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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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Friday, 05 August 11
THE WORLDS LARGEST COAL MINER TO INVEST IN INDO MINES
COALspot.com - Golden Energy Mines (GEMS) might go for initial public offering (IPO) by the end of September 2011. The company is planning to off lo ...
Friday, 05 August 11
DRY BULK MARKET FINALLY TAKES A BREATHER - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market at last caught a break mid-week after a constant fall which saw the industry’s benchmark, the BDI (Baltic Dry Index) falli ...
Thursday, 04 August 11
THE HBA CONTINUES TO FALL IN AUGUST
COALspot.com - Ministry of Energy and Mineral Resources of Indonesia has set the August 2011 coal reference price at US$ 117.21 per ton slightly low ...
Wednesday, 03 August 11
DEWA RETURNS TO US$2.65 MIO NET PROFIT - INSIDER STORIES
Coal mining contractor PT Darma Henwa Tbk (DEWA), that most of its revenue is contributed by Kaltim Prima Coal and Arutmin Indonesia, returned to ne ...
Wednesday, 03 August 11
DRY BULK MARKET SINKS TO THREE-MONTH LOWS, BUT CAPESIZES COULD TURN THINGS AROUND - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market kept on falling this week, on the back of slow cargo demand amid the summer season. Yesterday, the BDI (Baltic Dry Index), the i ...
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- Billiton Holdings Pty Ltd - Australia
- Bulk Trading Sa - Switzerland
- Jaiprakash Power Ventures ltd
- Baramulti Group, Indonesia
- Carbofer General Trading SA - India
- Power Finance Corporation Ltd., India
- Videocon Industries ltd - India
- Bhushan Steel Limited - India
- Aditya Birla Group - India
- Ind-Barath Power Infra Limited - India
- Oldendorff Carriers - Singapore
- Energy Development Corp, Philippines
- Africa Commodities Group - South Africa
- PTC India Limited - India
- Australian Coal Association
- Iligan Light & Power Inc, Philippines
- Miang Besar Coal Terminal - Indonesia
- Grasim Industreis Ltd - India
- Jindal Steel & Power Ltd - India
- Latin American Coal - Colombia
- Sical Logistics Limited - India
- Kaltim Prima Coal - Indonesia
- Barasentosa Lestari - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Thiess Contractors Indonesia
- ICICI Bank Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Krishnapatnam Port Company Ltd. - India
- PetroVietnam Power Coal Import and Supply Company
- Xindia Steels Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- International Coal Ventures Pvt Ltd - India
- Lanco Infratech Ltd - India
- The Treasury - Australian Government
- Formosa Plastics Group - Taiwan
- GN Power Mariveles Coal Plant, Philippines
- GMR Energy Limited - India
- Singapore Mercantile Exchange
- Maheswari Brothers Coal Limited - India
- Siam City Cement PLC, Thailand
- Agrawal Coal Company - India
- Karaikal Port Pvt Ltd - India
- Sree Jayajothi Cements Limited - India
- Globalindo Alam Lestari - Indonesia
- Bangladesh Power Developement Board
- Malabar Cements Ltd - India
- Eastern Energy - Thailand
- OPG Power Generation Pvt Ltd - India
- TeaM Sual Corporation - Philippines
- Leighton Contractors Pty Ltd - Australia
- Ceylon Electricity Board - Sri Lanka
- Bukit Makmur.PT - Indonesia
- San Jose City I Power Corp, Philippines
- Port Waratah Coal Services - Australia
- Savvy Resources Ltd - HongKong
- Parry Sugars Refinery, India
- SN Aboitiz Power Inc, Philippines
- Merrill Lynch Commodities Europe
- Wilmar Investment Holdings
- Petrochimia International Co. Ltd.- Taiwan
- PNOC Exploration Corporation - Philippines
- Georgia Ports Authority, United States
- Kepco SPC Power Corporation, Philippines
- Indian Energy Exchange, India
- CIMB Investment Bank - Malaysia
- Vijayanagar Sugar Pvt Ltd - India
- Anglo American - United Kingdom
- Renaissance Capital - South Africa
- Directorate Of Revenue Intelligence - India
- Parliament of New Zealand
- Independent Power Producers Association of India
- South Luzon Thermal Energy Corporation
- Thai Mozambique Logistica
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Indian Oil Corporation Limited
- Commonwealth Bank - Australia
- Price Waterhouse Coopers - Russia
- Intertek Mineral Services - Indonesia
- CNBM International Corporation - China
- Ministry of Finance - Indonesia
- Planning Commission, India
- Semirara Mining and Power Corporation, Philippines
- GAC Shipping (India) Pvt Ltd
- Uttam Galva Steels Limited - India
- Bhatia International Limited - India
- Simpson Spence & Young - Indonesia
- Mjunction Services Limited - India
