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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, 29 July 11
5300 ADB COAL WILL BE AT US$ 60/TON IN THIS QUARTER - RAIN
COALspot.com - PT Resource Alam Indonesia Tbk (KKGI) seeing the average selling price of its coal for the third quarter of this year will increase t ...
Thursday, 28 July 11
PTBA'S COAL PRICES UP IN H1 2011
COALspot.com - Bukit Asam’s coal prices in the second half of 2011 will expected to be higher than the first half of this year, said Sukrisno, ...
Thursday, 28 July 11
RESOURCE ALAM 1H PROFIT SURGES 208 PERCENT
Indonesia's tenth largest coal miner in term of concessions, PT Resource Alam Indonesia (KKGI), part of Rain Group, today reported a skyrocket net ...
Thursday, 28 July 11
DRY BULK MARKET EDGES FURTHER DOWN ON ADDED PRESSURE - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The Baltic Dry Index (BDI), an indicator of dry bulk freight rates has reached new lows this week, with yesterday’s session ending further dow ...
Wednesday, 27 July 11
BLACKSTONE TO INVEST INR 5,000 MILLION (APPRX. US$ 111 MILLION) IN VISA POWER
Press Release - The Blackstone Group (NYSE: BX) today announced that it will be investing INR 5,000 million (c. USD 111 million) in VISA Power ...
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- Cigading International Bulk Terminal - Indonesia
- Minerals Council of Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Eastern Coal Council - USA
- Sindya Power Generating Company Private Ltd
- Miang Besar Coal Terminal - Indonesia
- Ministry of Finance - Indonesia
- Xindia Steels Limited - India
- Bukit Baiduri Energy - Indonesia
- Manunggal Multi Energi - Indonesia
- Indo Tambangraya Megah - Indonesia
- Romanian Commodities Exchange
- IHS Mccloskey Coal Group - USA
- Makarim & Taira - Indonesia
- Jindal Steel & Power Ltd - India
- Pendopo Energi Batubara - Indonesia
- Planning Commission, India
- Gujarat Sidhee Cement - India
- Power Finance Corporation Ltd., India
- Electricity Generating Authority of Thailand
- International Coal Ventures Pvt Ltd - India
- San Jose City I Power Corp, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Simpson Spence & Young - Indonesia
- Independent Power Producers Association of India
- Thiess Contractors Indonesia
- Mintek Dendrill Indonesia
- Indonesian Coal Mining Association
- Gujarat Electricity Regulatory Commission - India
- Videocon Industries ltd - India
- Chettinad Cement Corporation Ltd - India
- Kumho Petrochemical, South Korea
- GVK Power & Infra Limited - India
- Baramulti Group, Indonesia
- Bhushan Steel Limited - India
- LBH Netherlands Bv - Netherlands
- Australian Coal Association
- Kohat Cement Company Ltd. - Pakistan
- Toyota Tsusho Corporation, Japan
- PetroVietnam Power Coal Import and Supply Company
- Krishnapatnam Port Company Ltd. - India
- The Treasury - Australian Government
- Sical Logistics Limited - India
- Alfred C Toepfer International GmbH - Germany
- SMC Global Power, Philippines
- Iligan Light & Power Inc, Philippines
- Thai Mozambique Logistica
- Sarangani Energy Corporation, Philippines
- Altura Mining Limited, Indonesia
- CNBM International Corporation - China
- Siam City Cement PLC, Thailand
- IEA Clean Coal Centre - UK
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Heidelberg Cement - Germany
- Australian Commodity Traders Exchange
- Coalindo Energy - Indonesia
- Price Waterhouse Coopers - Russia
- Bahari Cakrawala Sebuku - Indonesia
- London Commodity Brokers - England
- Bulk Trading Sa - Switzerland
- Semirara Mining Corp, Philippines
- White Energy Company Limited
- Bharathi Cement Corporation - India
- Ind-Barath Power Infra Limited - India
- Malabar Cements Ltd - India
- Maheswari Brothers Coal Limited - India
- Goldman Sachs - Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- Indian Energy Exchange, India
- Savvy Resources Ltd - HongKong
- GMR Energy Limited - India
- Kartika Selabumi Mining - Indonesia
- Kepco SPC Power Corporation, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Intertek Mineral Services - Indonesia
- The University of Queensland
- Ceylon Electricity Board - Sri Lanka
- Asmin Koalindo Tuhup - Indonesia
- Merrill Lynch Commodities Europe
- Bayan Resources Tbk. - Indonesia
- MS Steel International - UAE
- Meralco Power Generation, Philippines
- Borneo Indobara - Indonesia
- Rashtriya Ispat Nigam Limited - India
- India Bulls Power Limited - India
- Vedanta Resources Plc - India
- Cement Manufacturers Association - India
- Madhucon Powers Ltd - India
- VISA Power Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Ministry of Transport, Egypt
- GN Power Mariveles Coal Plant, Philippines
- Posco Energy - South Korea
- Wilmar Investment Holdings
- Antam Resourcindo - Indonesia
- Carbofer General Trading SA - India
- Therma Luzon, Inc, Philippines
- Kobexindo Tractors - Indoneisa
- Star Paper Mills Limited - India
- Coal and Oil Company - UAE
- Holcim Trading Pte Ltd - Singapore
- Globalindo Alam Lestari - Indonesia
- Samtan Co., Ltd - South Korea
- Tata Chemicals Ltd - India
- SN Aboitiz Power Inc, Philippines
- Trasteel International SA, Italy
- Metalloyd Limited - United Kingdom
- Coastal Gujarat Power Limited - India
- Kideco Jaya Agung - Indonesia
- Bhatia International Limited - India
- ICICI Bank Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Ministry of Mines - Canada
- Lanco Infratech Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Bhoruka Overseas - Indonesia
- Central Electricity Authority - India
- Latin American Coal - Colombia
- Singapore Mercantile Exchange
- Petrochimia International Co. Ltd.- Taiwan
- Interocean Group of Companies - India
- Orica Australia Pty. Ltd.
