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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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Thursday, 08 September 11
TRADA MARITIME BUYS GUNUNG BARA UTAMA
Insider Stories reported that, PT Trada Maritime Tbk (TRAM) has purchased convertible bonds issued by PT Awesome Coal from Zakia Limited. The memora ...
Thursday, 08 September 11
PETROSEA ADDS US$730 MIO CONTRACT
Coal mining contractor PT Petrosea Tbk (PTRO), a majority owned subsidiary of energy integrated company PT Indika Energy Tbk (INDY), has secured a U ...
Wednesday, 07 September 11
ANOTHER EXCEPTIONALLY STRONG WEEK FOR THE CAPESIZE MARKET - BRS
The very strong rise in Cape rates pushed through an overall improvement in the BDI this week, although relatively little benefit from the Capes has ...
Wednesday, 07 September 11
INDIA HIT BY INDONESIAS COAL PRICE - TEMPO INTERACTIVE
TEMPO Interactive, an Indonesian online news portal reported that, The Indian government has complained about the price increase of Indonesian coal, ...
Wednesday, 07 September 11
SAMPUR POWER AGREEMENT SIGNED - DAILY NEWS
Daily News, Sri Lank's national news paper reported that, the agreement for the setting up of a 500 MW coal-fired power plant at Sampur, Trincomale ...
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- Marubeni Corporation - India
- Directorate Of Revenue Intelligence - India
- Bharathi Cement Corporation - India
- Vedanta Resources Plc - India
- Chamber of Mines of South Africa
- Bank of Tokyo Mitsubishi UFJ Ltd
- Tata Chemicals Ltd - India
- Indian Energy Exchange, India
- Coastal Gujarat Power Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Orica Australia Pty. Ltd.
- TNB Fuel Sdn Bhd - Malaysia
- LBH Netherlands Bv - Netherlands
- Holcim Trading Pte Ltd - Singapore
- Vijayanagar Sugar Pvt Ltd - India
- Pendopo Energi Batubara - Indonesia
- Coal and Oil Company - UAE
- Merrill Lynch Commodities Europe
- Bayan Resources Tbk. - Indonesia
- White Energy Company Limited
- Aditya Birla Group - India
- Interocean Group of Companies - India
- Bhatia International Limited - India
- Maharashtra Electricity Regulatory Commission - India
- SN Aboitiz Power Inc, Philippines
- Anglo American - United Kingdom
- AsiaOL BioFuels Corp., Philippines
- Edison Trading Spa - Italy
- PetroVietnam Power Coal Import and Supply Company
- Manunggal Multi Energi - Indonesia
- Sarangani Energy Corporation, Philippines
- McConnell Dowell - Australia
- Port Waratah Coal Services - Australia
- Singapore Mercantile Exchange
- Malabar Cements Ltd - India
- San Jose City I Power Corp, Philippines
- Eastern Coal Council - USA
- Economic Council, Georgia
- Ministry of Mines - Canada
- Posco Energy - South Korea
- Semirara Mining Corp, Philippines
- Siam City Cement - Thailand
- Meenaskhi Energy Private Limited - India
- Parry Sugars Refinery, India
- Meralco Power Generation, Philippines
- Salva Resources Pvt Ltd - India
- Africa Commodities Group - South Africa
- Mintek Dendrill Indonesia
- Aboitiz Power Corporation - Philippines
- Globalindo Alam Lestari - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Uttam Galva Steels Limited - India
- Kapuas Tunggal Persada - Indonesia
- Kepco SPC Power Corporation, Philippines
- OPG Power Generation Pvt Ltd - India
- Indian Oil Corporation Limited
- Trasteel International SA, Italy
- Global Business Power Corporation, Philippines
- Goldman Sachs - Singapore
- Rio Tinto Coal - Australia
- London Commodity Brokers - England
- Indogreen Group - Indonesia
- Therma Luzon, Inc, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Pipit Mutiara Jaya. PT, Indonesia
- Petron Corporation, Philippines
- GMR Energy Limited - India
- Ind-Barath Power Infra Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- MS Steel International - UAE
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Sree Jayajothi Cements Limited - India
- ICICI Bank Limited - India
- Binh Thuan Hamico - Vietnam
- Asmin Koalindo Tuhup - Indonesia
- Mercuria Energy - Indonesia
- Jaiprakash Power Ventures ltd
- Gujarat Electricity Regulatory Commission - India
- GN Power Mariveles Coal Plant, Philippines
- Heidelberg Cement - Germany
- Kartika Selabumi Mining - Indonesia
- GAC Shipping (India) Pvt Ltd
- Toyota Tsusho Corporation, Japan
- Power Finance Corporation Ltd., India
- Videocon Industries ltd - India
- India Bulls Power Limited - India
- Miang Besar Coal Terminal - Indonesia
- Price Waterhouse Coopers - Russia
- Billiton Holdings Pty Ltd - Australia
- IHS Mccloskey Coal Group - USA
