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