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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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Tuesday, 29 March 11
DUTY EXEMPTION UNLIKELY TO IMPACT COKING COAL PRICES - PTI NEWS
Press Trust of India News reported that, the exemption to certain types of coking coal from customs duty is not likely to impact steel prices at pre ...
Monday, 28 March 11
HARUM ENERGY FY10 EARNING UP 7.23% - INSIDER STORIES
Thermal coal producer PT Harum Energy Tbk (HRUM), controlled by Indonesian businessman Kiki Barki through his son Lawrence Barki, posted a slight in ...
Monday, 28 March 11
IBT RAISES CAPACITY OF PULAU LAUT TERMINAL - THE JAKARTA POST
The Jakarta Post reported that, coal infrastructure and logistics firm PT Indonesia Bulk Terminal (IBT), a subsidiary of PT Adaro Energy Tbk, plans ...
Saturday, 26 March 11
THE FREIGHT MARKET REMAINED A BIT VOLATILE THIS WEEK - CAPT. REDDY
COALspot.com - "The freight market remained a bit volatile this week", says Capt. Reddy, director of Vistaar Shipping Singapore.
Howeve ...
Saturday, 26 March 11
FLSMIDTH WINS MULTIMILLION DOLLAR MATERIAL HANDLING PROJECT IN INDONESIA
FLSmidth has signed a contract in Jakarta worth in excess of USD 135m (DKK 700m) with PT Adaro Indonesia, a subsidiary of PT Adaro Energy Tbk., to s ...
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- Pipit Mutiara Jaya. PT, Indonesia
- Simpson Spence & Young - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Cement Manufacturers Association - India
- The Treasury - Australian Government
- LBH Netherlands Bv - Netherlands
- Sinarmas Energy and Mining - Indonesia
- Orica Australia Pty. Ltd.
- Star Paper Mills Limited - India
- Meenaskhi Energy Private Limited - India
- Coal and Oil Company - UAE
- Coalindo Energy - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Binh Thuan Hamico - Vietnam
- Ministry of Transport, Egypt
- Goldman Sachs - Singapore
- Indo Tambangraya Megah - Indonesia
- New Zealand Coal & Carbon
- Gujarat Electricity Regulatory Commission - India
- Barasentosa Lestari - Indonesia
- Africa Commodities Group - South Africa
- Global Business Power Corporation, Philippines
- Sakthi Sugars Limited - India
- Parry Sugars Refinery, India
- Bangladesh Power Developement Board
- Iligan Light & Power Inc, Philippines
- TeaM Sual Corporation - Philippines
- Larsen & Toubro Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- PTC India Limited - India
- IHS Mccloskey Coal Group - USA
- Global Coal Blending Company Limited - Australia
- Petron Corporation, Philippines
- Xindia Steels Limited - India
- Straits Asia Resources Limited - Singapore
- Uttam Galva Steels Limited - India
- Posco Energy - South Korea
- Interocean Group of Companies - India
- Sical Logistics Limited - India
- India Bulls Power Limited - India
- Siam City Cement PLC, Thailand
- Bhoruka Overseas - Indonesia
- Baramulti Group, Indonesia
- CIMB Investment Bank - Malaysia
- Malabar Cements Ltd - India
- Bayan Resources Tbk. - Indonesia
- Lanco Infratech Ltd - India
- Thiess Contractors Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Semirara Mining Corp, Philippines
- Sree Jayajothi Cements Limited - India
- Indian Energy Exchange, India
- Global Green Power PLC Corporation, Philippines
- SMC Global Power, Philippines
- Thai Mozambique Logistica
- Kobexindo Tractors - Indoneisa
- Miang Besar Coal Terminal - Indonesia
- McConnell Dowell - Australia
- Siam City Cement - Thailand
- PowerSource Philippines DevCo
- IEA Clean Coal Centre - UK
- Bulk Trading Sa - Switzerland
- Latin American Coal - Colombia
- Power Finance Corporation Ltd., India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Romanian Commodities Exchange
- Ind-Barath Power Infra Limited - India
- Indonesian Coal Mining Association
- Indian Oil Corporation Limited
- Timah Investasi Mineral - Indoneisa
- Bukit Makmur.PT - Indonesia
- VISA Power Limited - India
- White Energy Company Limited
- Altura Mining Limited, Indonesia
- Deloitte Consulting - India
- Merrill Lynch Commodities Europe
- GMR Energy Limited - India
- ASAPP Information Group - India
- Grasim Industreis Ltd - India
- SN Aboitiz Power Inc, Philippines
- Alfred C Toepfer International GmbH - Germany
- Orica Mining Services - Indonesia
- Energy Link Ltd, New Zealand
- Bhatia International Limited - India
- Mercator Lines Limited - India
- Sarangani Energy Corporation, Philippines
- Agrawal Coal Company - India
- Sojitz Corporation - Japan
- Madhucon Powers Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Vedanta Resources Plc - India
