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