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