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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, 08 March 11
US$ 8 BILLION WORTH OF INFRASTRUCTURE PROJECTS IN PIPELINE IN INDONESIA - WOOD MACKENZIE
India’s Increasing Demand for Thermal Coal Cannot Be Satisfied Without Emerging Coal Areas in Indonesia - Wood Mackenzie
At Coa ...
Tuesday, 08 March 11
INDIA'S VEDANTA TO ACQUIRE COAL MINES IN OVERSEAS
COALspot.com - India's Vedanta group is also looking at long-term off take agreements and possible acquire of coal mines overseas, the official sai ...
Tuesday, 08 March 11
MINERS SAY VALUE-ADDED LAW WILL HURT IN THE LONG RUN - THE JAKARTA GLOBE
The Jakarta Globe reported that, Government plans to require miners to give added value to their exported commodities could end up costing the count ...
Tuesday, 08 March 11
THE PANAMAX MARKET THIS WEEK FIRMED UP - BRS
Underlining the unpredictability of the current market, rates for all dry bulk segments swung up again last week. Stronger exports out of South Amer ...
Sunday, 06 March 11
THE S6 ROUTE MAY CONTINUE TO BE FIRM - VISTAAR
COALspot.com - The freight market was firm this week with all indices up. The BDI , Cape Index and Panamax index was up by almost 9 pct where as Sup ...
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- Economic Council, Georgia
- ICICI Bank Limited - India
- PTC India Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Eastern Energy - Thailand
- ASAPP Information Group - India
- Standard Chartered Bank - UAE
- Parliament of New Zealand
- Chamber of Mines of South Africa
- Pipit Mutiara Jaya. PT, Indonesia
- Miang Besar Coal Terminal - Indonesia
- Mercuria Energy - Indonesia
- Sarangani Energy Corporation, Philippines
- Indian Oil Corporation Limited
- Offshore Bulk Terminal Pte Ltd, Singapore
- PetroVietnam Power Coal Import and Supply Company
- Alfred C Toepfer International GmbH - Germany
- Kepco SPC Power Corporation, Philippines
- Binh Thuan Hamico - Vietnam
- Formosa Plastics Group - Taiwan
- Salva Resources Pvt Ltd - India
- OPG Power Generation Pvt Ltd - India
- Goldman Sachs - Singapore
- Videocon Industries ltd - India
- Sakthi Sugars Limited - India
- PowerSource Philippines DevCo
- Asmin Koalindo Tuhup - Indonesia
- Timah Investasi Mineral - Indoneisa
- Aditya Birla Group - India
- Planning Commission, India
- Ministry of Transport, Egypt
- Energy Link Ltd, New Zealand
- Karaikal Port Pvt Ltd - India
- MS Steel International - UAE
- Ambuja Cements Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Gujarat Mineral Development Corp Ltd - India
- Electricity Generating Authority of Thailand
- Georgia Ports Authority, United States
- Rio Tinto Coal - Australia
- Singapore Mercantile Exchange
- Neyveli Lignite Corporation Ltd, - India
- Maharashtra Electricity Regulatory Commission - India
- Ministry of Mines - Canada
- Jaiprakash Power Ventures ltd
- Vizag Seaport Private Limited - India
- Madhucon Powers Ltd - India
- Orica Mining Services - Indonesia
- Cement Manufacturers Association - India
- Eastern Coal Council - USA
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Billiton Holdings Pty Ltd - Australia
- Bhoruka Overseas - Indonesia
- Bukit Makmur.PT - Indonesia
- Indogreen Group - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Siam City Cement PLC, Thailand
- Carbofer General Trading SA - India
- Sindya Power Generating Company Private Ltd
- GN Power Mariveles Coal Plant, Philippines
- Kideco Jaya Agung - Indonesia
- Borneo Indobara - Indonesia
- Indika Energy - Indonesia
- Ministry of Finance - Indonesia
- Star Paper Mills Limited - India
- Straits Asia Resources Limited - Singapore
- Kobexindo Tractors - Indoneisa
- VISA Power Limited - India
- Siam City Cement - Thailand
- Aboitiz Power Corporation - Philippines
- Pendopo Energi Batubara - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Savvy Resources Ltd - HongKong
- CNBM International Corporation - China
- IEA Clean Coal Centre - UK
- Minerals Council of Australia
- Latin American Coal - Colombia
- London Commodity Brokers - England
- IHS Mccloskey Coal Group - USA
- Independent Power Producers Association of India
- Banpu Public Company Limited - Thailand
- Kaltim Prima Coal - Indonesia
- SMG Consultants - Indonesia
- Coalindo Energy - Indonesia
- Bayan Resources Tbk. - Indonesia
- Riau Bara Harum - Indonesia
- Toyota Tsusho Corporation, Japan
- Vedanta Resources Plc - India
- Simpson Spence & Young - Indonesia
- Bukit Baiduri Energy - Indonesia
- LBH Netherlands Bv - Netherlands
- Mintek Dendrill Indonesia
