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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, 05 December 11
THE DECEMBER HBA FELL 11% FROM ITS PEAK AT US$127.05 PER TON IN FEBRUARY 2011
COALspot.com - Ministry of Energy and Mineral Resources of Indonesia has sets the December 2011 coal reference price at US$ 112.67 per ton US$ 3.98 ...
Monday, 05 December 11
SGX LAUNCHED IHS MCCLOSKEY/XINHUA INFOLINK OTC CFR SOUTH CHINA COAL CONTRACT TODAY
COALspot.com - In order to meet the demand of the coal industry for an effective coal hedging tool with counterparty credit risk mitigation facility ...
Monday, 05 December 11
DRY BULK RATES LOOKING TO EXTEND GAINS THIS WEEK - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
Capesize dry bulk carrier owners have had a great week, with rates rising for six straight sessions (including the end of the week before that). As ...
Sunday, 04 December 11
SUPRAMAX TRIPS VIA INDONESIA WERE REPORTED AROUND $ 7500 - 8000 PD
COALspot.com - The BDI and Cape index recovered this week. The BDI was up by 3.26 pct and Cape index saw a big jump and closed at 3409 points (up by ...
Saturday, 03 December 11
BORNEO TO SPEND US$600 MIO CAPEX - INSIDER STORIES
Insider Stories reported that, Coking coal miner PT Borneo Lumbung Energi & Metal Tbk (BORN) plans to spend US$600 million capital expenditure ( ...
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- Cement Manufacturers Association - India
- Therma Luzon, Inc, Philippines
- Latin American Coal - Colombia
- Indian Energy Exchange, India
- Bukit Makmur.PT - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Goldman Sachs - Singapore
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Parliament of New Zealand
- India Bulls Power Limited - India
- Parry Sugars Refinery, India
- Metalloyd Limited - United Kingdom
- Medco Energi Mining Internasional
- Borneo Indobara - Indonesia
- Bhushan Steel Limited - India
- Lanco Infratech Ltd - India
- Rio Tinto Coal - Australia
- Ministry of Transport, Egypt
- Madhucon Powers Ltd - India
- Global Coal Blending Company Limited - Australia
- Intertek Mineral Services - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- New Zealand Coal & Carbon
- Straits Asia Resources Limited - Singapore
- Orica Mining Services - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Binh Thuan Hamico - Vietnam
- Wilmar Investment Holdings
- Barasentosa Lestari - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Coalindo Energy - Indonesia
- Posco Energy - South Korea
- Salva Resources Pvt Ltd - India
- Toyota Tsusho Corporation, Japan
- LBH Netherlands Bv - Netherlands
- Manunggal Multi Energi - Indonesia
- Bharathi Cement Corporation - India
- IEA Clean Coal Centre - UK
- Bahari Cakrawala Sebuku - Indonesia
- Deloitte Consulting - India
- Gujarat Sidhee Cement - India
- Ind-Barath Power Infra Limited - India
- Samtan Co., Ltd - South Korea
- Formosa Plastics Group - Taiwan
- Semirara Mining and Power Corporation, Philippines
- Karaikal Port Pvt Ltd - India
- Global Business Power Corporation, Philippines
- Globalindo Alam Lestari - Indonesia
- Central Electricity Authority - India
- Romanian Commodities Exchange
- Riau Bara Harum - Indonesia
- Anglo American - United Kingdom
- Asmin Koalindo Tuhup - Indonesia
- Meenaskhi Energy Private Limited - India
- White Energy Company Limited
- Siam City Cement - Thailand
- Power Finance Corporation Ltd., India
- Star Paper Mills Limited - India
- Bangladesh Power Developement Board
- Africa Commodities Group - South Africa
- Energy Development Corp, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Australian Commodity Traders Exchange
- SMC Global Power, Philippines
- Ambuja Cements Ltd - India
- Thiess Contractors Indonesia
- Kumho Petrochemical, South Korea
- Mintek Dendrill Indonesia
- Makarim & Taira - Indonesia
- CIMB Investment Bank - Malaysia
- Ceylon Electricity Board - Sri Lanka
- Simpson Spence & Young - Indonesia
- Renaissance Capital - South Africa
- Kohat Cement Company Ltd. - Pakistan
- Mercuria Energy - Indonesia
- Mjunction Services Limited - India
- Heidelberg Cement - Germany
- Dalmia Cement Bharat India
- Malabar Cements Ltd - India
- San Jose City I Power Corp, Philippines
- OPG Power Generation Pvt Ltd - India
- Bhoruka Overseas - Indonesia
- Aboitiz Power Corporation - Philippines
- Standard Chartered Bank - UAE
- SMG Consultants - Indonesia
- TeaM Sual Corporation - Philippines
- Central Java Power - Indonesia
- Directorate Of Revenue Intelligence - India
