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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, 14 September 11
GOVT SETS SEPTEMBER COAL REFERENCE PRICE AT $116.26 PER TON
COALspot.com - Ministry of Energy and Mineral Resources of Indonesia has set the September 2011 coal reference price at US$ 116.26 per ton slightly ...
Tuesday, 13 September 11
CAPITAL COSTS OF INDIAN COAL MINING PROJECT - AN ANALYST VIEW
By Mr Dipesh Dipu, Director - Consulting (Mining), Deloitte Touche Tohmatsu India Private Limited
The coal mining sector that has been opened par ...
Tuesday, 13 September 11
INDONESIAS COAL SECTOR EYES 2012 BOOM - JG
The Jakarta Globe, Indonesian English language News paper reported that, Coal production is set to surge next year as coal miners bolster their busi ...
Tuesday, 13 September 11
DRY BULK RALLY MAINTAINS MOMENTUM AT START OF THE WEEK - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market kept its upward momentum at the start of the week, as the industry’s benchmark, the Baltic Dry Index (BDI) was up by 2.07% ...
Monday, 12 September 11
INDONESIAN GOVERNMENT HAS ALLOCATED MORE COAL FOR 2012
COALspot.com - Indonesian government has increased the domestic market obligation allocation to 82.07 million tons of coal for 2012, which is 4 perc ...
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- Barasentosa Lestari - Indonesia
- Indogreen Group - Indonesia
- Deloitte Consulting - India
- Gujarat Sidhee Cement - India
- Globalindo Alam Lestari - Indonesia
- Global Coal Blending Company Limited - Australia
- GN Power Mariveles Coal Plant, Philippines
- Samtan Co., Ltd - South Korea
- Aditya Birla Group - India
- Interocean Group of Companies - India
- Vijayanagar Sugar Pvt Ltd - India
- Cigading International Bulk Terminal - Indonesia
- ASAPP Information Group - India
- Jaiprakash Power Ventures ltd
- SMC Global Power, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Eastern Energy - Thailand
- Heidelberg Cement - Germany
- Pendopo Energi Batubara - Indonesia
- Coastal Gujarat Power Limited - India
- MS Steel International - UAE
- Kapuas Tunggal Persada - Indonesia
- New Zealand Coal & Carbon
- Thiess Contractors Indonesia
- Metalloyd Limited - United Kingdom
- Wood Mackenzie - Singapore
- Savvy Resources Ltd - HongKong
- Kepco SPC Power Corporation, Philippines
- Parliament of New Zealand
- Chamber of Mines of South Africa
- LBH Netherlands Bv - Netherlands
- Vedanta Resources Plc - India
- Mercator Lines Limited - India
- Sarangani Energy Corporation, Philippines
- Kaltim Prima Coal - Indonesia
- Sree Jayajothi Cements Limited - India
- Sinarmas Energy and Mining - Indonesia
- Energy Development Corp, Philippines
- Mercuria Energy - Indonesia
- Riau Bara Harum - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Binh Thuan Hamico - Vietnam
- PNOC Exploration Corporation - Philippines
- Energy Link Ltd, New Zealand
- Sojitz Corporation - Japan
- South Luzon Thermal Energy Corporation
- Larsen & Toubro Limited - India
- Parry Sugars Refinery, India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Sical Logistics Limited - India
- Coalindo Energy - Indonesia
- ICICI Bank Limited - India
- Singapore Mercantile Exchange
- Standard Chartered Bank - UAE
- Medco Energi Mining Internasional
- Kohat Cement Company Ltd. - Pakistan
- Toyota Tsusho Corporation, Japan
- PTC India Limited - India
- Leighton Contractors Pty Ltd - Australia
- Ministry of Mines - Canada
- SMG Consultants - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Latin American Coal - Colombia
- Formosa Plastics Group - Taiwan
- Electricity Authority, New Zealand
- Global Business Power Corporation, Philippines
- Borneo Indobara - Indonesia
- Indonesian Coal Mining Association
- Lanco Infratech Ltd - India
- Orica Australia Pty. Ltd.
