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