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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, 28 February 11
COAL INDIA HIKES PRICES BY 12% FOR SELECT CONSUMERS - ECONOMIC TIMES
Economic Times reported that, Coal India has raised prices by an average 12% for some of its consumers from Sunday, boosting its revenue by 6,000 cr ...
Saturday, 26 February 11
CIL TO HIKE COAL PRICES BY 15 PC FROM TONIGHT - THE TIMES OF INDIA
The Times of India reported that, an Indian State-run coal producer, Coal India will raise the price of coal on an average by about 15 per cent with ...
Saturday, 26 February 11
SUPRAMAX INDEX WAS UP ABOUT 10 PERCENT THIS WEEK - VISTAAR
COALspot.com - The market started on a weak note and seemed to have lost the momentum seen the previous week. The main sectors affected were Cape an ...
Saturday, 26 February 11
PEABODY ENERGY ENTERS INTO COAL SOURCING AGREEMENT ACCESSING INDONESIAN COAL FOR EXPORT
Peabody Energy today said it has entered into an agreement with Indonesia's PT Cahaya Energi Mandiri (CEM) to source 2 million tons of coal for Asi ...
Thursday, 24 February 11
DRY BULK MARKET KEEPS LOSING GROUND, CAPESIZES SUFFERING - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market lost further ground yesterday, as the industry’s benchmark, the Baltic Dry Index was rapidly falling, ending the session d ...
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- Asmin Koalindo Tuhup - Indonesia
- Commonwealth Bank - Australia
- Pendopo Energi Batubara - Indonesia
- Bukit Baiduri Energy - Indonesia
- Oldendorff Carriers - Singapore
- Altura Mining Limited, Indonesia
- Dalmia Cement Bharat India
- Kartika Selabumi Mining - Indonesia
- Africa Commodities Group - South Africa
- Indika Energy - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Vedanta Resources Plc - India
- Salva Resources Pvt Ltd - India
- Energy Link Ltd, New Zealand
- Iligan Light & Power Inc, Philippines
- Jindal Steel & Power Ltd - India
- Ministry of Mines - Canada
- Neyveli Lignite Corporation Ltd, - India
- Vizag Seaport Private Limited - India
- Latin American Coal - Colombia
- Price Waterhouse Coopers - Russia
- Minerals Council of Australia
- Pipit Mutiara Jaya. PT, Indonesia
- CNBM International Corporation - China
- Central Electricity Authority - India
- Edison Trading Spa - Italy
- Straits Asia Resources Limited - Singapore
- Romanian Commodities Exchange
- Malabar Cements Ltd - India
- Coalindo Energy - Indonesia
- Anglo American - United Kingdom
- Petrochimia International Co. Ltd.- Taiwan
- Antam Resourcindo - Indonesia
- Aditya Birla Group - India
- PNOC Exploration Corporation - Philippines
- Jaiprakash Power Ventures ltd
- Coal and Oil Company - UAE
- Lanco Infratech Ltd - India
- Bhoruka Overseas - Indonesia
- Indian Energy Exchange, India
- India Bulls Power Limited - India
- European Bulk Services B.V. - Netherlands
- IEA Clean Coal Centre - UK
- Global Business Power Corporation, Philippines
- CIMB Investment Bank - Malaysia
- Marubeni Corporation - India
- LBH Netherlands Bv - Netherlands
- Energy Development Corp, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- The University of Queensland
- Kohat Cement Company Ltd. - Pakistan
- Maheswari Brothers Coal Limited - India
- Petron Corporation, Philippines
- Bhushan Steel Limited - India
- Bhatia International Limited - India
- Orica Mining Services - Indonesia
- Thai Mozambique Logistica
- Central Java Power - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Carbofer General Trading SA - India
- Bukit Makmur.PT - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Orica Australia Pty. Ltd.
