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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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Wednesday, 21 September 11
2ND ANNUAL SHALE GAS SUMMIT
2nd Annual Shale Gas Summit 31 October – 3 November 2011 JW Marriott Hotel, Hong Kong
According to a recent EI ...
Tuesday, 20 September 11
MTD INAUGURATES ITS COAL TERMINAL IN JAVA ISLAND
Press Release – MTD Group of Malaysia, one of prominent key players in the development of infrastructure in Malaysia, today inaugurated their ...
Tuesday, 20 September 11
DRY BULK MARKET LOSING ITS EDGE, RETREATING AT THE START OF THE WEEK - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
After a surge during the past couple of weeks, which saw Capesize earnings boosted and the BDI (Baltic Dry Index) reaching levels of year high and c ...
Monday, 19 September 11
CHINA IMPORTS MORE THAN 10 MMT INDO COAL IN AUGUST 2011
COALspot.com - Indonesian coal exports dropped 1.642 million tons in August compared to July exports. Indonesia exports 29.662 million tons of coal ...
Monday, 19 September 11
INDOMOBIL ENTERING INTO COAL MINING BUSINESS
COALspot.Com- PT Indomobil Sukses Internasional Tbk, part of, one of Indonesia's largest conglomerates, to enter into mining industry ac ...
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- Pipit Mutiara Jaya. PT, Indonesia
- Krishnapatnam Port Company Ltd. - India
- Latin American Coal - Colombia
- Carbofer General Trading SA - India
- CNBM International Corporation - China
- Indonesian Coal Mining Association
- Cigading International Bulk Terminal - Indonesia
- Lanco Infratech Ltd - India
- Orica Australia Pty. Ltd.
- Gujarat Electricity Regulatory Commission - India
- Siam City Cement - Thailand
- Wilmar Investment Holdings
- Global Coal Blending Company Limited - Australia
- Tamil Nadu electricity Board
- Indian Energy Exchange, India
- Sakthi Sugars Limited - India
- Borneo Indobara - Indonesia
- Trasteel International SA, Italy
- Interocean Group of Companies - India
- Directorate Of Revenue Intelligence - India
- Ceylon Electricity Board - Sri Lanka
- Barasentosa Lestari - Indonesia
- Dalmia Cement Bharat India
- Kepco SPC Power Corporation, Philippines
- Manunggal Multi Energi - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- The Treasury - Australian Government
- Banpu Public Company Limited - Thailand
- Renaissance Capital - South Africa
- Larsen & Toubro Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- PTC India Limited - India
- GMR Energy Limited - India
- Sojitz Corporation - Japan
- Bayan Resources Tbk. - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Vizag Seaport Private Limited - India
- Economic Council, Georgia
- Electricity Generating Authority of Thailand
- Thiess Contractors Indonesia
- Merrill Lynch Commodities Europe
- Salva Resources Pvt Ltd - India
- Bangladesh Power Developement Board
- Africa Commodities Group - South Africa
- Maharashtra Electricity Regulatory Commission - India
- Alfred C Toepfer International GmbH - Germany
- Energy Development Corp, Philippines
- PowerSource Philippines DevCo
- Toyota Tsusho Corporation, Japan
- Aboitiz Power Corporation - Philippines
- Essar Steel Hazira Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Port Waratah Coal Services - Australia
- Singapore Mercantile Exchange
- Global Business Power Corporation, Philippines
- Edison Trading Spa - Italy
- Timah Investasi Mineral - Indoneisa
- Chettinad Cement Corporation Ltd - India
- Straits Asia Resources Limited - Singapore
- Kumho Petrochemical, South Korea
- Bank of Tokyo Mitsubishi UFJ Ltd
- Coal and Oil Company - UAE
- IEA Clean Coal Centre - UK
- Eastern Coal Council - USA
- Kohat Cement Company Ltd. - Pakistan
- Ministry of Mines - Canada
- Bhushan Steel Limited - India
- Chamber of Mines of South Africa
- Global Green Power PLC Corporation, Philippines
- Planning Commission, India
- Tata Chemicals Ltd - India
- Medco Energi Mining Internasional
- Romanian Commodities Exchange
- Grasim Industreis Ltd - India
- Kaltim Prima Coal - Indonesia
- Mintek Dendrill Indonesia
- CIMB Investment Bank - Malaysia
- Kideco Jaya Agung - Indonesia
- IHS Mccloskey Coal Group - USA
- Goldman Sachs - Singapore
- Billiton Holdings Pty Ltd - Australia
- Georgia Ports Authority, United States
- Ambuja Cements Ltd - India
- Attock Cement Pakistan Limited
- London Commodity Brokers - England
- Agrawal Coal Company - India
- McConnell Dowell - Australia
- Bulk Trading Sa - Switzerland
- Petrochimia International Co. Ltd.- Taiwan