- New Zealand Coal & Carbon
- India Bulls Power Limited - India
- Sree Jayajothi Cements Limited - India
- Altura Mining Limited, Indonesia
- Larsen & Toubro Limited - India
- Bhatia International Limited - India
- Mjunction Services Limited - India
- Metalloyd Limited - United Kingdom
- Merrill Lynch Commodities Europe
- Central Java Power - Indonesia
- Petron Corporation, Philippines
- The University of Queensland
- Directorate Of Revenue Intelligence - India
- Chettinad Cement Corporation Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Indian Energy Exchange, India
- Power Finance Corporation Ltd., India
- Port Waratah Coal Services - Australia
- Dalmia Cement Bharat India
- Marubeni Corporation - India
- Indonesian Coal Mining Association
- GMR Energy Limited - India
- Semirara Mining and Power Corporation, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Wood Mackenzie - Singapore
- Tata Chemicals Ltd - India
- McConnell Dowell - Australia
- Wilmar Investment Holdings
- Globalindo Alam Lestari - Indonesia
- Kartika Selabumi Mining - Indonesia
- The Treasury - Australian Government
- Edison Trading Spa - Italy
- Manunggal Multi Energi - Indonesia
- Global Green Power PLC Corporation, Philippines
- Malabar Cements Ltd - India
- Lanco Infratech Ltd - India
- Iligan Light & Power Inc, Philippines
- Cigading International Bulk Terminal - Indonesia
- Electricity Authority, New Zealand
- CIMB Investment Bank - Malaysia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Krishnapatnam Port Company Ltd. - India
- Kumho Petrochemical, South Korea
- Sojitz Corporation - Japan
- Energy Development Corp, Philippines
- San Jose City I Power Corp, Philippines
- Africa Commodities Group - South Africa
- Jorong Barutama Greston.PT - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Samtan Co., Ltd - South Korea
- Baramulti Group, Indonesia
- Antam Resourcindo - Indonesia
- International Coal Ventures Pvt Ltd - India
- Gujarat Sidhee Cement - India
- Grasim Industreis Ltd - India
- Barasentosa Lestari - Indonesia
- Global Coal Blending Company Limited - Australia
- Bhushan Steel Limited - India
- Ind-Barath Power Infra Limited - India
- Tamil Nadu electricity Board
- Bukit Asam (Persero) Tbk - Indonesia
- Therma Luzon, Inc, Philippines
- Semirara Mining Corp, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Thiess Contractors Indonesia
- Leighton Contractors Pty Ltd - Australia
- Xindia Steels Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Jindal Steel & Power Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- SMC Global Power, Philippines
- Interocean Group of Companies - India
- Meralco Power Generation, Philippines
- AsiaOL BioFuels Corp., Philippines
- TeaM Sual Corporation - Philippines
- Deloitte Consulting - India
- GVK Power & Infra Limited - India
- Meenaskhi Energy Private Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Essar Steel Hazira Ltd - India
- Central Electricity Authority - India
- Karbindo Abesyapradhi - Indoneisa
- Rashtriya Ispat Nigam Limited - India
- Orica Australia Pty. Ltd.
- The State Trading Corporation of India Ltd
- Agrawal Coal Company - India
- Kohat Cement Company Ltd. - Pakistan
- GAC Shipping (India) Pvt Ltd
- PNOC Exploration Corporation - Philippines
- Intertek Mineral Services - Indonesia
- Attock Cement Pakistan Limited
- European Bulk Services B.V. - Netherlands
- Sical Logistics Limited - India
- Coastal Gujarat Power Limited - India
- Bangladesh Power Developement Board
- Oldendorff Carriers - Singapore
- Makarim & Taira - Indonesia
- Bulk Trading Sa - Switzerland
- Medco Energi Mining Internasional
- South Luzon Thermal Energy Corporation
- Australian Coal Association
- Price Waterhouse Coopers - Russia
- White Energy Company Limited
- SN Aboitiz Power Inc, Philippines
- Renaissance Capital - South Africa
- Romanian Commodities Exchange
- Australian Commodity Traders Exchange
- Coal and Oil Company - UAE
- Indo Tambangraya Megah - Indonesia
- Posco Energy - South Korea
- Maheswari Brothers Coal Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Mercator Lines Limited - India
- Uttam Galva Steels Limited - India
- Commonwealth Bank - Australia
- Thai Mozambique Logistica
- Global Business Power Corporation, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Heidelberg Cement - Germany
- Bharathi Cement Corporation - India
- Parry Sugars Refinery, India
- Trasteel International SA, Italy
- Holcim Trading Pte Ltd - Singapore
- Anglo American - United Kingdom
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