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