- Simpson Spence & Young - Indonesia
- Georgia Ports Authority, United States
- Bayan Resources Tbk. - Indonesia
- Sojitz Corporation - Japan
- Coastal Gujarat Power Limited - India
- Indian Oil Corporation Limited
- Bangladesh Power Developement Board
- Intertek Mineral Services - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Tamil Nadu electricity Board
- Miang Besar Coal Terminal - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Bharathi Cement Corporation - India
- McConnell Dowell - Australia
- Semirara Mining and Power Corporation, Philippines
- MS Steel International - UAE
- Karaikal Port Pvt Ltd - India
- The Treasury - Australian Government
- Mjunction Services Limited - India
- Parliament of New Zealand
- Videocon Industries ltd - India
- Ambuja Cements Ltd - India
- San Jose City I Power Corp, Philippines
- Indonesian Coal Mining Association
- IHS Mccloskey Coal Group - USA
- Global Coal Blending Company Limited - Australia
- PTC India Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Riau Bara Harum - Indonesia
- Heidelberg Cement - Germany
- Star Paper Mills Limited - India
- ASAPP Information Group - India
- Interocean Group of Companies - India
- Gujarat Mineral Development Corp Ltd - India
- South Luzon Thermal Energy Corporation
- Maharashtra Electricity Regulatory Commission - India
- OPG Power Generation Pvt Ltd - India
- Goldman Sachs - Singapore
- Ministry of Finance - Indonesia
- Parry Sugars Refinery, India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kaltim Prima Coal - Indonesia
- Ind-Barath Power Infra Limited - India
- ICICI Bank Limited - India
- Wilmar Investment Holdings
- Rio Tinto Coal - Australia
- Renaissance Capital - South Africa
- Singapore Mercantile Exchange
- Indo Tambangraya Megah - Indonesia
- Independent Power Producers Association of India
- Eastern Coal Council - USA
- Merrill Lynch Commodities Europe
- Indogreen Group - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Wood Mackenzie - Singapore
- Gujarat Sidhee Cement - India
- Aboitiz Power Corporation - Philippines
- International Coal Ventures Pvt Ltd - India
- Grasim Industreis Ltd - India
- Borneo Indobara - Indonesia
- Sindya Power Generating Company Private Ltd
- Makarim & Taira - Indonesia
- Attock Cement Pakistan Limited
- GN Power Mariveles Coal Plant, Philippines
- Posco Energy - South Korea
- Ministry of Transport, Egypt
- Barasentosa Lestari - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Meenaskhi Energy Private Limited - India
- Kideco Jaya Agung - Indonesia
- Sakthi Sugars Limited - India
- Economic Council, Georgia
- Meralco Power Generation, Philippines
- Deloitte Consulting - India
- Electricity Authority, New Zealand
- Uttam Galva Steels Limited - India
- Kumho Petrochemical, South Korea
- GVK Power & Infra Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Timah Investasi Mineral - Indoneisa
- Siam City Cement - Thailand
- Sical Logistics Limited - India
- SMG Consultants - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Australian Coal Association
- Mintek Dendrill Indonesia
- Kobexindo Tractors - Indoneisa
- Cigading International Bulk Terminal - Indonesia
- Tata Chemicals Ltd - India
- Semirara Mining Corp, Philippines
- Standard Chartered Bank - UAE
- SMC Global Power, Philippines
- Sinarmas Energy and Mining - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Agrawal Coal Company - India
- Siam City Cement PLC, Thailand
- Toyota Tsusho Corporation, Japan
- Sree Jayajothi Cements Limited - India
- Chettinad Cement Corporation Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Manunggal Multi Energi - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Port Waratah Coal Services - Australia
- GAC Shipping (India) Pvt Ltd
- New Zealand Coal & Carbon
- Global Green Power PLC Corporation, Philippines
- Electricity Generating Authority of Thailand
- Bukit Asam (Persero) Tbk - Indonesia
- Kepco SPC Power Corporation, Philippines
- GMR Energy Limited - India
- Essar Steel Hazira Ltd - India
- Madhucon Powers Ltd - India
- Baramulti Group, Indonesia
- TeaM Sual Corporation - Philippines
- Cement Manufacturers Association - India
- Holcim Trading Pte Ltd - Singapore
- TNB Fuel Sdn Bhd - Malaysia
- Savvy Resources Ltd - HongKong
- Directorate General of MIneral and Coal - Indonesia
- Larsen & Toubro Limited - India
- Metalloyd Limited - United Kingdom
- Binh Thuan Hamico - Vietnam
- Directorate Of Revenue Intelligence - India
- Medco Energi Mining Internasional
- Power Finance Corporation Ltd., India
- Mercuria Energy - Indonesia
- The State Trading Corporation of India Ltd
- Thiess Contractors Indonesia
- PowerSource Philippines DevCo
- Formosa Plastics Group - Taiwan
- Samtan Co., Ltd - South Korea
- Planning Commission, India
- SN Aboitiz Power Inc, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Mercator Lines Limited - India
- London Commodity Brokers - England
- VISA Power Limited - India
- Bulk Trading Sa - Switzerland
- Alfred C Toepfer International GmbH - Germany
- Rashtriya Ispat Nigam Limited - India
- Banpu Public Company Limited - Thailand
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Sarangani Energy Corporation, Philippines
- White Energy Company Limited
- Leighton Contractors Pty Ltd - Australia
- Globalindo Alam Lestari - Indonesia
- Trasteel International SA, Italy
- Bahari Cakrawala Sebuku - Indonesia
- Australian Commodity Traders Exchange
- Eastern Energy - Thailand
- Krishnapatnam Port Company Ltd. - India
- Chamber of Mines of South Africa
- Xindia Steels Limited - India
- Therma Luzon, Inc, Philippines
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