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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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Tuesday, 01 November 11
ATLAS RESOURCES SETS IPO AT RP1,500 - INSIDER STORIES
Insider Stories reported that, coal miner PT Atlas Resources Tbk has set its initial public offering (IPO) at Rp1,500 (approximately US$ 0.169) per ...
Tuesday, 01 November 11
DRY BULK MARKETS CORRECTION SPILLS OVER ONTO NEW WEEK - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market is losing steam, as evidenced by the falls experienced last week, which were also apparent at the beginning of the new week. A l ...
Monday, 31 October 11
CHINAS HUNGER FOR INDONESIAN COAL AT THREE YEAR-HIGH AS WINTER NEARS - JOSEPH KIRSCHKE
COALspot.com - Chinese demand for power-station coal from Indonesia has soared to its highest level in three years, as central heating plants and po ...
Saturday, 29 October 11
ATLAS RESOURCES SEALS US$95 MIO LOAN - INSIDER STORIES
Insider Stories reported that, coal producer PT Atlas Resources Tbk, that is controlled by Indonesian businessman Andre Abdi, has secured US$95 mill ...
Saturday, 29 October 11
INDONESIA TO INDIA FREIGHT LIKELY TO REMAIN SOFT
COALspot.com - The market continued to slow down and all segment were down this week.
The biggest drop was in the Cape Index down by 8.19 pct&nbs ...
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- Bayan Resources Tbk. - Indonesia
- Central Java Power - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Meenaskhi Energy Private Limited - India
- Gujarat Sidhee Cement - India
- Miang Besar Coal Terminal - Indonesia
- Australian Coal Association
- Borneo Indobara - Indonesia
- Eastern Coal Council - USA
- Energy Link Ltd, New Zealand
- Gujarat Electricity Regulatory Commission - India
- Gujarat Mineral Development Corp Ltd - India
- Petron Corporation, Philippines
- Indian Energy Exchange, India
- Iligan Light & Power Inc, Philippines
- ICICI Bank Limited - India
- Meralco Power Generation, Philippines
- Eastern Energy - Thailand
- MS Steel International - UAE
- Port Waratah Coal Services - Australia
- IHS Mccloskey Coal Group - USA
- Ind-Barath Power Infra Limited - India
- Heidelberg Cement - Germany
- Australian Commodity Traders Exchange
- Siam City Cement PLC, Thailand
- Georgia Ports Authority, United States
- LBH Netherlands Bv - Netherlands
- White Energy Company Limited
- SMG Consultants - Indonesia
- Globalindo Alam Lestari - Indonesia
- Energy Development Corp, Philippines
- Interocean Group of Companies - India
- Bukit Makmur.PT - Indonesia
- Kideco Jaya Agung - Indonesia
- Wilmar Investment Holdings
- Simpson Spence & Young - Indonesia
- Sojitz Corporation - Japan
- Sakthi Sugars Limited - India
- Indogreen Group - Indonesia
- Orica Mining Services - Indonesia
- Barasentosa Lestari - Indonesia
- Jaiprakash Power Ventures ltd
- Mjunction Services Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Carbofer General Trading SA - India
- The State Trading Corporation of India Ltd
- Essar Steel Hazira Ltd - India
- Semirara Mining and Power Corporation, Philippines
- CNBM International Corporation - China
- India Bulls Power Limited - India
- Manunggal Multi Energi - Indonesia
- Sical Logistics Limited - India
- Attock Cement Pakistan Limited
- Rashtriya Ispat Nigam Limited - India
- Samtan Co., Ltd - South Korea
- International Coal Ventures Pvt Ltd - India
- Global Coal Blending Company Limited - Australia
- Economic Council, Georgia
- Coal and Oil Company - UAE
- Thai Mozambique Logistica
- Deloitte Consulting - India
- Independent Power Producers Association of India
- Chamber of Mines of South Africa
- The Treasury - Australian Government
- Thiess Contractors Indonesia
- Ministry of Finance - Indonesia
- Global Business Power Corporation, Philippines
- Kaltim Prima Coal - Indonesia
- Karaikal Port Pvt Ltd - India
- Global Green Power PLC Corporation, Philippines
- AsiaOL BioFuels Corp., Philippines
- Lanco Infratech Ltd - India
- GMR Energy Limited - India
- Madhucon Powers Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Semirara Mining Corp, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Formosa Plastics Group - Taiwan
- Tata Chemicals Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Mercuria Energy - Indonesia
- Kobexindo Tractors - Indoneisa
- Edison Trading Spa - Italy
- Leighton Contractors Pty Ltd - Australia
- Sindya Power Generating Company Private Ltd
- Cigading International Bulk Terminal - Indonesia
- Bhatia International Limited - India
- Jindal Steel & Power Ltd - India
- Chettinad Cement Corporation Ltd - India
- London Commodity Brokers - England
- Maharashtra Electricity Regulatory Commission - India
- Africa Commodities Group - South Africa
- GN Power Mariveles Coal Plant, Philippines
- Parliament of New Zealand
- Mintek Dendrill Indonesia
- Merrill Lynch Commodities Europe
- Grasim Industreis Ltd - India
- Larsen & Toubro Limited - India
- Singapore Mercantile Exchange
- Aditya Birla Group - India
- Orica Australia Pty. Ltd.
