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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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- Vijayanagar Sugar Pvt Ltd - India
- Siam City Cement PLC, Thailand
- London Commodity Brokers - England
- Barasentosa Lestari - Indonesia
- Price Waterhouse Coopers - Russia
- Sree Jayajothi Cements Limited - India
- Renaissance Capital - South Africa
- Romanian Commodities Exchange
- Uttam Galva Steels Limited - India
- Gujarat Sidhee Cement - India
- VISA Power Limited - India
- GVK Power & Infra Limited - India
- Orica Mining Services - Indonesia
- Global Coal Blending Company Limited - Australia
- GAC Shipping (India) Pvt Ltd
- GN Power Mariveles Coal Plant, Philippines
- Rio Tinto Coal - Australia
- Bukit Asam (Persero) Tbk - Indonesia
- Jindal Steel & Power Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Parry Sugars Refinery, India
- Kumho Petrochemical, South Korea
- The University of Queensland
- Cement Manufacturers Association - India
- Ministry of Transport, Egypt
- Lanco Infratech Ltd - India
- South Luzon Thermal Energy Corporation
- International Coal Ventures Pvt Ltd - India
- Timah Investasi Mineral - Indoneisa
- IHS Mccloskey Coal Group - USA
- Essar Steel Hazira Ltd - India
- Mjunction Services Limited - India
- Meenaskhi Energy Private Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Parliament of New Zealand
- Therma Luzon, Inc, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Sakthi Sugars Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Tamil Nadu electricity Board
- Leighton Contractors Pty Ltd - Australia
- Merrill Lynch Commodities Europe
- Goldman Sachs - Singapore
- Wilmar Investment Holdings
- Kartika Selabumi Mining - Indonesia
- Banpu Public Company Limited - Thailand
- Orica Australia Pty. Ltd.
- Indonesian Coal Mining Association
- Salva Resources Pvt Ltd - India
- Global Business Power Corporation, Philippines
- Central Electricity Authority - India
- Formosa Plastics Group - Taiwan
- Karaikal Port Pvt Ltd - India
- Bhatia International Limited - India
- Indogreen Group - Indonesia
- Star Paper Mills Limited - India
- Semirara Mining and Power Corporation, Philippines
- Bhushan Steel Limited - India
- Sarangani Energy Corporation, Philippines
- Port Waratah Coal Services - Australia
- Australian Commodity Traders Exchange
- McConnell Dowell - Australia
- GMR Energy Limited - India
- Savvy Resources Ltd - HongKong
- Meralco Power Generation, Philippines
- LBH Netherlands Bv - Netherlands
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Interocean Group of Companies - India
- Eastern Coal Council - USA
- Australian Coal Association
- IEA Clean Coal Centre - UK
- Grasim Industreis Ltd - India
- Sindya Power Generating Company Private Ltd
- Intertek Mineral Services - Indonesia
- Mercuria Energy - Indonesia
- Jaiprakash Power Ventures ltd
- Indika Energy - Indonesia
- Thiess Contractors Indonesia
- Indo Tambangraya Megah - Indonesia
- Xindia Steels Limited - India
- Toyota Tsusho Corporation, Japan
- Semirara Mining Corp, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kohat Cement Company Ltd. - Pakistan
- Borneo Indobara - Indonesia
- PTC India Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- MS Steel International - UAE
- PNOC Exploration Corporation - Philippines
- SN Aboitiz Power Inc, Philippines
- Maharashtra Electricity Regulatory Commission - India
- India Bulls Power Limited - India
- Ministry of Finance - Indonesia
- Straits Asia Resources Limited - Singapore
- Alfred C Toepfer International GmbH - Germany
- Bukit Makmur.PT - Indonesia
- Gujarat Electricity Regulatory Commission - India
- TeaM Sual Corporation - Philippines
- Directorate Of Revenue Intelligence - India
- Mintek Dendrill Indonesia
- Georgia Ports Authority, United States
- Baramulti Group, Indonesia
- Mercator Lines Limited - India
- Kideco Jaya Agung - Indonesia
- Agrawal Coal Company - India
