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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, 14 August 11
SUPRAMAX CHARTER RATES SHARPLY UP - CAPT.REDDY
COALspot.com - The BDI ended positive with gains in Cape and Panamax index. The BDI was up by 1.50 pct and the cape and panamax index was up by almo ...
Saturday, 13 August 11
GMR HAS ENTERED INTO CSPA WITH GEMS TO ACQUIRE 30% STAKE
COALspot.com - GMR Infrastructure Investments (Singapore) Pte Ltd, a subsidiary of GMR Infrastructure, has signed conditional sale and purchase agre ...
Friday, 12 August 11
COAL MINERS WILL ALLOW TO CONSTRUCT MINE MOUTH POWER PLANT
COALspot.com - The government is set to draft a regulation to enable construction of steam-fired power plants (PLTU) by coal mining companies for th ...
Friday, 12 August 11
CAPESIZE DEMAND HELPS LIFTING OF DRY BULK MARKET - HELLENIC SHIPPING NEWS
The dry bulk market has recovered a small fraction of its lost ground this week, with higher returns as a result of increased capesize demand. This ...
Thursday, 11 August 11
INDO TAMBANGRAYA 1H NET PROFIT SOARS 53.09%
Coal miner PT Indo Tambangraya Megah Tbk (ITMG) today reported a 53.09% jump in net profit for the first 6 months of this year on the back of higher ...
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- Barasentosa Lestari - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Parliament of New Zealand
- Kartika Selabumi Mining - Indonesia
- Vizag Seaport Private Limited - India
- Grasim Industreis Ltd - India
- India Bulls Power Limited - India
- Agrawal Coal Company - India
- Simpson Spence & Young - Indonesia
- Indogreen Group - Indonesia
- Coal and Oil Company - UAE
- Georgia Ports Authority, United States
- Thiess Contractors Indonesia
- Holcim Trading Pte Ltd - Singapore
- Samtan Co., Ltd - South Korea
- LBH Netherlands Bv - Netherlands
- Power Finance Corporation Ltd., India
- Videocon Industries ltd - India
- Xindia Steels Limited - India
- White Energy Company Limited
- Straits Asia Resources Limited - Singapore
- Kideco Jaya Agung - Indonesia
- Energy Development Corp, Philippines
- SMG Consultants - Indonesia
- Energy Link Ltd, New Zealand
- Globalindo Alam Lestari - Indonesia
- Sakthi Sugars Limited - India
- Orica Mining Services - Indonesia
- Goldman Sachs - Singapore
- Kapuas Tunggal Persada - Indonesia
- Bhushan Steel Limited - India
- Electricity Authority, New Zealand
- Baramulti Group, Indonesia
- Coalindo Energy - Indonesia
- Salva Resources Pvt Ltd - India
- McConnell Dowell - Australia
- Meenaskhi Energy Private Limited - India
- Sarangani Energy Corporation, Philippines
- Savvy Resources Ltd - HongKong
- Aditya Birla Group - India
- Cement Manufacturers Association - India
- Parry Sugars Refinery, India
- Port Waratah Coal Services - Australia
- The State Trading Corporation of India Ltd
- Merrill Lynch Commodities Europe
- Anglo American - United Kingdom
- Manunggal Multi Energi - Indonesia
- Vedanta Resources Plc - India
- Bukit Asam (Persero) Tbk - Indonesia
- Trasteel International SA, Italy
- Standard Chartered Bank - UAE
- Mercuria Energy - Indonesia
- Wilmar Investment Holdings
- Makarim & Taira - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Toyota Tsusho Corporation, Japan
- Medco Energi Mining Internasional
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Rio Tinto Coal - Australia
- Sindya Power Generating Company Private Ltd
- ICICI Bank Limited - India
- Jindal Steel & Power Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- AsiaOL BioFuels Corp., Philippines
- OPG Power Generation Pvt Ltd - India
- GMR Energy Limited - India
- Bulk Trading Sa - Switzerland
- Sical Logistics Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Intertek Mineral Services - Indonesia
- CIMB Investment Bank - Malaysia
- Central Java Power - Indonesia
- Central Electricity Authority - India
- Kepco SPC Power Corporation, Philippines
- Ministry of Transport, Egypt
- Latin American Coal - Colombia
- Independent Power Producers Association of India
- Indian Oil Corporation Limited
- PTC India Limited - India
- SMC Global Power, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Banpu Public Company Limited - Thailand
- Eastern Energy - Thailand
- Economic Council, Georgia
- Gujarat Sidhee Cement - India
- Sree Jayajothi Cements Limited - India
- Planning Commission, India
- Jorong Barutama Greston.PT - Indonesia
- Heidelberg Cement - Germany
- Wood Mackenzie - Singapore
- Global Green Power PLC Corporation, Philippines
