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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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Friday, 02 December 11
DRY BULK CARRIERS BACK IN THE SPOTLIGHT AS MARKET SPEEDS UP - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
With the tanker and container markets suffering dearly, it seems that the tide has once again turned in favor of the dry bulk carriers, despite over ...
Thursday, 01 December 11
DRY BULK MARKET RISES TO NEW HEIGHTS ON RENEWED DEMAND - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market has kept on rising this week, with the industry’s benchmark, the Baltic Dry Index (BDI) climbing to 1,846 points on Wednes ...
Tuesday, 29 November 11
SOUTH AFRICAN COAL INTO CHINA, THE ACTIVITY WAS SLOW - BRS
Capesize
The Capesize market in Atlantic stayed pretty firm last week with transatlantic rounds being fixed in the high twenties. Sentiment was les ...
Tuesday, 29 November 11
GOLDEN GATE BRIDGE OF INDONESIA COLLAPSED AT KUKAR, EAST KALIMANTAN
COALspot.com - A suspension bridge in Indonesia’s east Kalimantan province over the Mahakam river collapsed on Saturday, killing at least elev ...
Tuesday, 29 November 11
BUKIT ASAM SCOUTS RP3 TRILLION PROFIT - INSIDER STORIES
The state-controlled coal miner PT Bukit Asam Tbk (PTBA) expects to post a Rp3 trillion net income this year, reaching its target which is 50% above ...
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- Parliament of New Zealand
- Gujarat Sidhee Cement - India
- Manunggal Multi Energi - Indonesia
- VISA Power Limited - India
- Australian Commodity Traders Exchange
- Gujarat Mineral Development Corp Ltd - India
- OPG Power Generation Pvt Ltd - India
- White Energy Company Limited
- Kideco Jaya Agung - Indonesia
- Marubeni Corporation - India
- Uttam Galva Steels Limited - India
- Baramulti Group, Indonesia
- Ceylon Electricity Board - Sri Lanka
- ASAPP Information Group - India
- Directorate General of MIneral and Coal - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Barasentosa Lestari - Indonesia
- Petron Corporation, Philippines
- Altura Mining Limited, Indonesia
- TeaM Sual Corporation - Philippines
- Romanian Commodities Exchange
- Georgia Ports Authority, United States
- Bhoruka Overseas - Indonesia
- Indian Oil Corporation Limited
- Straits Asia Resources Limited - Singapore
- Miang Besar Coal Terminal - Indonesia
- Videocon Industries ltd - India
- Medco Energi Mining Internasional
- Holcim Trading Pte Ltd - Singapore
- Chamber of Mines of South Africa
- Independent Power Producers Association of India
- Sindya Power Generating Company Private Ltd
- Bukit Baiduri Energy - Indonesia
- Mintek Dendrill Indonesia
- Bangladesh Power Developement Board
- Australian Coal Association
- PetroVietnam Power Coal Import and Supply Company
- Global Green Power PLC Corporation, Philippines
- Maheswari Brothers Coal Limited - India
- Attock Cement Pakistan Limited
- Pendopo Energi Batubara - Indonesia
- Wilmar Investment Holdings
- Madhucon Powers Ltd - India
- Tamil Nadu electricity Board
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- PTC India Limited - India
- Globalindo Alam Lestari - Indonesia
- Kaltim Prima Coal - Indonesia
- Banpu Public Company Limited - Thailand
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Power Finance Corporation Ltd., India
- Indika Energy - Indonesia
- Semirara Mining Corp, Philippines
- Wood Mackenzie - Singapore
- Simpson Spence & Young - Indonesia
- Kumho Petrochemical, South Korea
- Electricity Generating Authority of Thailand
- Jaiprakash Power Ventures ltd
- Kartika Selabumi Mining - Indonesia
- The University of Queensland
- Sakthi Sugars Limited - India
- Coal and Oil Company - UAE
- San Jose City I Power Corp, Philippines
- Energy Development Corp, Philippines
- Ministry of Transport, Egypt
- Indonesian Coal Mining Association
- Samtan Co., Ltd - South Korea
- Asia Pacific Energy Resources Ventures Inc, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- PNOC Exploration Corporation - Philippines
- CIMB Investment Bank - Malaysia
- Bhushan Steel Limited - India
- Indian Energy Exchange, India
- IHS Mccloskey Coal Group - USA
- Formosa Plastics Group - Taiwan
- South Luzon Thermal Energy Corporation
- Cement Manufacturers Association - India
- Star Paper Mills Limited - India
- Coastal Gujarat Power Limited - India
- The Treasury - Australian Government
- Leighton Contractors Pty Ltd - Australia
- Economic Council, Georgia
- Eastern Energy - Thailand
- Rashtriya Ispat Nigam Limited - India
- Orica Australia Pty. Ltd.
