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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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Sunday, 17 April 11
ADARO TO PROPOSE US$75 MILLION DIVIDEND
COALspot.com - One of Indonesia's largest coal miner PT Adaro Energy Tbk (ADRO) is keen to propose a final dividend of US$75 million or Rp 20.17 (U ...
Saturday, 16 April 11
TNPL RECEIVES 1.6MT OF COAL OFFERS - SOURCES
COALspot.com - Tamil Nadu Newsprint and Papers Ltd. has closed its 160,000 MT coal inquiry today.
More than a half a dozen of Indian coal t ...
Friday, 15 April 11
DRY BULK MARKET KEEPS ON FALLING, ON LOW DEMAND AND HIGH SUPPLY - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market has kept its falling patern this week, with the industry’s benchmark, the Baltic Dry Index (BDI) retreating again yesterda ...
Thursday, 14 April 11
SUPRAS IN N.CHINA GET CLOSE TO $12000 FOR TRIPS VIA INDONESIA TO INDIA - FEARNBULK
Handy
The Atlantic market remains flat - very little new/fresh business and slow activity. Considerable prompt tonnage remains unfixed. The USG pa ...
Wednesday, 13 April 11
CAPESIZE VESSELS ARE DELIVERED AT A PACE OF ONE NEW VESSEL EVERY SECOND DAY - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
In a clear sign that it will take a significant rise in global seaborne dry bulk trade in order to be able to absorb the flurry of new building tonn ...
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- Kohat Cement Company Ltd. - Pakistan
- Bhushan Steel Limited - India
- Lanco Infratech Ltd - India
- Chettinad Cement Corporation Ltd - India
- Bulk Trading Sa - Switzerland
- SMG Consultants - Indonesia
- Minerals Council of Australia
- Straits Asia Resources Limited - Singapore
- Directorate General of MIneral and Coal - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Price Waterhouse Coopers - Russia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bukit Makmur.PT - Indonesia
- Singapore Mercantile Exchange
- Metalloyd Limited - United Kingdom
- India Bulls Power Limited - India
- Agrawal Coal Company - India
- Planning Commission, India
- Goldman Sachs - Singapore
- Sinarmas Energy and Mining - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Wood Mackenzie - Singapore
- Billiton Holdings Pty Ltd - Australia
- Salva Resources Pvt Ltd - India
- Aboitiz Power Corporation - Philippines
- Eastern Coal Council - USA
- Merrill Lynch Commodities Europe
- Rio Tinto Coal - Australia
- Bukit Asam (Persero) Tbk - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Standard Chartered Bank - UAE
- Central Java Power - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- IEA Clean Coal Centre - UK
- Formosa Plastics Group - Taiwan
- Bhatia International Limited - India
- Indogreen Group - Indonesia
- Commonwealth Bank - Australia
- Posco Energy - South Korea
- Malabar Cements Ltd - India
- CIMB Investment Bank - Malaysia
- South Luzon Thermal Energy Corporation
- Latin American Coal - Colombia
- Jorong Barutama Greston.PT - Indonesia
- Antam Resourcindo - Indonesia
- Ministry of Mines - Canada
- Samtan Co., Ltd - South Korea
- Indian Energy Exchange, India
- Baramulti Group, Indonesia
- San Jose City I Power Corp, Philippines
- Africa Commodities Group - South Africa
- Savvy Resources Ltd - HongKong
- The State Trading Corporation of India Ltd
- Deloitte Consulting - India
- Romanian Commodities Exchange
- Sojitz Corporation - Japan
- Renaissance Capital - South Africa
- Dalmia Cement Bharat India
- GAC Shipping (India) Pvt Ltd
- Georgia Ports Authority, United States
- Marubeni Corporation - India
- Ministry of Finance - Indonesia
- Iligan Light & Power Inc, Philippines
- PTC India Limited - India
- Petron Corporation, Philippines
- Ceylon Electricity Board - Sri Lanka
- Thiess Contractors Indonesia
- Gujarat Sidhee Cement - India
- Madhucon Powers Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Karaikal Port Pvt Ltd - India
- Heidelberg Cement - Germany
- Kobexindo Tractors - Indoneisa
- Binh Thuan Hamico - Vietnam
- Energy Development Corp, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Coastal Gujarat Power Limited - India
- VISA Power Limited - India
- Port Waratah Coal Services - Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Anglo American - United Kingdom
- Ind-Barath Power Infra Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Maheswari Brothers Coal Limited - India
- PowerSource Philippines DevCo
- ASAPP Information Group - India
- London Commodity Brokers - England
- Leighton Contractors Pty Ltd - Australia
- Kalimantan Lumbung Energi - Indonesia