- Antam Resourcindo - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- SN Aboitiz Power Inc, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Port Waratah Coal Services - Australia
- Price Waterhouse Coopers - Russia
- Agrawal Coal Company - India
- Marubeni Corporation - India
- Leighton Contractors Pty Ltd - Australia
- Indika Energy - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Larsen & Toubro Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- GVK Power & Infra Limited - India
- Maheswari Brothers Coal Limited - India
- Georgia Ports Authority, United States
- Electricity Authority, New Zealand
- GAC Shipping (India) Pvt Ltd
- Semirara Mining Corp, Philippines
- Indonesian Coal Mining Association
- Edison Trading Spa - Italy
- Chamber of Mines of South Africa
- Altura Mining Limited, Indonesia
- Independent Power Producers Association of India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Interocean Group of Companies - India
- Thai Mozambique Logistica
- Holcim Trading Pte Ltd - Singapore
- Jaiprakash Power Ventures ltd
- Tamil Nadu electricity Board
- Grasim Industreis Ltd - India
- Uttam Galva Steels Limited - India
- Planning Commission, India
- Kaltim Prima Coal - Indonesia
- Meralco Power Generation, Philippines
- Commonwealth Bank - Australia
- Ministry of Finance - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Bulk Trading Sa - Switzerland
- Economic Council, Georgia
- PowerSource Philippines DevCo
- IHS Mccloskey Coal Group - USA
- Petron Corporation, Philippines
- Savvy Resources Ltd - HongKong
- TNB Fuel Sdn Bhd - Malaysia
- MS Steel International - UAE
- Electricity Generating Authority of Thailand
- AsiaOL BioFuels Corp., Philippines
- Aditya Birla Group - India
- Sree Jayajothi Cements Limited - India
- GN Power Mariveles Coal Plant, Philippines
- ICICI Bank Limited - India
- Videocon Industries ltd - India
- Indo Tambangraya Megah - Indonesia
- The Treasury - Australian Government
- ASAPP Information Group - India
- Mercator Lines Limited - India
- South Luzon Thermal Energy Corporation
- Oldendorff Carriers - Singapore
- Trasteel International SA, Italy
- Baramulti Group, Indonesia
- McConnell Dowell - Australia
- Energy Link Ltd, New Zealand
- PetroVietnam Power Coal Import and Supply Company
- Carbofer General Trading SA - India
- Kideco Jaya Agung - Indonesia
- Coastal Gujarat Power Limited - India
- London Commodity Brokers - England
- Ministry of Mines - Canada
- Petrochimia International Co. Ltd.- Taiwan
- Jindal Steel & Power Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Sindya Power Generating Company Private Ltd
- Gujarat Electricity Regulatory Commission - India
- Pendopo Energi Batubara - Indonesia
- Bukit Baiduri Energy - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Global Green Power PLC Corporation, Philippines
- Xindia Steels Limited - India
- European Bulk Services B.V. - Netherlands
- Coal and Oil Company - UAE
- Attock Cement Pakistan Limited
- VISA Power Limited - India
- Merrill Lynch Commodities Europe
- Sical Logistics Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- CNBM International Corporation - China
- GMR Energy Limited - India
- Wood Mackenzie - Singapore
- Siam City Cement PLC, Thailand
- Kepco SPC Power Corporation, Philippines
- Kartika Selabumi Mining - Indonesia
- Indogreen Group - Indonesia
- Orica Australia Pty. Ltd.
- Krishnapatnam Port Company Ltd. - India
- Eastern Energy - Thailand
- Bayan Resources Tbk. - Indonesia
- Vedanta Resources Plc - India
- Essar Steel Hazira Ltd - India
- International Coal Ventures Pvt Ltd - India
- Indian Oil Corporation Limited
- Chettinad Cement Corporation Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- PTC India Limited - India
- PNOC Exploration Corporation - Philippines
- The State Trading Corporation of India Ltd
- Sojitz Corporation - Japan
- Timah Investasi Mineral - Indoneisa
- Banpu Public Company Limited - Thailand
- Miang Besar Coal Terminal - Indonesia
- Tata Chemicals Ltd - India
- Singapore Mercantile Exchange
- Australian Coal Association
- Eastern Coal Council - USA
- Iligan Light & Power Inc, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Sarangani Energy Corporation, Philippines
- Minerals Council of Australia
- The University of Queensland
- Bhatia International Limited - India
- Kapuas Tunggal Persada - Indonesia
- Vizag Seaport Private Limited - India
- Kobexindo Tractors - Indoneisa
- Sakthi Sugars Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
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