green Power PLC Corporation, Philippines
- Vizag Seaport Private Limited - India
- Petron Corporation, Philippines
- Videocon Industries ltd - India
- Energy Development Corp, Philippines
- Sindya Power Generating Company Private Ltd
- Romanian Commodities Exchange
- Indo Tambangraya Megah - Indonesia
- Latin American Coal - Colombia
- PTC India Limited - India
- Commonwealth Bank - Australia
- Jindal Steel & Power Ltd - India
- Simpson Spence & Young - Indonesia
- Central Java Power - Indonesia
- Siam City Cement - Thailand
- TeaM Sual Corporation - Philippines
- Intertek Mineral Services - Indonesia
- Indika Energy - Indonesia
- Eastern Energy - Thailand
- Dalmia Cement Bharat India
- Power Finance Corporation Ltd., India
- PetroVietnam Power Coal Import and Supply Company
- Bulk Trading Sa - Switzerland
- Global Business Power Corporation, Philippines
- Wood Mackenzie - Singapore
- Salva Resources Pvt Ltd - India
- ICICI Bank Limited - India
- IHS Mccloskey Coal Group - USA
- Medco Energi Mining Internasional
- Karbindo Abesyapradhi - Indoneisa
- Semirara Mining and Power Corporation, Philippines
- ASAPP Information Group - India
- Kartika Selabumi Mining - Indonesia
- Banpu Public Company Limited - Thailand
- Holcim Trading Pte Ltd - Singapore
- CIMB Investment Bank - Malaysia
- Gujarat Electricity Regulatory Commission - India
- Orica Mining Services - Indonesia
- Uttam Galva Steels Limited - India
- Minerals Council of Australia
- Gujarat Sidhee Cement - India
- Bhushan Steel Limited - India
- Globalindo Alam Lestari - Indonesia
- Antam Resourcindo - Indonesia
- Siam City Cement PLC, Thailand
- Electricity Generating Authority of Thailand
- Bayan Resources Tbk. - Indonesia
- Standard Chartered Bank - UAE
- Interocean Group of Companies - India
- Lanco Infratech Ltd - India
- Agrawal Coal Company - India
- Barasentosa Lestari - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Binh Thuan Hamico - Vietnam
- Grasim Industreis Ltd - India
- Indian Energy Exchange, India
- Iligan Light & Power Inc, Philippines
- Chamber of Mines of South Africa
- Ministry of Finance - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- New Zealand Coal & Carbon
- Savvy Resources Ltd - HongKong
- LBH Netherlands Bv - Netherlands
- Sakthi Sugars Limited - India
- Ambuja Cements Ltd - India
- Parry Sugars Refinery, India
- Parliament of New Zealand
- VISA Power Limited - India
- Sree Jayajothi Cements Limited - India
- Chettinad Cement Corporation Ltd - India
- Bukit Makmur.PT - Indonesia
- SN Aboitiz Power Inc, Philippines
- The State Trading Corporation of India Ltd
- Toyota Tsusho Corporation, Japan
- Indogreen Group - Indonesia
- International Coal Ventures Pvt Ltd - India
- Anglo American - United Kingdom
- Coal and Oil Company - UAE
- Xindia Steels Limited - India
- Economic Council, Georgia
- Rashtriya Ispat Nigam Limited - India
- Sical Logistics Limited - India
- Renaissance Capital - South Africa
- Bhatia International Limited - India
- London Commodity Brokers - England
- TNB Fuel Sdn Bhd - Malaysia
- Baramulti Group, Indonesia
- Karaikal Port Pvt Ltd - India
- Independent Power Producers Association of India
- Kaltim Prima Coal - Indonesia
- Makarim & Taira - Indonesia
- GAC Shipping (India) Pvt Ltd
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bahari Cakrawala Sebuku - Indonesia
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