- Sojitz Corporation - Japan
- Kaltim Prima Coal - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Jaiprakash Power Ventures ltd
- Renaissance Capital - South Africa
- Meenaskhi Energy Private Limited - India
- Energy Development Corp, Philippines
- Aditya Birla Group - India
- PowerSource Philippines DevCo
- The State Trading Corporation of India Ltd
- Edison Trading Spa - Italy
- Commonwealth Bank - Australia
- Dalmia Cement Bharat India
- Directorate Of Revenue Intelligence - India
- Global Coal Blending Company Limited - Australia
- Medco Energi Mining Internasional
- Siam City Cement - Thailand
- Bukit Asam (Persero) Tbk - Indonesia
- Sakthi Sugars Limited - India
- Port Waratah Coal Services - Australia
- Indika Energy - Indonesia
- European Bulk Services B.V. - Netherlands
- Uttam Galva Steels Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Orica Mining Services - Indonesia
- PTC India Limited - India
- South Luzon Thermal Energy Corporation
- Salva Resources Pvt Ltd - India
- Billiton Holdings Pty Ltd - Australia
- CIMB Investment Bank - Malaysia
- Attock Cement Pakistan Limited
- Vijayanagar Sugar Pvt Ltd - India
- GAC Shipping (India) Pvt Ltd
- Parry Sugars Refinery, India
- Vizag Seaport Private Limited - India
- AsiaOL BioFuels Corp., Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Barasentosa Lestari - Indonesia
- Georgia Ports Authority, United States
- Ambuja Cements Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Marubeni Corporation - India
- Banpu Public Company Limited - Thailand
- Straits Asia Resources Limited - Singapore
- Electricity Authority, New Zealand
- McConnell Dowell - Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Africa Commodities Group - South Africa
- Larsen & Toubro Limited - India
- Binh Thuan Hamico - Vietnam
- Mercator Lines Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Rio Tinto Coal - Australia
- Essar Steel Hazira Ltd - India
- Formosa Plastics Group - Taiwan
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bangladesh Power Developement Board
- Grasim Industreis Ltd - India
- Standard Chartered Bank - UAE
- Global Green Power PLC Corporation, Philippines
- ASAPP Information Group - India
- Timah Investasi Mineral - Indoneisa
- TNB Fuel Sdn Bhd - Malaysia
- Deloitte Consulting - India
- Central Java Power - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Wood Mackenzie - Singapore
- Anglo American - United Kingdom
- OPG Power Generation Pvt Ltd - India
- Chamber of Mines of South Africa
- Economic Council, Georgia
- Riau Bara Harum - Indonesia
- Tamil Nadu electricity Board
- Bukit Makmur.PT - Indonesia
- Petron Corporation, Philippines
- Karaikal Port Pvt Ltd - India
- Parliament of New Zealand
- Global Business Power Corporation, Philippines
- Mercuria Energy - Indonesia
- TeaM Sual Corporation - Philippines
- Eastern Energy - Thailand
- Directorate General of MIneral and Coal - Indonesia
- PNOC Exploration Corporation - Philippines
- Energy Link Ltd, New Zealand
- Mjunction Services Limited - India
- Oldendorff Carriers - Singapore
- New Zealand Coal & Carbon
- Jorong Barutama Greston.PT - Indonesia
- Indogreen Group - Indonesia
- SMG Consultants - Indonesia
- Sree Jayajothi Cements Limited - India
- Agrawal Coal Company - India
- Sinarmas Energy and Mining - Indonesia
- Indian Oil Corporation Limited
- Aboitiz Power Corporation - Philippines
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