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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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Sunday, 28 August 11
FREIGHT MARKET COULD BE FIRM NEXT MONTH - VISTAAR
COALspot.com - The freight market continued the upward trend first half of the week . However, towards the end of the week lost momentum and the BDI ...
Saturday, 27 August 11
JAPANESE BULK CARRIER SETS RECORD ON NORTHERN SEA ROUTE - BARENTS OBSERVER
The Northern Sea Route will see its third record in less than a month when the largest ever bulk carrier to take the route leaves Murmansk next week ...
Saturday, 27 August 11
RBCT-INDIA ROUNDS FIXED AT AROUND US$ 12K - FEARNBULK
Handy
Stable but very positional markets across all segments in the Atlantic: the gap between owners and charterers rate ideas is building up as o ...
Friday, 26 August 11
TUAH TURANGGA AGUNG ACQUIRES AN ADDITIONAL 40% SHARES IN BARA PRIMA AGUNG
COALspot.com - PT Tuah Turangga Agung, a subsidiary of PT United Tractors Tbk, has signed an acquisition agreement to acquire 40% of PT Bara Prima A ...
Friday, 26 August 11
INTRACO EYES US$200 MIO COAL TAKEOVER - INSIDER STORIES
Heavy equipment distributor PT Intraco Penta Tbk, that was founded by Halex Halim, is scouting a coal acquisition with the valuation above US$200 mi ...
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- Meenaskhi Energy Private Limited - India
- Cigading International Bulk Terminal - Indonesia
- MS Steel International - UAE
- Economic Council, Georgia
- Billiton Holdings Pty Ltd - Australia
- Bahari Cakrawala Sebuku - Indonesia
- Global Coal Blending Company Limited - Australia
- Eastern Energy - Thailand
- Barasentosa Lestari - Indonesia
- Altura Mining Limited, Indonesia
- IHS Mccloskey Coal Group - USA
- Mercator Lines Limited - India
- Chamber of Mines of South Africa
- Minerals Council of Australia
- Bhatia International Limited - India
- Power Finance Corporation Ltd., India
- The University of Queensland
- Karaikal Port Pvt Ltd - India
- Baramulti Group, Indonesia
- Leighton Contractors Pty Ltd - Australia
- Bulk Trading Sa - Switzerland
- Coalindo Energy - Indonesia
- Central Electricity Authority - India
- Posco Energy - South Korea
- Formosa Plastics Group - Taiwan
- Gujarat Electricity Regulatory Commission - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- The State Trading Corporation of India Ltd
- Antam Resourcindo - Indonesia
- Iligan Light & Power Inc, Philippines
- Ministry of Finance - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- India Bulls Power Limited - India
- Orica Mining Services - Indonesia
- Parry Sugars Refinery, India
- Petrochimia International Co. Ltd.- Taiwan
- Kapuas Tunggal Persada - Indonesia
- London Commodity Brokers - England
- Sarangani Energy Corporation, Philippines
- Singapore Mercantile Exchange
- The Treasury - Australian Government
- Vijayanagar Sugar Pvt Ltd - India
- South Luzon Thermal Energy Corporation
- Sical Logistics Limited - India
- Indian Energy Exchange, India
- Eastern Coal Council - USA
- Holcim Trading Pte Ltd - Singapore
- Intertek Mineral Services - Indonesia
- Gujarat Sidhee Cement - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- ASAPP Information Group - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Deloitte Consulting - India
- Australian Coal Association
- Oldendorff Carriers - Singapore
- SMG Consultants - Indonesia
- Planning Commission, India
- Bukit Makmur.PT - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Petron Corporation, Philippines
- Semirara Mining Corp, Philippines
- SN Aboitiz Power Inc, Philippines
- Romanian Commodities Exchange
- Xindia Steels Limited - India
- Vedanta Resources Plc - India
- SMC Global Power, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- PTC India Limited - India
- Meralco Power Generation, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Aditya Birla Group - India
- GAC Shipping (India) Pvt Ltd
- Sindya Power Generating Company Private Ltd
- Videocon Industries ltd - India
- Africa Commodities Group - South Africa
- Coastal Gujarat Power Limited - India
- Bhoruka Overseas - Indonesia
- Uttam Galva Steels Limited - India
- PowerSource Philippines DevCo
- Grasim Industreis Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Georgia Ports Authority, United States
- GN Power Mariveles Coal Plant, Philippines
- Medco Energi Mining Internasional
- Price Waterhouse Coopers - Russia
- Pendopo Energi Batubara - Indonesia
- Goldman Sachs - Singapore
- Latin American Coal - Colombia
