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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, 13 June 11
THE INDONESIAN COAL REFERENCE PRICE HAS JUMPED 1.2 PERCENT IN JUNE
COALspot.com - The Ministry of Energy & Mineral Resources sets coal spot price benchmark for June 2011 at US$ 119.03 per ton, higher than US$ 1. ...
Sunday, 12 June 11
THE FREIGHT MARKET IS LIKELY TO BE SOFT NEXT WEEK - CAPT. REDDY
COALspot.com - The freight market continued to soften this week except for Panamax index. The BDI was down by about 4.77 pct and closed at 1,418 poi ...
Friday, 10 June 11
DRY BULK ON RETREAT MODE - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
This week has offered dry bulk ship owners no real reason to smile, as the industry’s benchmarket, the Baltic Dry Index (BDI) has been steadil ...
Friday, 10 June 11
BUKIT ASAM RECORDED RP1.3 TRILLION PROFIT IN MAY - TEMPO INTERACTIVE
Tempo Interactive reported that, PT PT Tambang Batubara Bukit Asam Tbk (PTBA) made a net profit of Rp 1.3 trillion (approx. US$ 152,779,410) at the ...
Friday, 10 June 11
DRY BULK ON RETREAT MODE - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
This week has offered dry bulk ship owners no real reason to smile, as the industry’s benchmarket, the Baltic Dry Index (BDI) has been steadil ...
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- Sical Logistics Limited - India
- Formosa Plastics Group - Taiwan
- Savvy Resources Ltd - HongKong
- Cement Manufacturers Association - India
- Krishnapatnam Port Company Ltd. - India
- Standard Chartered Bank - UAE
- Minerals Council of Australia
- Bhatia International Limited - India
- White Energy Company Limited
- Indian Energy Exchange, India
- Aboitiz Power Corporation - Philippines
- Toyota Tsusho Corporation, Japan
- TeaM Sual Corporation - Philippines
- Coastal Gujarat Power Limited - India
- Meralco Power Generation, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Carbofer General Trading SA - India
- Sojitz Corporation - Japan
- Karbindo Abesyapradhi - Indoneisa
- Agrawal Coal Company - India
- Kalimantan Lumbung Energi - Indonesia
- Eastern Energy - Thailand
- Bayan Resources Tbk. - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Globalindo Alam Lestari - Indonesia
- SMG Consultants - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Electricity Generating Authority of Thailand
- PowerSource Philippines DevCo
- IHS Mccloskey Coal Group - USA
- Aditya Birla Group - India
- Banpu Public Company Limited - Thailand
- Lanco Infratech Ltd - India
- Indonesian Coal Mining Association
- Eastern Coal Council - USA
- Indo Tambangraya Megah - Indonesia
- Port Waratah Coal Services - Australia
- Pipit Mutiara Jaya. PT, Indonesia
- Australian Commodity Traders Exchange
- Xindia Steels Limited - India
- Interocean Group of Companies - India
- Pendopo Energi Batubara - Indonesia
- London Commodity Brokers - England
- Bulk Trading Sa - Switzerland
- Global Green Power PLC Corporation, Philippines
- Meenaskhi Energy Private Limited - India
- GAC Shipping (India) Pvt Ltd
- Bukit Asam (Persero) Tbk - Indonesia
- Straits Asia Resources Limited - Singapore
- Larsen & Toubro Limited - India
- Vizag Seaport Private Limited - India
- Indika Energy - Indonesia
- Directorate Of Revenue Intelligence - India
- India Bulls Power Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Timah Investasi Mineral - Indoneisa
- OPG Power Generation Pvt Ltd - India
- Antam Resourcindo - Indonesia
- Salva Resources Pvt Ltd - India
- Chettinad Cement Corporation Ltd - India
- Orica Mining Services - Indonesia
- Goldman Sachs - Singapore
- Semirara Mining and Power Corporation, Philippines
- PTC India Limited - India
- Orica Australia Pty. Ltd.
