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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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Thursday, 16 June 11
FREIGHT MARKET FAILS TO RECOVER - DREWRY / HELLENIC SHIPPING
With demand failing to improve enough to contain the colossal increases in supply, the dry bulk freight market stayed near the dreadfully low levels ...
Thursday, 16 June 11
VALLAR CONTROLS 84.7 PERCENT STAKE IN BERAU COAL - INSIDER STORIES
Insider Stories reported that, London-based investment company Vallar Plc, via its subsidiary dubbed Vallar Investments UK Limited, today announced ...
Wednesday, 15 June 11
INDONESIA NEW COAL POLICY WORRIES INDIA POWER FIRMS - MYDIGITALFC
Tata Power, Adani group, Lanco Infratech and Reliance Power, among other Indian coal importers, are waiting to assess the impact of the Indonesian g ...
Wednesday, 15 June 11
BAYAN RESOURCES OWNS 56 PERCENT KANGAROO - INSIDER STORIES
Australia-listed coal miner Kangaroo Resources Limited (KRL) has obtained final approval from its shareholders to complete its US$277 million acquis ...
Wednesday, 15 June 11
DRY BULK MARKET WEAKENS AGAIN - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
Despite this time of year traditionally being one of the busiest for the dry bulk market, it seems that in the post-crisis era trade patterns are co ...
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- Xindia Steels Limited - India
- The Treasury - Australian Government
- Energy Link Ltd, New Zealand
- Larsen & Toubro Limited - India
- Malabar Cements Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- London Commodity Brokers - England
- Videocon Industries ltd - India
- Kartika Selabumi Mining - Indonesia
- Madhucon Powers Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Medco Energi Mining Internasional
- Petron Corporation, Philippines
- GVK Power & Infra Limited - India
- Attock Cement Pakistan Limited
- Sakthi Sugars Limited - India
- Kideco Jaya Agung - Indonesia
- Indogreen Group - Indonesia
- Global Business Power Corporation, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Binh Thuan Hamico - Vietnam
- Oldendorff Carriers - Singapore
- Samtan Co., Ltd - South Korea
- VISA Power Limited - India
- Salva Resources Pvt Ltd - India
- Electricity Generating Authority of Thailand
- Posco Energy - South Korea
- Bayan Resources Tbk. - Indonesia
- Coastal Gujarat Power Limited - India
- Central Java Power - Indonesia
- Energy Development Corp, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Wilmar Investment Holdings
- Leighton Contractors Pty Ltd - Australia
- Globalindo Alam Lestari - Indonesia
- Ministry of Mines - Canada
- Gujarat Mineral Development Corp Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Straits Asia Resources Limited - Singapore
- Offshore Bulk Terminal Pte Ltd, Singapore
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- GAC Shipping (India) Pvt Ltd
- Indian Energy Exchange, India
- Port Waratah Coal Services - Australia
- CIMB Investment Bank - Malaysia
- New Zealand Coal & Carbon
- Toyota Tsusho Corporation, Japan
- Orica Mining Services - Indonesia
- Pendopo Energi Batubara - Indonesia
- LBH Netherlands Bv - Netherlands
- Mercuria Energy - Indonesia
- Directorate Of Revenue Intelligence - India
- Agrawal Coal Company - India
- Bukit Baiduri Energy - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Renaissance Capital - South Africa
- Jorong Barutama Greston.PT - Indonesia
- Maheswari Brothers Coal Limited - India
- Semirara Mining and Power Corporation, Philippines
- Cement Manufacturers Association - India
- McConnell Dowell - Australia
- Lanco Infratech Ltd - India
- Barasentosa Lestari - Indonesia
- Simpson Spence & Young - Indonesia
- Global Green Power PLC Corporation, Philippines
- Savvy Resources Ltd - HongKong
- Global Coal Blending Company Limited - Australia
- Coal and Oil Company - UAE
- European Bulk Services B.V. - Netherlands
- TeaM Sual Corporation - Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- IHS Mccloskey Coal Group - USA
- Vedanta Resources Plc - India
- Grasim Industreis Ltd - India
- MS Steel International - UAE
- Maharashtra Electricity Regulatory Commission - India
- Indo Tambangraya Megah - Indonesia
- Makarim & Taira - Indonesia
- Aboitiz Power Corporation - Philippines
- Marubeni Corporation - India
- Eastern Energy - Thailand
- Ministry of Finance - Indonesia
- SMC Global Power, Philippines
- Georgia Ports Authority, United States
- Billiton Holdings Pty Ltd - Australia
- Interocean Group of Companies - India
- Indonesian Coal Mining Association
- SN Aboitiz Power Inc, Philippines
- Ceylon Electricity Board - Sri Lanka
- Bharathi Cement Corporation - India
- Dalmia Cement Bharat India
- Borneo Indobara - Indonesia
- Jaiprakash Power Ventures ltd
- Vizag Seaport Private Limited - India
- Chamber of Mines of South Africa
- TNB Fuel Sdn Bhd - Malaysia
- Sinarmas Energy and Mining - Indonesia
- Rio Tinto Coal - Australia
- India Bulls Power Limited - India
- Karaikal Port Pvt Ltd - India
- Siam City Cement - Thailand
- Essar Steel Hazira Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Tata Chemicals Ltd - India
- Africa Commodities Group - South Africa
- Mercator Lines Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Standard Chartered Bank - UAE
- Thiess Contractors Indonesia
- Sojitz Corporation - Japan
- Bangladesh Power Developement Board
- The State Trading Corporation of India Ltd
- Mjunction Services Limited - India
- Heidelberg Cement - Germany
- Kalimantan Lumbung Energi - Indonesia
- Baramulti Group, Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Coalindo Energy - Indonesia
- Anglo American - United Kingdom
- Kohat Cement Company Ltd. - Pakistan
- Bhoruka Overseas - Indonesia
- Uttam Galva Steels Limited - India
- OPG Power Generation Pvt Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Orica Australia Pty. Ltd.
