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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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Monday, 20 June 11
5TH ASIA PACIFIC COAL TRADING & INVESTMENT OUTLOOK 2011 IS ON THE WAY
Press Release - Since the beginning of 2011, international commodity price has been in a high level, resulting in “TENSION” of energy co ...
Sunday, 19 June 11
S6 AND S7 ROUTES LIKELY TO BE SOFT NEXT WEEK - VISTAAR
COALspot.com - The freight market seemed to be stabilizing and the BDI and Cape index was up marginally and closed at 1,423 points and 1,824 points ...
Sunday, 19 June 11
BUMI 1Q NET PROFIT INCREASES 16.5 PERCENT
PT Bumi Resources Tbk (BUMI), Indonesia's largest coal exporter that is 25% owned by London-listed Vallar Plc, reported a16.49% increase in net pro ...
Friday, 17 June 11
DRY BULK BREATHES SIGH OF RELEAF ON RENEWED CAPESIZE DEMAND - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market has caught a sign of relief from the middle of the week onwards, as the BDI (Baltic Dry Index) increased once again yesterday, t ...
Thursday, 16 June 11
BOOSTING THE USE OF LOW CARBON ENERGY FOR A BETTER WORLD
Bali, Indonesia host of world renewable energy congress – Indonesia, international conference & exhibition on renewable energy and energy ...
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- Deloitte Consulting - India
- Indian Energy Exchange, India
- Bhushan Steel Limited - India
- PNOC Exploration Corporation - Philippines
- Georgia Ports Authority, United States
- Mercuria Energy - Indonesia
- Krishnapatnam Port Company Ltd. - India
- IHS Mccloskey Coal Group - USA
- LBH Netherlands Bv - Netherlands
- Parliament of New Zealand
- Globalindo Alam Lestari - Indonesia
- Power Finance Corporation Ltd., India
- Siam City Cement PLC, Thailand
- Orica Mining Services - Indonesia
- Africa Commodities Group - South Africa
- MS Steel International - UAE
- Essar Steel Hazira Ltd - India
- Indogreen Group - Indonesia
- Thai Mozambique Logistica
- Electricity Authority, New Zealand
- Kohat Cement Company Ltd. - Pakistan
- Meenaskhi Energy Private Limited - India
- SN Aboitiz Power Inc, Philippines
- Gujarat Sidhee Cement - India
- Sical Logistics Limited - India
- Therma Luzon, Inc, Philippines
- Mintek Dendrill Indonesia
- TeaM Sual Corporation - Philippines
- Binh Thuan Hamico - Vietnam
- Metalloyd Limited - United Kingdom
- Heidelberg Cement - Germany
- Oldendorff Carriers - Singapore
- Electricity Generating Authority of Thailand
- Indika Energy - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Global Green Power PLC Corporation, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Latin American Coal - Colombia
- Karbindo Abesyapradhi - Indoneisa
- ASAPP Information Group - India
- Commonwealth Bank - Australia
- Leighton Contractors Pty Ltd - Australia
- Posco Energy - South Korea
- Salva Resources Pvt Ltd - India
- Romanian Commodities Exchange
- Australian Commodity Traders Exchange
- Ceylon Electricity Board - Sri Lanka
- Planning Commission, India
- Billiton Holdings Pty Ltd - Australia
- Global Business Power Corporation, Philippines
- Indonesian Coal Mining Association
- Kobexindo Tractors - Indoneisa
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Anglo American - United Kingdom
- Indo Tambangraya Megah - Indonesia
- Tata Chemicals Ltd - India
- Bangladesh Power Developement Board
- Pendopo Energi Batubara - Indonesia
- Price Waterhouse Coopers - Russia
- The University of Queensland
- International Coal Ventures Pvt Ltd - India
- Formosa Plastics Group - Taiwan
- European Bulk Services B.V. - Netherlands
- Xindia Steels Limited - India
- Samtan Co., Ltd - South Korea
- Kapuas Tunggal Persada - Indonesia
- Central Java Power - Indonesia
- Kumho Petrochemical, South Korea
- Sindya Power Generating Company Private Ltd
- Rashtriya Ispat Nigam Limited - India
- Tamil Nadu electricity Board
- Kartika Selabumi Mining - Indonesia
- Bayan Resources Tbk. - Indonesia
- Uttam Galva Steels Limited - India
- Ministry of Mines - Canada
- Maheswari Brothers Coal Limited - India
- South Luzon Thermal Energy Corporation
- Orica Australia Pty. Ltd.