- Karaikal Port Pvt Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Maharashtra Electricity Regulatory Commission - India
- Gujarat Sidhee Cement - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Ceylon Electricity Board - Sri Lanka
- Billiton Holdings Pty Ltd - Australia
- London Commodity Brokers - England
- Indika Energy - Indonesia
- SMG Consultants - Indonesia
- Planning Commission, India
- Central Java Power - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Economic Council, Georgia
- Intertek Mineral Services - Indonesia
- South Luzon Thermal Energy Corporation
- Vizag Seaport Private Limited - India
- Jindal Steel & Power Ltd - India
- Mercuria Energy - Indonesia
- Australian Commodity Traders Exchange
- Tamil Nadu electricity Board
- Dalmia Cement Bharat India
- Rio Tinto Coal - Australia
- Coastal Gujarat Power Limited - India
- San Jose City I Power Corp, Philippines
- Neyveli Lignite Corporation Ltd, - India
- PetroVietnam Power Coal Import and Supply Company
- Electricity Generating Authority of Thailand
- Port Waratah Coal Services - Australia
- Kohat Cement Company Ltd. - Pakistan
- Kumho Petrochemical, South Korea
- Kapuas Tunggal Persada - Indonesia
- Tata Chemicals Ltd - India
- Kideco Jaya Agung - Indonesia
- Chamber of Mines of South Africa
- Australian Coal Association
- Attock Cement Pakistan Limited
- Bharathi Cement Corporation - India
- CNBM International Corporation - China
- Karbindo Abesyapradhi - Indoneisa
- Energy Development Corp, Philippines
- Bukit Baiduri Energy - Indonesia
- GVK Power & Infra Limited - India
- Kartika Selabumi Mining - Indonesia
- Sindya Power Generating Company Private Ltd
- Essar Steel Hazira Ltd - India
- Renaissance Capital - South Africa
- Toyota Tsusho Corporation, Japan
- Marubeni Corporation - India
- GN Power Mariveles Coal Plant, Philippines
- ICICI Bank Limited - India
- International Coal Ventures Pvt Ltd - India
- Edison Trading Spa - Italy
- Standard Chartered Bank - UAE
- Independent Power Producers Association of India
- Ministry of Mines - Canada
- Aditya Birla Group - India
- Jorong Barutama Greston.PT - Indonesia
- Carbofer General Trading SA - India
- PNOC Exploration Corporation - Philippines
- Central Electricity Authority - India
- Pendopo Energi Batubara - Indonesia
- Singapore Mercantile Exchange
- Leighton Contractors Pty Ltd - Australia
- MS Steel International - UAE
- Gujarat Mineral Development Corp Ltd - India
- Eastern Energy - Thailand
- European Bulk Services B.V. - Netherlands
- Banpu Public Company Limited - Thailand
- OPG Power Generation Pvt Ltd - India
- Salva Resources Pvt Ltd - India
- Videocon Industries ltd - India
- Globalindo Alam Lestari - Indonesia
- Wilmar Investment Holdings
- Mintek Dendrill Indonesia
- Samtan Co., Ltd - South Korea
- Price Waterhouse Coopers - Russia
- The University of Queensland
- Kepco SPC Power Corporation, Philippines
- Kaltim Prima Coal - Indonesia
- Parliament of New Zealand
- Cigading International Bulk Terminal - Indonesia
- Makarim & Taira - Indonesia
- Borneo Indobara - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Georgia Ports Authority, United States
- Bhushan Steel Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Formosa Plastics Group - Taiwan
- Directorate General of MIneral and Coal - Indonesia
- Heidelberg Cement - Germany
- Mjunction Services Limited - India
- Ministry of Finance - Indonesia
- GAC Shipping (India) Pvt Ltd
- Meralco Power Generation, Philippines
- Medco Energi Mining Internasional
- Ambuja Cements Ltd - India
- Manunggal Multi Energi - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Commonwealth Bank - Australia
- Jaiprakash Power Ventures ltd
- Savvy Resources Ltd - HongKong
- Riau Bara Harum - Indonesia
- Aboitiz Power Corporation - Philippines
- Antam Resourcindo - Indonesia
- Oldendorff Carriers - Singapore
- Vijayanagar Sugar Pvt Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Maheswari Brothers Coal Limited - India
- Chettinad Cement Corporation Ltd - India
- The State Trading Corporation of India Ltd
- Electricity Authority, New Zealand
- Anglo American - United Kingdom
- Minerals Council of Australia
- Therma Luzon, Inc, Philippines
- Metalloyd Limited - United Kingdom
- Directorate Of Revenue Intelligence - India
- Wood Mackenzie - Singapore
- Semirara Mining and Power Corporation, Philippines
- Indogreen Group - Indonesia
- Trasteel International SA, Italy
- Eastern Coal Council - USA
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
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