- SMG Consultants - Indonesia
- Central Java Power - Indonesia
- Savvy Resources Ltd - HongKong
- ASAPP Information Group - India
- Videocon Industries ltd - India
- Petron Corporation, Philippines
- India Bulls Power Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bhoruka Overseas - Indonesia
- MS Steel International - UAE
- Thai Mozambique Logistica
- Formosa Plastics Group - Taiwan
- International Coal Ventures Pvt Ltd - India
- LBH Netherlands Bv - Netherlands
- Ministry of Transport, Egypt
- Pendopo Energi Batubara - Indonesia
- Standard Chartered Bank - UAE
- White Energy Company Limited
- The State Trading Corporation of India Ltd
- Aditya Birla Group - India
- Jindal Steel & Power Ltd - India
- Mjunction Services Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Antam Resourcindo - Indonesia
- Anglo American - United Kingdom
- PNOC Exploration Corporation - Philippines
- Makarim & Taira - Indonesia
- Intertek Mineral Services - Indonesia
- OPG Power Generation Pvt Ltd - India
- Sical Logistics Limited - India
- Oldendorff Carriers - Singapore
- Independent Power Producers Association of India
- Bharathi Cement Corporation - India
- Indogreen Group - Indonesia
- Price Waterhouse Coopers - Russia
- Marubeni Corporation - India
- Kalimantan Lumbung Energi - Indonesia
- Semirara Mining Corp, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Deloitte Consulting - India
- Gujarat Mineral Development Corp Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bukit Makmur.PT - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Indika Energy - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Simpson Spence & Young - Indonesia
- Baramulti Group, Indonesia
- SMC Global Power, Philippines
- Bhatia International Limited - India
- Bukit Baiduri Energy - Indonesia
- Eastern Energy - Thailand
- Binh Thuan Hamico - Vietnam
- Sree Jayajothi Cements Limited - India
- Holcim Trading Pte Ltd - Singapore
- Posco Energy - South Korea
- San Jose City I Power Corp, Philippines
- Samtan Co., Ltd - South Korea
- New Zealand Coal & Carbon
- Wood Mackenzie - Singapore
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- GVK Power & Infra Limited - India
- Mercuria Energy - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Parliament of New Zealand
- VISA Power Limited - India
- Siam City Cement PLC, Thailand
- Altura Mining Limited, Indonesia
- Metalloyd Limited - United Kingdom
- Meralco Power Generation, Philippines
- Mercator Lines Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Karaikal Port Pvt Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Parry Sugars Refinery, India
- Cement Manufacturers Association - India
- TeaM Sual Corporation - Philippines
- Miang Besar Coal Terminal - Indonesia
- The University of Queensland
- Commonwealth Bank - Australia
- Xindia Steels Limited - India
- Power Finance Corporation Ltd., India
- ICICI Bank Limited - India
- Madhucon Powers Ltd - India
- Ministry of Finance - Indonesia
- Vedanta Resources Plc - India
- Australian Coal Association
- Meenaskhi Energy Private Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Globalindo Alam Lestari - Indonesia
- Therma Luzon, Inc, Philippines
- European Bulk Services B.V. - Netherlands
- Coastal Gujarat Power Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Australian Commodity Traders Exchange
- Orica Mining Services - Indonesia
- Riau Bara Harum - Indonesia
- GAC Shipping (India) Pvt Ltd
- Uttam Galva Steels Limited - India
- Kartika Selabumi Mining - Indonesia
- Jaiprakash Power Ventures ltd
- Ind-Barath Power Infra Limited - India
- Sarangani Energy Corporation, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Vijayanagar Sugar Pvt Ltd - India
- Energy Link Ltd, New Zealand
- Maheswari Brothers Coal Limited - India
- Malabar Cements Ltd - India
- Indo Tambangraya Megah - Indonesia
- Coalindo Energy - Indonesia
- Electricity Authority, New Zealand
- Iligan Light & Power Inc, Philippines
- South Luzon Thermal Energy Corporation
- Gujarat Sidhee Cement - India
- Star Paper Mills Limited - India
- Sinarmas Energy and Mining - Indonesia
- Central Electricity Authority - India
- Kapuas Tunggal Persada - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Sindya Power Generating Company Private Ltd
- SN Aboitiz Power Inc, Philippines
- Rio Tinto Coal - Australia
- Minerals Council of Australia
- Indian Oil Corporation Limited
- Semirara Mining and Power Corporation, Philippines
- Kobexindo Tractors - Indoneisa
- Heidelberg Cement - Germany
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