- Alfred C Toepfer International GmbH - Germany
- Karaikal Port Pvt Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Renaissance Capital - South Africa
- Central Java Power - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- IEA Clean Coal Centre - UK
- Directorate General of MIneral and Coal - Indonesia
- Central Electricity Authority - India
- Baramulti Group, Indonesia
- McConnell Dowell - Australia
- Siam City Cement - Thailand
- Bharathi Cement Corporation - India
- Neyveli Lignite Corporation Ltd, - India
- Kartika Selabumi Mining - Indonesia
- Manunggal Multi Energi - Indonesia
- Indian Oil Corporation Limited
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Ministry of Finance - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Parry Sugars Refinery, India
- Bhushan Steel Limited - India
- GMR Energy Limited - India
- New Zealand Coal & Carbon
- Mercuria Energy - Indonesia
- Sree Jayajothi Cements Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Marubeni Corporation - India
- Holcim Trading Pte Ltd - Singapore
- Deloitte Consulting - India
- Mjunction Services Limited - India
- Makarim & Taira - Indonesia
- Parliament of New Zealand
- Thiess Contractors Indonesia
- Vedanta Resources Plc - India
- Sakthi Sugars Limited - India
- Africa Commodities Group - South Africa
- Maheswari Brothers Coal Limited - India
- Kideco Jaya Agung - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Posco Energy - South Korea
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Ind-Barath Power Infra Limited - India
- Attock Cement Pakistan Limited
- Altura Mining Limited, Indonesia
- Latin American Coal - Colombia
- CNBM International Corporation - China
- Metalloyd Limited - United Kingdom
- Petrochimia International Co. Ltd.- Taiwan
- Power Finance Corporation Ltd., India
- Bukit Makmur.PT - Indonesia
- Singapore Mercantile Exchange
- Energy Link Ltd, New Zealand
- Sindya Power Generating Company Private Ltd
- Independent Power Producers Association of India
- Jindal Steel & Power Ltd - India
- Kumho Petrochemical, South Korea
- Kaltim Prima Coal - Indonesia
- Videocon Industries ltd - India
- VISA Power Limited - India
- Medco Energi Mining Internasional
- Coal and Oil Company - UAE
- International Coal Ventures Pvt Ltd - India
- Ministry of Mines - Canada
- Merrill Lynch Commodities Europe
- Gujarat Electricity Regulatory Commission - India
- Wood Mackenzie - Singapore
- Jaiprakash Power Ventures ltd
- Georgia Ports Authority, United States
- The Treasury - Australian Government
- Sinarmas Energy and Mining - Indonesia
- Coalindo Energy - Indonesia
- Heidelberg Cement - Germany
- South Luzon Thermal Energy Corporation
- PNOC Exploration Corporation - Philippines
- CIMB Investment Bank - Malaysia
- Chamber of Mines of South Africa
- Essar Steel Hazira Ltd - India
- Trasteel International SA, Italy
- Rashtriya Ispat Nigam Limited - India
- Barasentosa Lestari - Indonesia
- Oldendorff Carriers - Singapore
- Binh Thuan Hamico - Vietnam
- AsiaOL BioFuels Corp., Philippines
- Rio Tinto Coal - Australia
- The State Trading Corporation of India Ltd
- Thai Mozambique Logistica
- Sarangani Energy Corporation, Philippines
- Dalmia Cement Bharat India
- Bangladesh Power Developement Board
- Grasim Industreis Ltd - India
- Energy Development Corp, Philippines
- SN Aboitiz Power Inc, Philippines
- Siam City Cement PLC, Thailand
- Romanian Commodities Exchange
- Price Waterhouse Coopers - Russia
- Samtan Co., Ltd - South Korea
- Ministry of Transport, Egypt
- Global Coal Blending Company Limited - Australia
- Petron Corporation, Philippines
- Tamil Nadu electricity Board
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Madhucon Powers Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Semirara Mining Corp, Philippines
- Tata Chemicals Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Anglo American - United Kingdom
- LBH Netherlands Bv - Netherlands
- Gujarat Sidhee Cement - India
- Iligan Light & Power Inc, Philippines
- Simpson Spence & Young - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Kapuas Tunggal Persada - Indonesia
- Malabar Cements Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Commonwealth Bank - Australia
- Star Paper Mills Limited - India
- Indogreen Group - Indonesia
- Kobexindo Tractors - Indoneisa
- Kepco SPC Power Corporation, Philippines
- Mercator Lines Limited - India
- Ambuja Cements Ltd - India
- San Jose City I Power Corp, Philippines
- Therma Luzon, Inc, Philippines
- Economic Council, Georgia
- Electricity Authority, New Zealand
- Jorong Barutama Greston.PT - Indonesia
- Planning Commission, India
- GVK Power & Infra Limited - India
- Bhoruka Overseas - Indonesia
- Australian Coal Association
- ICICI Bank Limited - India
- Cigading International Bulk Terminal - Indonesia
- Global Business Power Corporation, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- PetroVietnam Power Coal Import and Supply Company
- Mintek Dendrill Indonesia
- Miang Besar Coal Terminal - Indonesia
- Riau Bara Harum - Indonesia
- Intertek Mineral Services - Indonesia
- Borneo Indobara - Indonesia
- Uttam Galva Steels Limited - India
- Edison Trading Spa - Italy
- Wilmar Investment Holdings
- MS Steel International - UAE
- Billiton Holdings Pty Ltd - Australia
- European Bulk Services B.V. - Netherlands
- ASAPP Information Group - India
- The University of Queensland
- SMC Global Power, Philippines
- Bukit Baiduri Energy - Indonesia
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