- Ind-Barath Power Infra Limited - India
- Merrill Lynch Commodities Europe
- Renaissance Capital - South Africa
- Siam City Cement - Thailand
- Cement Manufacturers Association - India
- Star Paper Mills Limited - India
- Standard Chartered Bank - UAE
- Edison Trading Spa - Italy
- Global Business Power Corporation, Philippines
- Siam City Cement PLC, Thailand
- Therma Luzon, Inc, Philippines
- GMR Energy Limited - India
- New Zealand Coal & Carbon
- Indian Oil Corporation Limited
- Miang Besar Coal Terminal - Indonesia
- Indika Energy - Indonesia
- Coal and Oil Company - UAE
- Heidelberg Cement - Germany
- Sree Jayajothi Cements Limited - India
- Rio Tinto Coal - Australia
- IEA Clean Coal Centre - UK
- Jindal Steel & Power Ltd - India
- Simpson Spence & Young - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Independent Power Producers Association of India
- Ministry of Mines - Canada
- White Energy Company Limited
- Essar Steel Hazira Ltd - India
- Kaltim Prima Coal - Indonesia
- Thiess Contractors Indonesia
- Binh Thuan Hamico - Vietnam
- Salva Resources Pvt Ltd - India
- Vizag Seaport Private Limited - India
- Electricity Authority, New Zealand
- Energy Development Corp, Philippines
- Kartika Selabumi Mining - Indonesia
- Parliament of New Zealand
- Global Green Power PLC Corporation, Philippines
- Bharathi Cement Corporation - India
- Ministry of Transport, Egypt
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Timah Investasi Mineral - Indoneisa
- Semirara Mining and Power Corporation, Philippines
- Samtan Co., Ltd - South Korea
- Alfred C Toepfer International GmbH - Germany
- TeaM Sual Corporation - Philippines
- Sojitz Corporation - Japan
- CIMB Investment Bank - Malaysia
- Globalindo Alam Lestari - Indonesia
- European Bulk Services B.V. - Netherlands
- Bayan Resources Tbk. - Indonesia
- Tamil Nadu electricity Board
- GVK Power & Infra Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Commonwealth Bank - Australia
- Indo Tambangraya Megah - Indonesia
- LBH Netherlands Bv - Netherlands
- Anglo American - United Kingdom
- Carbofer General Trading SA - India
- CNBM International Corporation - China
- PNOC Exploration Corporation - Philippines
- Indogreen Group - Indonesia
- Marubeni Corporation - India
- OPG Power Generation Pvt Ltd - India
- Electricity Generating Authority of Thailand
- Aboitiz Power Corporation - Philippines
- Karbindo Abesyapradhi - Indoneisa
- Australian Commodity Traders Exchange
- Kobexindo Tractors - Indoneisa
- San Jose City I Power Corp, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Maheswari Brothers Coal Limited - India
- Interocean Group of Companies - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- AsiaOL BioFuels Corp., Philippines
- Kideco Jaya Agung - Indonesia
- McConnell Dowell - Australia
- Bangladesh Power Developement Board
- Chettinad Cement Corporation Ltd - India
- Riau Bara Harum - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Agrawal Coal Company - India
- Central Java Power - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Lanco Infratech Ltd - India
- Banpu Public Company Limited - Thailand
- Ambuja Cements Ltd - India
- Kepco SPC Power Corporation, Philippines
- Larsen & Toubro Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Mjunction Services Limited - India
- Sakthi Sugars Limited - India
- Krishnapatnam Port Company Ltd. - India
- Makarim & Taira - Indonesia
- Tata Chemicals Ltd - India
- Bhushan Steel Limited - India
- Indonesian Coal Mining Association
- Bukit Baiduri Energy - Indonesia
- Orica Australia Pty. Ltd.
- Dalmia Cement Bharat India
- Jaiprakash Power Ventures ltd
- Savvy Resources Ltd - HongKong
- Wilmar Investment Holdings
- PetroVietnam Power Coal Import and Supply Company
- Trasteel International SA, Italy
- Directorate Of Revenue Intelligence - India
- Mercuria Energy - Indonesia
- Kumho Petrochemical, South Korea
- Attock Cement Pakistan Limited
- Port Waratah Coal Services - Australia
- Toyota Tsusho Corporation, Japan
- Madhucon Powers Ltd - India
- Borneo Indobara - Indonesia
- Mintek Dendrill Indonesia
- Metalloyd Limited - United Kingdom
- Manunggal Multi Energi - Indonesia
- ICICI Bank Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Straits Asia Resources Limited - Singapore
- VISA Power Limited - India
- Thai Mozambique Logistica
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- International Coal Ventures Pvt Ltd - India
- Energy Link Ltd, New Zealand
- Wood Mackenzie - Singapore
- Malabar Cements Ltd - India
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