- Kepco SPC Power Corporation, Philippines
- The University of Queensland
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Mintek Dendrill Indonesia
- Sindya Power Generating Company Private Ltd
- Jindal Steel & Power Ltd - India
- Orica Mining Services - Indonesia
- CNBM International Corporation - China
- Parry Sugars Refinery, India
- Manunggal Multi Energi - Indonesia
- Sree Jayajothi Cements Limited - India
- Australian Coal Association
- Intertek Mineral Services - Indonesia
- Tata Chemicals Ltd - India
- Indonesian Coal Mining Association
- Kideco Jaya Agung - Indonesia
- Toyota Tsusho Corporation, Japan
- Bukit Baiduri Energy - Indonesia
- International Coal Ventures Pvt Ltd - India
- Global Green Power PLC Corporation, Philippines
- GMR Energy Limited - India
- Ministry of Transport, Egypt
- Krishnapatnam Port Company Ltd. - India
- Bangladesh Power Developement Board
- Kapuas Tunggal Persada - Indonesia
- Indika Energy - Indonesia
- Globalindo Alam Lestari - Indonesia
- Global Business Power Corporation, Philippines
- Kumho Petrochemical, South Korea
- Chamber of Mines of South Africa
- PNOC Exploration Corporation - Philippines
- Bayan Resources Tbk. - Indonesia
- IHS Mccloskey Coal Group - USA
- Cement Manufacturers Association - India
- Riau Bara Harum - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Energy Link Ltd, New Zealand
- Attock Cement Pakistan Limited
- ICICI Bank Limited - India
- Sical Logistics Limited - India
- Gujarat Electricity Regulatory Commission - India
- Uttam Galva Steels Limited - India
- Sakthi Sugars Limited - India
- AsiaOL BioFuels Corp., Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Bharathi Cement Corporation - India
- TeaM Sual Corporation - Philippines
- SMC Global Power, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Semirara Mining Corp, Philippines
- New Zealand Coal & Carbon
- Rashtriya Ispat Nigam Limited - India
- Makarim & Taira - Indonesia
- White Energy Company Limited
- Eastern Energy - Thailand
- Siam City Cement - Thailand
- Aditya Birla Group - India
- Indian Oil Corporation Limited
- Barasentosa Lestari - Indonesia
- Carbofer General Trading SA - India
- Oldendorff Carriers - Singapore
- Indo Tambangraya Megah - Indonesia
- Central Electricity Authority - India
- Alfred C Toepfer International GmbH - Germany
- Grasim Industreis Ltd - India
- Timah Investasi Mineral - Indoneisa
- TNB Fuel Sdn Bhd - Malaysia
- Meralco Power Generation, Philippines
- McConnell Dowell - Australia
- Electricity Generating Authority of Thailand
- Altura Mining Limited, Indonesia
- Vedanta Resources Plc - India
- Kaltim Prima Coal - Indonesia
- Parliament of New Zealand
- Tamil Nadu electricity Board
- Ambuja Cements Ltd - India
- Mercator Lines Limited - India
- Australian Commodity Traders Exchange
- Semirara Mining and Power Corporation, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Coalindo Energy - Indonesia
- The Treasury - Australian Government
- Trasteel International SA, Italy
- Directorate Of Revenue Intelligence - India
- Therma Luzon, Inc, Philippines
- Mjunction Services Limited - India
- MS Steel International - UAE
- Power Finance Corporation Ltd., India
- Kartika Selabumi Mining - Indonesia
- Pendopo Energi Batubara - Indonesia
- Orica Australia Pty. Ltd.
- European Bulk Services B.V. - Netherlands
- Cigading International Bulk Terminal - Indonesia
- Siam City Cement PLC, Thailand
- Independent Power Producers Association of India
- SN Aboitiz Power Inc, Philippines
- Sarangani Energy Corporation, Philippines
- LBH Netherlands Bv - Netherlands
- Mercuria Energy - Indonesia
- Star Paper Mills Limited - India
- Bhoruka Overseas - Indonesia
- Meenaskhi Energy Private Limited - India
- Borneo Indobara - Indonesia
- Videocon Industries ltd - India
- Miang Besar Coal Terminal - Indonesia
- Wilmar Investment Holdings
- GVK Power & Infra Limited - India
- Electricity Authority, New Zealand
- Jaiprakash Power Ventures ltd
- Holcim Trading Pte Ltd - Singapore
- Vizag Seaport Private Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Interocean Group of Companies - India
- GN Power Mariveles Coal Plant, Philippines
- Xindia Steels Limited - India
- Simpson Spence & Young - Indonesia
- Essar Steel Hazira Ltd - India
- Banpu Public Company Limited - Thailand
- Coal and Oil Company - UAE
- Medco Energi Mining Internasional
- OPG Power Generation Pvt Ltd - India
- Larsen & Toubro Limited - India
- Global Coal Blending Company Limited - Australia
- Edison Trading Spa - Italy
- Economic Council, Georgia
- Thai Mozambique Logistica
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