- Sindya Power Generating Company Private Ltd
- Bhoruka Overseas - Indonesia
- Bhushan Steel Limited - India
- Kobexindo Tractors - Indoneisa
- Meenaskhi Energy Private Limited - India
- Straits Asia Resources Limited - Singapore
- Gujarat Electricity Regulatory Commission - India
- Anglo American - United Kingdom
- CNBM International Corporation - China
- Alfred C Toepfer International GmbH - Germany
- Rio Tinto Coal - Australia
- Simpson Spence & Young - Indonesia
- Oldendorff Carriers - Singapore
- Planning Commission, India
- Trasteel International SA, Italy
- SN Aboitiz Power Inc, Philippines
- McConnell Dowell - Australia
- Bukit Makmur.PT - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Videocon Industries ltd - India
- Madhucon Powers Ltd - India
- Orica Mining Services - Indonesia
- Bhatia International Limited - India
- Attock Cement Pakistan Limited
- Thai Mozambique Logistica
- Merrill Lynch Commodities Europe
- Minerals Council of Australia
- Ceylon Electricity Board - Sri Lanka
- Chettinad Cement Corporation Ltd - India
- IEA Clean Coal Centre - UK
- The University of Queensland
- Georgia Ports Authority, United States
- PetroVietnam Power Coal Import and Supply Company
- Neyveli Lignite Corporation Ltd, - India
- Maheswari Brothers Coal Limited - India
- Bulk Trading Sa - Switzerland
- Mjunction Services Limited - India
- Tata Chemicals Ltd - India
- OPG Power Generation Pvt Ltd - India
- Ind-Barath Power Infra Limited - India
- Salva Resources Pvt Ltd - India
- Vizag Seaport Private Limited - India
- Australian Coal Association
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Karbindo Abesyapradhi - Indoneisa
- VISA Power Limited - India
- Directorate Of Revenue Intelligence - India
- Eastern Coal Council - USA
- GAC Shipping (India) Pvt Ltd
- San Jose City I Power Corp, Philippines
- Carbofer General Trading SA - India
- Posco Energy - South Korea
- Siam City Cement - Thailand
- Directorate General of MIneral and Coal - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Baramulti Group, Indonesia
- Indika Energy - Indonesia
- Bukit Baiduri Energy - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Bharathi Cement Corporation - India
- Meralco Power Generation, Philippines
- IHS Mccloskey Coal Group - USA
- Wilmar Investment Holdings
- Star Paper Mills Limited - India
- Dalmia Cement Bharat India
- Timah Investasi Mineral - Indoneisa
- Independent Power Producers Association of India
- GMR Energy Limited - India
- Maharashtra Electricity Regulatory Commission - India
- India Bulls Power Limited - India
- Australian Commodity Traders Exchange
- Goldman Sachs - Singapore
- Indo Tambangraya Megah - Indonesia
- The State Trading Corporation of India Ltd
- Power Finance Corporation Ltd., India
- International Coal Ventures Pvt Ltd - India
- Ambuja Cements Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- European Bulk Services B.V. - Netherlands
- Edison Trading Spa - Italy
- Petron Corporation, Philippines
- Port Waratah Coal Services - Australia
- PowerSource Philippines DevCo
- Pipit Mutiara Jaya. PT, Indonesia
- Agrawal Coal Company - India
- Aboitiz Power Corporation - Philippines
- Bayan Resources Tbk. - Indonesia
- Kumho Petrochemical, South Korea
- Romanian Commodities Exchange
- Cement Manufacturers Association - India
- TeaM Sual Corporation - Philippines
- Ministry of Finance - Indonesia
- Electricity Generating Authority of Thailand
- Indian Oil Corporation Limited
- Altura Mining Limited, Indonesia
- Iligan Light & Power Inc, Philippines
- Jindal Steel & Power Ltd - India
- Commonwealth Bank - Australia
- Banpu Public Company Limited - Thailand
- White Energy Company Limited
- TNB Fuel Sdn Bhd - Malaysia
- Gujarat Mineral Development Corp Ltd - India
- GVK Power & Infra Limited - India
- Mintek Dendrill Indonesia
- Central Electricity Authority - India
- Indian Energy Exchange, India
- Kartika Selabumi Mining - Indonesia
- The Treasury - Australian Government
- London Commodity Brokers - England
- Bangladesh Power Developement Board
- CIMB Investment Bank - Malaysia
- Xindia Steels Limited - India
- Ministry of Transport, Egypt
- Rashtriya Ispat Nigam Limited - India
- Siam City Cement PLC, Thailand
- Essar Steel Hazira Ltd - India
- Manunggal Multi Energi - Indonesia
- Antam Resourcindo - Indonesia
- Uttam Galva Steels Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Kideco Jaya Agung - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Krishnapatnam Port Company Ltd. - India
- Tamil Nadu electricity Board
- Price Waterhouse Coopers - Russia
- Sakthi Sugars Limited - India
- Makarim & Taira - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Billiton Holdings Pty Ltd - Australia
- Central Java Power - Indonesia
- Renaissance Capital - South Africa
- Marubeni Corporation - India
- Global Green Power PLC Corporation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Jorong Barutama Greston.PT - Indonesia
- Economic Council, Georgia
- Coal and Oil Company - UAE
- Bahari Cakrawala Sebuku - Indonesia
- Intertek Mineral Services - Indonesia
- Grasim Industreis Ltd - India
- Malabar Cements Ltd - India
- Africa Commodities Group - South Africa
- Semirara Mining Corp, Philippines
- Karaikal Port Pvt Ltd - India
- Therma Luzon, Inc, Philippines
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