- Holcim Trading Pte Ltd - Singapore
- Madhucon Powers Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Indogreen Group - Indonesia
- Kobexindo Tractors - Indoneisa
- Karbindo Abesyapradhi - Indoneisa
- White Energy Company Limited
- Pendopo Energi Batubara - Indonesia
- India Bulls Power Limited - India
- Therma Luzon, Inc, Philippines
- Bharathi Cement Corporation - India
- Sarangani Energy Corporation, Philippines
- Rio Tinto Coal - Australia
- Kapuas Tunggal Persada - Indonesia
- Straits Asia Resources Limited - Singapore
- Central Electricity Authority - India
- European Bulk Services B.V. - Netherlands
- Mercator Lines Limited - India
- Aboitiz Power Corporation - Philippines
- Indika Energy - Indonesia
- Posco Energy - South Korea
- Bank of Tokyo Mitsubishi UFJ Ltd
- Essar Steel Hazira Ltd - India
- Goldman Sachs - Singapore
- Makarim & Taira - Indonesia
- McConnell Dowell - Australia
- Orica Mining Services - Indonesia
- The State Trading Corporation of India Ltd
- Meralco Power Generation, Philippines
- Minerals Council of Australia
- ASAPP Information Group - India
- Dalmia Cement Bharat India
- Economic Council, Georgia
- VISA Power Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- MS Steel International - UAE
- Petron Corporation, Philippines
- Banpu Public Company Limited - Thailand
- Manunggal Multi Energi - Indonesia
- Salva Resources Pvt Ltd - India
- Meenaskhi Energy Private Limited - India
- Global Coal Blending Company Limited - Australia
- Asmin Koalindo Tuhup - Indonesia
- Standard Chartered Bank - UAE
- Deloitte Consulting - India
- IEA Clean Coal Centre - UK
- Tata Chemicals Ltd - India
- Global Business Power Corporation, Philippines
- Chettinad Cement Corporation Ltd - India
- Romanian Commodities Exchange
- Electricity Generating Authority of Thailand
- Central Java Power - Indonesia
- Ministry of Mines - Canada
- Bukit Asam (Persero) Tbk - Indonesia
- Bhoruka Overseas - Indonesia
- Coal and Oil Company - UAE
- Binh Thuan Hamico - Vietnam
- Star Paper Mills Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Kalimantan Lumbung Energi - Indonesia
- GVK Power & Infra Limited - India
- Antam Resourcindo - Indonesia
- New Zealand Coal & Carbon
- Ambuja Cements Ltd - India
- Coastal Gujarat Power Limited - India
- Riau Bara Harum - Indonesia
- Siam City Cement - Thailand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Tamil Nadu electricity Board
- Bayan Resources Tbk. - Indonesia
- Energy Link Ltd, New Zealand
- Australian Commodity Traders Exchange
- LBH Netherlands Bv - Netherlands
- Ministry of Transport, Egypt
- Eastern Coal Council - USA
- Mercuria Energy - Indonesia
- Semirara Mining Corp, Philippines
- Kartika Selabumi Mining - Indonesia
- Marubeni Corporation - India
- SMC Global Power, Philippines
- Sakthi Sugars Limited - India
- Edison Trading Spa - Italy
- Kideco Jaya Agung - Indonesia
- Kumho Petrochemical, South Korea
- Sojitz Corporation - Japan
- SMG Consultants - Indonesia
- Samtan Co., Ltd - South Korea
- Larsen & Toubro Limited - India
- Vizag Seaport Private Limited - India
- Altura Mining Limited, Indonesia
- Vedanta Resources Plc - India
- Heidelberg Cement - Germany
- Cigading International Bulk Terminal - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Chamber of Mines of South Africa
- PowerSource Philippines DevCo
- Alfred C Toepfer International GmbH - Germany
- Electricity Authority, New Zealand
- Metalloyd Limited - United Kingdom
- Timah Investasi Mineral - Indoneisa
- Sindya Power Generating Company Private Ltd
- London Commodity Brokers - England
- Maharashtra Electricity Regulatory Commission - India
- Rashtriya Ispat Nigam Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Indo Tambangraya Megah - Indonesia
- IHS Mccloskey Coal Group - USA
- Attock Cement Pakistan Limited
- Medco Energi Mining Internasional
- Gujarat Electricity Regulatory Commission - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Borneo Indobara - Indonesia
- Cement Manufacturers Association - India
- Neyveli Lignite Corporation Ltd, - India
- Wood Mackenzie - Singapore
- Orica Australia Pty. Ltd.
- Mintek Dendrill Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Interocean Group of Companies - India
- Bahari Cakrawala Sebuku - Indonesia
- Toyota Tsusho Corporation, Japan
- Sinarmas Energy and Mining - Indonesia
- Indonesian Coal Mining Association
- Gujarat Sidhee Cement - India
- The University of Queensland
- Trasteel International SA, Italy
- Coalindo Energy - Indonesia
- Global Green Power PLC Corporation, Philippines
- Bukit Baiduri Energy - Indonesia
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