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