- Standard Chartered Bank - UAE
- Anglo American - United Kingdom
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Rio Tinto Coal - Australia
- Sree Jayajothi Cements Limited - India
- Parry Sugars Refinery, India
- Coalindo Energy - Indonesia
- Posco Energy - South Korea
- VISA Power Limited - India
- South Luzon Thermal Energy Corporation
- San Jose City I Power Corp, Philippines
- Planning Commission, India
- PetroVietnam Power Coal Import and Supply Company
- Central Electricity Authority - India
- Krishnapatnam Port Company Ltd. - India
- Oldendorff Carriers - Singapore
- PNOC Exploration Corporation - Philippines
- Altura Mining Limited, Indonesia
- Salva Resources Pvt Ltd - India
- TeaM Sual Corporation - Philippines
- Videocon Industries ltd - India
- McConnell Dowell - Australia
- The University of Queensland
- Bharathi Cement Corporation - India
- Ministry of Transport, Egypt
- European Bulk Services B.V. - Netherlands
- Toyota Tsusho Corporation, Japan
- Star Paper Mills Limited - India
- Bulk Trading Sa - Switzerland
- Agrawal Coal Company - India
- Binh Thuan Hamico - Vietnam
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Siam City Cement - Thailand
- Bukit Baiduri Energy - Indonesia
- SN Aboitiz Power Inc, Philippines
- Bangladesh Power Developement Board
- Directorate General of MIneral and Coal - Indonesia
- CIMB Investment Bank - Malaysia
- Makarim & Taira - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Indo Tambangraya Megah - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Coastal Gujarat Power Limited - India
- Xindia Steels Limited - India
- IEA Clean Coal Centre - UK
- Vizag Seaport Private Limited - India
- GAC Shipping (India) Pvt Ltd
- Dalmia Cement Bharat India
- GVK Power & Infra Limited - India
- Electricity Generating Authority of Thailand
- Timah Investasi Mineral - Indoneisa
- Aboitiz Power Corporation - Philippines
- Mercator Lines Limited - India
- Holcim Trading Pte Ltd - Singapore
- Power Finance Corporation Ltd., India
- Uttam Galva Steels Limited - India
- Metalloyd Limited - United Kingdom
- Vedanta Resources Plc - India
- Straits Asia Resources Limited - Singapore
- ASAPP Information Group - India
- Intertek Mineral Services - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Maheswari Brothers Coal Limited - India
- Indonesian Coal Mining Association
- Ministry of Mines - Canada
- Medco Energi Mining Internasional
- Petrochimia International Co. Ltd.- Taiwan
- Latin American Coal - Colombia
- Sinarmas Energy and Mining - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Marubeni Corporation - India
- Price Waterhouse Coopers - Russia
- Kartika Selabumi Mining - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Riau Bara Harum - Indonesia
- Tamil Nadu electricity Board
- Therma Luzon, Inc, Philippines
- Pendopo Energi Batubara - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Bhushan Steel Limited - India
- Baramulti Group, Indonesia
- Trasteel International SA, Italy
- Kalimantan Lumbung Energi - Indonesia
- Directorate Of Revenue Intelligence - India
- PTC India Limited - India
- Sarangani Energy Corporation, Philippines
- Cement Manufacturers Association - India
- Indika Energy - Indonesia
- New Zealand Coal & Carbon
- Romanian Commodities Exchange
- Renaissance Capital - South Africa
- Ceylon Electricity Board - Sri Lanka
- Malabar Cements Ltd - India
- Savvy Resources Ltd - HongKong
- Wood Mackenzie - Singapore
- Kumho Petrochemical, South Korea
- Indian Oil Corporation Limited
- Kepco SPC Power Corporation, Philippines
- Minerals Council of Australia
- Karbindo Abesyapradhi - Indoneisa
- Banpu Public Company Limited - Thailand
- Jorong Barutama Greston.PT - Indonesia
- Commonwealth Bank - Australia
- Vijayanagar Sugar Pvt Ltd - India
- Ambuja Cements Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Antam Resourcindo - Indonesia
- PowerSource Philippines DevCo
- Bhoruka Overseas - Indonesia
- Electricity Authority, New Zealand
- SMC Global Power, Philippines
- Goldman Sachs - Singapore
- OPG Power Generation Pvt Ltd - India
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