- Bhatia International Limited - India
- Singapore Mercantile Exchange
- Sinarmas Energy and Mining - Indonesia
- PowerSource Philippines DevCo
- Bulk Trading Sa - Switzerland
- Bukit Asam (Persero) Tbk - Indonesia
- Ambuja Cements Ltd - India
- LBH Netherlands Bv - Netherlands
- Savvy Resources Ltd - HongKong
- Global Business Power Corporation, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Timah Investasi Mineral - Indoneisa
- Trasteel International SA, Italy
- Vijayanagar Sugar Pvt Ltd - India
- Africa Commodities Group - South Africa
- Price Waterhouse Coopers - Russia
- Toyota Tsusho Corporation, Japan
- Global Coal Blending Company Limited - Australia
- Meenaskhi Energy Private Limited - India
- Kobexindo Tractors - Indoneisa
- GAC Shipping (India) Pvt Ltd
- Jindal Steel & Power Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- GMR Energy Limited - India
- Merrill Lynch Commodities Europe
- Sojitz Corporation - Japan
- Orica Mining Services - Indonesia
- Lanco Infratech Ltd - India
- Xindia Steels Limited - India
- Indogreen Group - Indonesia
- Sical Logistics Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Siam City Cement PLC, Thailand
- Agrawal Coal Company - India
- Dalmia Cement Bharat India
- Salva Resources Pvt Ltd - India
- Aditya Birla Group - India
- Standard Chartered Bank - UAE
- Essar Steel Hazira Ltd - India
- Parry Sugars Refinery, India
- Tata Chemicals Ltd - India
- The State Trading Corporation of India Ltd
- Larsen & Toubro Limited - India
- Krishnapatnam Port Company Ltd. - India
- Central Electricity Authority - India
- European Bulk Services B.V. - Netherlands
- MS Steel International - UAE
- Malabar Cements Ltd - India
- Oldendorff Carriers - Singapore
- Asmin Koalindo Tuhup - Indonesia
- New Zealand Coal & Carbon
- Riau Bara Harum - Indonesia
- Bharathi Cement Corporation - India
- Latin American Coal - Colombia
- London Commodity Brokers - England
- Bank of Tokyo Mitsubishi UFJ Ltd
- Sarangani Energy Corporation, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Karaikal Port Pvt Ltd - India
- Thiess Contractors Indonesia
- Heidelberg Cement - Germany
- SMG Consultants - Indonesia
- Edison Trading Spa - Italy
- Minerals Council of Australia
- CNBM International Corporation - China
- SMC Global Power, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- India Bulls Power Limited - India
- Coalindo Energy - Indonesia
- Port Waratah Coal Services - Australia
- Metalloyd Limited - United Kingdom
- Energy Link Ltd, New Zealand
- Carbofer General Trading SA - India
- Renaissance Capital - South Africa
- Grasim Industreis Ltd - India
- Aboitiz Power Corporation - Philippines
- Kalimantan Lumbung Energi - Indonesia
- Interocean Group of Companies - India
- Gujarat Electricity Regulatory Commission - India
- Vizag Seaport Private Limited - India
- Antam Resourcindo - Indonesia
- IEA Clean Coal Centre - UK
- Bayan Resources Tbk. - Indonesia
- Iligan Light & Power Inc, Philippines
- SN Aboitiz Power Inc, Philippines
- Eastern Coal Council - USA
- ICICI Bank Limited - India
- Mjunction Services Limited - India
- Directorate Of Revenue Intelligence - India
- Cigading International Bulk Terminal - Indonesia
- Ministry of Mines - Canada
- Mercuria Energy - Indonesia
- GVK Power & Infra Limited - India
- Siam City Cement - Thailand
- Makarim & Taira - Indonesia
- Intertek Mineral Services - Indonesia
- Posco Energy - South Korea
- Offshore Bulk Terminal Pte Ltd, Singapore
- Mercator Lines Limited - India
- Indo Tambangraya Megah - Indonesia
- Bukit Makmur.PT - Indonesia
- International Coal Ventures Pvt Ltd - India
- Sree Jayajothi Cements Limited - India
- Binh Thuan Hamico - Vietnam
- Kapuas Tunggal Persada - Indonesia
- Meralco Power Generation, Philippines
- Electricity Authority, New Zealand
- Vedanta Resources Plc - India
- Goldman Sachs - Singapore
- Chettinad Cement Corporation Ltd - India
- Thai Mozambique Logistica
- Anglo American - United Kingdom
- Commonwealth Bank - Australia
- Deloitte Consulting - India
- Planning Commission, India
- Therma Luzon, Inc, Philippines
- Kepco SPC Power Corporation, Philippines
- Semirara Mining and Power Corporation, Philippines
- Billiton Holdings Pty Ltd - Australia
- Central Java Power - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Ministry of Finance - Indonesia
- Ind-Barath Power Infra Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- McConnell Dowell - Australia
- Rio Tinto Coal - Australia
- Borneo Indobara - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Petrochimia International Co. Ltd.- Taiwan
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