- CIMB Investment Bank - Malaysia
- Eastern Energy - Thailand
- Siam City Cement - Thailand
- Bayan Resources Tbk. - Indonesia
- Energy Link Ltd, New Zealand
- Energy Development Corp, Philippines
- Singapore Mercantile Exchange
- Billiton Holdings Pty Ltd - Australia
- Bangladesh Power Developement Board
- Electricity Generating Authority of Thailand
- New Zealand Coal & Carbon
- Cigading International Bulk Terminal - Indonesia
- Videocon Industries ltd - India
- Vedanta Resources Plc - India
- The State Trading Corporation of India Ltd
- Petrochimia International Co. Ltd.- Taiwan
- Indian Oil Corporation Limited
- Wood Mackenzie - Singapore
- European Bulk Services B.V. - Netherlands
- Holcim Trading Pte Ltd - Singapore
- Central Java Power - Indonesia
- Edison Trading Spa - Italy
- Thai Mozambique Logistica
- Anglo American - United Kingdom
- Independent Power Producers Association of India
- Ceylon Electricity Board - Sri Lanka
- Kapuas Tunggal Persada - Indonesia
- Posco Energy - South Korea
- Latin American Coal - Colombia
- TNB Fuel Sdn Bhd - Malaysia
- Electricity Authority, New Zealand
- OPG Power Generation Pvt Ltd - India
- Oldendorff Carriers - Singapore
- Petron Corporation, Philippines
- SMC Global Power, Philippines
- CNBM International Corporation - China
- Kalimantan Lumbung Energi - Indonesia
- Kepco SPC Power Corporation, Philippines
- Riau Bara Harum - Indonesia
- Samtan Co., Ltd - South Korea
- Coalindo Energy - Indonesia
- Bukit Baiduri Energy - Indonesia
- Commonwealth Bank - Australia
- Trasteel International SA, Italy
- San Jose City I Power Corp, Philippines
- Medco Energi Mining Internasional
- PowerSource Philippines DevCo
- Vizag Seaport Private Limited - India
- Minerals Council of Australia
- Globalindo Alam Lestari - Indonesia
- The Treasury - Australian Government
- Coal and Oil Company - UAE
- PetroVietnam Power Coal Import and Supply Company
- Metalloyd Limited - United Kingdom
- Simpson Spence & Young - Indonesia
- Binh Thuan Hamico - Vietnam
- Planning Commission, India
- Malabar Cements Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bharathi Cement Corporation - India
- Larsen & Toubro Limited - India
- Chettinad Cement Corporation Ltd - India
- Attock Cement Pakistan Limited
- Sojitz Corporation - Japan
- Ministry of Mines - Canada
- Kobexindo Tractors - Indoneisa
- AsiaOL BioFuels Corp., Philippines
- Rashtriya Ispat Nigam Limited - India
- Sinarmas Energy and Mining - Indonesia
- Iligan Light & Power Inc, Philippines
- Africa Commodities Group - South Africa
- Sical Logistics Limited - India
- Krishnapatnam Port Company Ltd. - India
- Aboitiz Power Corporation - Philippines
- Indian Energy Exchange, India
- Ambuja Cements Ltd - India
- Manunggal Multi Energi - Indonesia
- Altura Mining Limited, Indonesia
- Dalmia Cement Bharat India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Carbofer General Trading SA - India
- Chamber of Mines of South Africa
- Aditya Birla Group - India
- Kaltim Prima Coal - Indonesia
- Pendopo Energi Batubara - Indonesia
- Standard Chartered Bank - UAE
- Makarim & Taira - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Coastal Gujarat Power Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- White Energy Company Limited
- Power Finance Corporation Ltd., India
- Marubeni Corporation - India
- Maheswari Brothers Coal Limited - India
- ASAPP Information Group - India
- Ind-Barath Power Infra Limited - India
- Bulk Trading Sa - Switzerland
- Deloitte Consulting - India
- Madhucon Powers Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- SMG Consultants - Indonesia
- Global Green Power PLC Corporation, Philippines
- Heidelberg Cement - Germany
- Economic Council, Georgia
- Tata Chemicals Ltd - India
- Bhoruka Overseas - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Antam Resourcindo - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- ICICI Bank Limited - India
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