- Jindal Steel & Power Ltd - India
- PowerSource Philippines DevCo
- Attock Cement Pakistan Limited
- Semirara Mining Corp, Philippines
- Simpson Spence & Young - Indonesia
- SMC Global Power, Philippines
- Bukit Makmur.PT - Indonesia
- Cement Manufacturers Association - India
- Siam City Cement - Thailand
- Bulk Trading Sa - Switzerland
- CIMB Investment Bank - Malaysia
- Dalmia Cement Bharat India
- GN Power Mariveles Coal Plant, Philippines
- Eastern Energy - Thailand
- Kalimantan Lumbung Energi - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- VISA Power Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Lanco Infratech Ltd - India
- Australian Coal Association
- Minerals Council of Australia
- Eastern Coal Council - USA
- Ministry of Finance - Indonesia
- Manunggal Multi Energi - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Petron Corporation, Philippines
- GMR Energy Limited - India
- Borneo Indobara - Indonesia
- Indian Oil Corporation Limited
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Renaissance Capital - South Africa
- Vizag Seaport Private Limited - India
- Central Electricity Authority - India
- Directorate Of Revenue Intelligence - India
- Jaiprakash Power Ventures ltd
- Energy Development Corp, Philippines
- Chettinad Cement Corporation Ltd - India
- Sakthi Sugars Limited - India
- Intertek Mineral Services - Indonesia
- Wood Mackenzie - Singapore
- Medco Energi Mining Internasional
- Asmin Koalindo Tuhup - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- SMG Consultants - Indonesia
- Marubeni Corporation - India
- San Jose City I Power Corp, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Timah Investasi Mineral - Indoneisa
- Miang Besar Coal Terminal - Indonesia
- Kideco Jaya Agung - Indonesia
- The State Trading Corporation of India Ltd
- Gujarat Mineral Development Corp Ltd - India
- Parry Sugars Refinery, India
- Vijayanagar Sugar Pvt Ltd - India
- Bhatia International Limited - India
- The Treasury - Australian Government
- Semirara Mining and Power Corporation, Philippines
- Banpu Public Company Limited - Thailand
- Edison Trading Spa - Italy
- Star Paper Mills Limited - India
- Riau Bara Harum - Indonesia
- Antam Resourcindo - Indonesia
- Barasentosa Lestari - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Grasim Industreis Ltd - India
- Carbofer General Trading SA - India
- Larsen & Toubro Limited - India
- Independent Power Producers Association of India
- Aboitiz Power Corporation - Philippines
- Alfred C Toepfer International GmbH - Germany
- Thiess Contractors Indonesia
- Sojitz Corporation - Japan
- Economic Council, Georgia
- CNBM International Corporation - China
- Iligan Light & Power Inc, Philippines
- Ambuja Cements Ltd - India
- Rio Tinto Coal - Australia
- Global Coal Blending Company Limited - Australia
- Trasteel International SA, Italy
- GAC Shipping (India) Pvt Ltd
- Mercator Lines Limited - India
- Coal and Oil Company - UAE
- Standard Chartered Bank - UAE
- ICICI Bank Limited - India
- PTC India Limited - India
- Singapore Mercantile Exchange
- New Zealand Coal & Carbon
- Aditya Birla Group - India
- Coastal Gujarat Power Limited - India
- Bukit Baiduri Energy - Indonesia
- Makarim & Taira - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Malabar Cements Ltd - India
- London Commodity Brokers - England
- Maharashtra Electricity Regulatory Commission - India
- Bhoruka Overseas - Indonesia
- Bharathi Cement Corporation - India
- Baramulti Group, Indonesia
- Cigading International Bulk Terminal - Indonesia
- Ind-Barath Power Infra Limited - India
- Savvy Resources Ltd - HongKong
- Coalindo Energy - Indonesia
- Karaikal Port Pvt Ltd - India
- Ministry of Transport, Egypt
- Toyota Tsusho Corporation, Japan
- IEA Clean Coal Centre - UK
- Meralco Power Generation, Philippines
- Mjunction Services Limited - India
- Wilmar Investment Holdings
- Altura Mining Limited, Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Port Waratah Coal Services - Australia
- Interocean Group of Companies - India
- Sarangani Energy Corporation, Philippines
- Videocon Industries ltd - India
- Goldman Sachs - Singapore
- Kaltim Prima Coal - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- TNB Fuel Sdn Bhd - Malaysia
- Pipit Mutiara Jaya. PT, Indonesia
- India Bulls Power Limited - India
- Madhucon Powers Ltd - India
- Kepco SPC Power Corporation, Philippines
- McConnell Dowell - Australia
- Merrill Lynch Commodities Europe
- Chamber of Mines of South Africa
- Holcim Trading Pte Ltd - Singapore
- Gujarat Electricity Regulatory Commission - India
- OPG Power Generation Pvt Ltd - India
- Sree Jayajothi Cements Limited - India
- Energy Link Ltd, New Zealand
- Agrawal Coal Company - India
- Straits Asia Resources Limited - Singapore
- Vedanta Resources Plc - India
- GVK Power & Infra Limited - India
- White Energy Company Limited
- Directorate General of MIneral and Coal - Indonesia
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