- Bharathi Cement Corporation - India
- London Commodity Brokers - England
- GN Power Mariveles Coal Plant, Philippines
- Marubeni Corporation - India
- Chamber of Mines of South Africa
- Offshore Bulk Terminal Pte Ltd, Singapore
- TNB Fuel Sdn Bhd - Malaysia
- Karbindo Abesyapradhi - Indoneisa
- Mintek Dendrill Indonesia
- Electricity Generating Authority of Thailand
- GAC Shipping (India) Pvt Ltd
- Bangladesh Power Developement Board
- Maharashtra Electricity Regulatory Commission - India
- Gujarat Electricity Regulatory Commission - India
- Coastal Gujarat Power Limited - India
- Tata Chemicals Ltd - India
- European Bulk Services B.V. - Netherlands
- Sojitz Corporation - Japan
- Australian Commodity Traders Exchange
- Jaiprakash Power Ventures ltd
- Posco Energy - South Korea
- Leighton Contractors Pty Ltd - Australia
- Attock Cement Pakistan Limited
- Star Paper Mills Limited - India
- Renaissance Capital - South Africa
- Siam City Cement - Thailand
- Kalimantan Lumbung Energi - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Ind-Barath Power Infra Limited - India
- GVK Power & Infra Limited - India
- Australian Coal Association
- Madhucon Powers Ltd - India
- Bukit Makmur.PT - Indonesia
- Larsen & Toubro Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bhatia International Limited - India
- Indo Tambangraya Megah - Indonesia
- Rashtriya Ispat Nigam Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Formosa Plastics Group - Taiwan
- Romanian Commodities Exchange
- Ceylon Electricity Board - Sri Lanka
- Uttam Galva Steels Limited - India
- ASAPP Information Group - India
- Thai Mozambique Logistica
- Petrochimia International Co. Ltd.- Taiwan
- Singapore Mercantile Exchange
- Kobexindo Tractors - Indoneisa
- Meralco Power Generation, Philippines
- Indika Energy - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Semirara Mining Corp, Philippines
- Africa Commodities Group - South Africa
- Billiton Holdings Pty Ltd - Australia
- PowerSource Philippines DevCo
- Carbofer General Trading SA - India
- Kumho Petrochemical, South Korea
- Malabar Cements Ltd - India
- Pendopo Energi Batubara - Indonesia
- Timah Investasi Mineral - Indoneisa
- Therma Luzon, Inc, Philippines
- New Zealand Coal & Carbon
- Directorate Of Revenue Intelligence - India
- Antam Resourcindo - Indonesia
- International Coal Ventures Pvt Ltd - India
- Chettinad Cement Corporation Ltd - India
- Global Business Power Corporation, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Karaikal Port Pvt Ltd - India
- Deloitte Consulting - India
- Global Coal Blending Company Limited - Australia
- CNBM International Corporation - China
- The University of Queensland
- Bhoruka Overseas - Indonesia
- Minerals Council of Australia
- Maheswari Brothers Coal Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Mjunction Services Limited - India
- Bayan Resources Tbk. - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- South Luzon Thermal Energy Corporation
- MS Steel International - UAE
- IEA Clean Coal Centre - UK
- Ministry of Mines - Canada
- VISA Power Limited - India
- Krishnapatnam Port Company Ltd. - India
- SN Aboitiz Power Inc, Philippines
- Indonesian Coal Mining Association
- Binh Thuan Hamico - Vietnam
- Siam City Cement PLC, Thailand
- Semirara Mining and Power Corporation, Philippines
- Oldendorff Carriers - Singapore
- Pipit Mutiara Jaya. PT, Indonesia
- Orica Australia Pty. Ltd.
- Ministry of Finance - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Metalloyd Limited - United Kingdom
- Altura Mining Limited, Indonesia
- Iligan Light & Power Inc, Philippines
- TeaM Sual Corporation - Philippines
- Indian Energy Exchange, India
- The Treasury - Australian Government
- Interocean Group of Companies - India
- Kaltim Prima Coal - Indonesia
- PNOC Exploration Corporation - Philippines
- Commonwealth Bank - Australia
- IHS Mccloskey Coal Group - USA
- Borneo Indobara - Indonesia
- Dalmia Cement Bharat India
- Aboitiz Power Corporation - Philippines
- Essar Steel Hazira Ltd - India
- Price Waterhouse Coopers - Russia
- Petron Corporation, Philippines
- Riau Bara Harum - Indonesia
- Tamil Nadu electricity Board
- Bahari Cakrawala Sebuku - Indonesia
- Mercator Lines Limited - India
- San Jose City I Power Corp, Philippines
- Lanco Infratech Ltd - India
- Bukit Baiduri Energy - Indonesia
- Ambuja Cements Ltd - India
- Edison Trading Spa - Italy
- Eastern Coal Council - USA
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