- Ministry of Transport, Egypt
- Kapuas Tunggal Persada - Indonesia
- Metalloyd Limited - United Kingdom
- Bhushan Steel Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Central Electricity Authority - India
- AsiaOL BioFuels Corp., Philippines
- Australian Coal Association
- The University of Queensland
- Indian Oil Corporation Limited
- ASAPP Information Group - India
- Electricity Authority, New Zealand
- Alfred C Toepfer International GmbH - Germany
- Chettinad Cement Corporation Ltd - India
- Meenaskhi Energy Private Limited - India
- Independent Power Producers Association of India
- Commonwealth Bank - Australia
- Indika Energy - Indonesia
- South Luzon Thermal Energy Corporation
- Asia Pacific Energy Resources Ventures Inc, Philippines
- SMG Consultants - Indonesia
- Planning Commission, India
- ICICI Bank Limited - India
- Aditya Birla Group - India
- GMR Energy Limited - India
- Edison Trading Spa - Italy
- Price Waterhouse Coopers - Russia
- Siam City Cement PLC, Thailand
- Formosa Plastics Group - Taiwan
- Ind-Barath Power Infra Limited - India
- PetroVietnam Power Coal Import and Supply Company
- White Energy Company Limited
- Altura Mining Limited, Indonesia
- Thai Mozambique Logistica
- Kobexindo Tractors - Indoneisa
- Trasteel International SA, Italy
- Eastern Coal Council - USA
- Vijayanagar Sugar Pvt Ltd - India
- Semirara Mining Corp, Philippines
- Economic Council, Georgia
- IEA Clean Coal Centre - UK
- Bhatia International Limited - India
- Wood Mackenzie - Singapore
- Banpu Public Company Limited - Thailand
- PNOC Exploration Corporation - Philippines
- PowerSource Philippines DevCo
- Minerals Council of Australia
- Tamil Nadu electricity Board
- Antam Resourcindo - Indonesia
- Merrill Lynch Commodities Europe
- Parry Sugars Refinery, India
- Gujarat Sidhee Cement - India
- International Coal Ventures Pvt Ltd - India
- San Jose City I Power Corp, Philippines
- Deloitte Consulting - India
- Bukit Makmur.PT - Indonesia
- Kaltim Prima Coal - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Mintek Dendrill Indonesia
- Singapore Mercantile Exchange
- PTC India Limited - India
- Riau Bara Harum - Indonesia
- Iligan Light & Power Inc, Philippines
- Goldman Sachs - Singapore
- Sarangani Energy Corporation, Philippines
- Kepco SPC Power Corporation, Philippines
- Holcim Trading Pte Ltd - Singapore
- Intertek Mineral Services - Indonesia
- Ambuja Cements Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Carbofer General Trading SA - India
- Petrochimia International Co. Ltd.- Taiwan
- Meralco Power Generation, Philippines
- Sree Jayajothi Cements Limited - India
- Sindya Power Generating Company Private Ltd
- Therma Luzon, Inc, Philippines
- Gujarat Electricity Regulatory Commission - India
- Pipit Mutiara Jaya. PT, Indonesia
- Manunggal Multi Energi - Indonesia
- Power Finance Corporation Ltd., India
- Jindal Steel & Power Ltd - India
- Romanian Commodities Exchange
- Star Paper Mills Limited - India
- Sical Logistics Limited - India
- Bulk Trading Sa - Switzerland
- Australian Commodity Traders Exchange
- Parliament of New Zealand
- Latin American Coal - Colombia
- CNBM International Corporation - China
- Kumho Petrochemical, South Korea
- Timah Investasi Mineral - Indoneisa
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