- European Bulk Services B.V. - Netherlands
- Simpson Spence & Young - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Energy Development Corp, Philippines
- Oldendorff Carriers - Singapore
- The University of Queensland
- Australian Commodity Traders Exchange
- Formosa Plastics Group - Taiwan
- Bahari Cakrawala Sebuku - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Electricity Authority, New Zealand
- PTC India Limited - India
- Bhoruka Overseas - Indonesia
- Semirara Mining and Power Corporation, Philippines
- ASAPP Information Group - India
- Bukit Asam (Persero) Tbk - Indonesia
- Ambuja Cements Ltd - India
- Commonwealth Bank - Australia
- Chettinad Cement Corporation Ltd - India
- New Zealand Coal & Carbon
- Parliament of New Zealand
- Riau Bara Harum - Indonesia
- Sindya Power Generating Company Private Ltd
- Thiess Contractors Indonesia
- Global Coal Blending Company Limited - Australia
- Xindia Steels Limited - India
- Sakthi Sugars Limited - India
- Timah Investasi Mineral - Indoneisa
- Ministry of Finance - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Ministry of Transport, Egypt
- Mercator Lines Limited - India
- Metalloyd Limited - United Kingdom
- Essar Steel Hazira Ltd - India
- Central Electricity Authority - India
- Maheswari Brothers Coal Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Jindal Steel & Power Ltd - India
- Star Paper Mills Limited - India
- Indo Tambangraya Megah - Indonesia
- PowerSource Philippines DevCo
- Bukit Makmur.PT - Indonesia
- Minerals Council of Australia
- Australian Coal Association
- Independent Power Producers Association of India
- Directorate General of MIneral and Coal - Indonesia
- Antam Resourcindo - Indonesia
- Central Java Power - Indonesia
- Bulk Trading Sa - Switzerland
- Planning Commission, India
- Kohat Cement Company Ltd. - Pakistan
- Straits Asia Resources Limited - Singapore
- Bangladesh Power Developement Board
- Wilmar Investment Holdings
- Romanian Commodities Exchange
- Cigading International Bulk Terminal - Indonesia
- Baramulti Group, Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Karaikal Port Pvt Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Ceylon Electricity Board - Sri Lanka
- Iligan Light & Power Inc, Philippines
- Renaissance Capital - South Africa
- Mjunction Services Limited - India
- SMC Global Power, Philippines
- Orica Mining Services - Indonesia
- Kideco Jaya Agung - Indonesia
- Georgia Ports Authority, United States
- Gujarat Sidhee Cement - India
- IEA Clean Coal Centre - UK
- Madhucon Powers Ltd - India
- Kobexindo Tractors - Indoneisa
- Sojitz Corporation - Japan
- Global Green Power PLC Corporation, Philippines
- Samtan Co., Ltd - South Korea
- Kumho Petrochemical, South Korea
- Indika Energy - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Thai Mozambique Logistica
- Energy Link Ltd, New Zealand
- Standard Chartered Bank - UAE
- Makarim & Taira - Indonesia
- Medco Energi Mining Internasional
- CNBM International Corporation - China
- Bukit Baiduri Energy - Indonesia
- Deloitte Consulting - India
- TeaM Sual Corporation - Philippines
- Larsen & Toubro Limited - India
- Grasim Industreis Ltd - India
- VISA Power Limited - India
- PNOC Exploration Corporation - Philippines
- Latin American Coal - Colombia
- GVK Power & Infra Limited - India
- Agrawal Coal Company - India
- Carbofer General Trading SA - India
- The Treasury - Australian Government
- Coalindo Energy - Indonesia
- Intertek Mineral Services - Indonesia
- Banpu Public Company Limited - Thailand
- Kaltim Prima Coal - Indonesia
- International Coal Ventures Pvt Ltd - India
- South Luzon Thermal Energy Corporation
- Cement Manufacturers Association - India
- Tamil Nadu electricity Board
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Siam City Cement PLC, Thailand
- Attock Cement Pakistan Limited
- Bhushan Steel Limited - India
- Leighton Contractors Pty Ltd - Australia
- Altura Mining Limited, Indonesia
- Vizag Seaport Private Limited - India
- Indonesian Coal Mining Association
- Barasentosa Lestari - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Eastern Energy - Thailand
- Wood Mackenzie - Singapore
- Electricity Generating Authority of Thailand
- Sinarmas Energy and Mining - Indonesia
- Savvy Resources Ltd - HongKong
- Borneo Indobara - Indonesia
- The State Trading Corporation of India Ltd
- Lanco Infratech Ltd - India
- SMG Consultants - Indonesia
- Dalmia Cement Bharat India
- Sical Logistics Limited - India
- CIMB Investment Bank - Malaysia
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