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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 February 11
BAYAN, KANGAROO EXTEND DUE DILIGENCE
Coal miner controlled by businessman Dato' Low Tuck Kwong PT Bayan Resources Tbk (BYAN) and Australia-listed coal company Kangaroo Resources Limite ...
Tuesday, 08 February 11
DRY BULK: IS THE TIDE TURNING? - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
In what could be perceived as a change of market sentiment for the better, the dry bulk industry’s benchmark, the Baltic Dry Index (BDI) poste ...
Monday, 07 February 11
THE INDONESIAN COAL REFERENCE PRICE HAS JUMPED 13.03 PERCENT IN FEBRUARY 2011
COALspot.com - Indonesia’s Ministry of Energy and Mineral Resources has set the February 2011 Indonesian Coal Reference Price for therma ...
Monday, 07 February 11
COAL PRICES ON RISE: DEMAND FROM INDIA AND CHINA - ANALYZED SUNIL K KUMBHAT
INDONESIA IS HEART OF ASIAN COAL BOOM
COALspot.com - Rising demand of Coal from India and China, coupled with global financial recovery, is driv ...
Monday, 07 February 11
RICHARDS BAY COAL TERMINAL EXPORTS SURGE, BUOYED BY ECONOMIC DEVELOPMENT IN CHINA AND INDIA
COALspot.com - Richards Bay Coal Terminal (RBCT) announced today that 2010 exports have exceeded the last two years’ performance, said in a re ...
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- VISA Power Limited - India
- Tamil Nadu electricity Board
- ICICI Bank Limited - India
- IHS Mccloskey Coal Group - USA
- GN Power Mariveles Coal Plant, Philippines
- Siam City Cement - Thailand
- Eastern Energy - Thailand
- SN Aboitiz Power Inc, Philippines
- McConnell Dowell - Australia
- Trasteel International SA, Italy
- Bangladesh Power Developement Board
- Uttam Galva Steels Limited - India
- Gujarat Sidhee Cement - India
- Wood Mackenzie - Singapore
- Jaiprakash Power Ventures ltd
- Price Waterhouse Coopers - Russia
- Miang Besar Coal Terminal - Indonesia
- The University of Queensland
- OPG Power Generation Pvt Ltd - India
- Attock Cement Pakistan Limited
- Bulk Trading Sa - Switzerland
- Larsen & Toubro Limited - India
- Meralco Power Generation, Philippines
- Georgia Ports Authority, United States
- Sindya Power Generating Company Private Ltd
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Karaikal Port Pvt Ltd - India
- Africa Commodities Group - South Africa
- Sakthi Sugars Limited - India
- Kohat Cement Company Ltd. - Pakistan
- The State Trading Corporation of India Ltd
- PowerSource Philippines DevCo
- GAC Shipping (India) Pvt Ltd
- Indika Energy - Indonesia
- Independent Power Producers Association of India
- Energy Link Ltd, New Zealand
- Formosa Plastics Group - Taiwan
- Maharashtra Electricity Regulatory Commission - India
- Leighton Contractors Pty Ltd - Australia
- Indo Tambangraya Megah - Indonesia
- Eastern Coal Council - USA
- Bhushan Steel Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- IEA Clean Coal Centre - UK
- India Bulls Power Limited - India
- Savvy Resources Ltd - HongKong
- Chamber of Mines of South Africa
- Electricity Generating Authority of Thailand
- Romanian Commodities Exchange
- New Zealand Coal & Carbon
- Heidelberg Cement - Germany
- Intertek Mineral Services - Indonesia
- Planning Commission, India
- Petrochimia International Co. Ltd.- Taiwan
- Bank of Tokyo Mitsubishi UFJ Ltd
- Ministry of Mines - Canada
- GVK Power & Infra Limited - India
- Oldendorff Carriers - Singapore
- Indian Energy Exchange, India
- Billiton Holdings Pty Ltd - Australia
- Indonesian Coal Mining Association
- Xindia Steels Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Mjunction Services Limited - India
- Riau Bara Harum - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Kobexindo Tractors - Indoneisa
- Ambuja Cements Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Aboitiz Power Corporation - Philippines
- Jorong Barutama Greston.PT - Indonesia
- Pendopo Energi Batubara - Indonesia
- Videocon Industries ltd - India
- Borneo Indobara - Indonesia
- Agrawal Coal Company - India
- Karbindo Abesyapradhi - Indoneisa
- AsiaOL BioFuels Corp., Philippines
- Orica Mining Services - Indonesia
- Singapore Mercantile Exchange
- SMC Global Power, Philippines
- Global Green Power PLC Corporation, Philippines
- CIMB Investment Bank - Malaysia
- Kapuas Tunggal Persada - Indonesia
- Grasim Industreis Ltd - India
- Tata Chemicals Ltd - India
- MS Steel International - UAE
- Meenaskhi Energy Private Limited - India
- Ceylon Electricity Board - Sri Lanka
- Directorate General of MIneral and Coal - Indonesia
- Central Java Power - Indonesia
- Global Coal Blending Company Limited - Australia
- Makarim & Taira - Indonesia
- Goldman Sachs - Singapore
- PTC India Limited - India
- Indian Oil Corporation Limited
- Krishnapatnam Port Company Ltd. - India
- European Bulk Services B.V. - Netherlands
- CNBM International Corporation - China
- Kartika Selabumi Mining - Indonesia
- Kumho Petrochemical, South Korea
- Sarangani Energy Corporation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Sojitz Corporation - Japan
- Bhatia International Limited - India
- Therma Luzon, Inc, Philippines
- Holcim Trading Pte Ltd - Singapore
- Salva Resources Pvt Ltd - India
- Ministry of Transport, Egypt
- Bhoruka Overseas - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Timah Investasi Mineral - Indoneisa
- Australian Commodity Traders Exchange
- Edison Trading Spa - Italy
- Manunggal Multi Energi - Indonesia
- Sical Logistics Limited - India
- Orica Australia Pty. Ltd.
- PetroVietnam Power Coal Import and Supply Company
- Antam Resourcindo - Indonesia
- TeaM Sual Corporation - Philippines
- Renaissance Capital - South Africa
- Bukit Makmur.PT - Indonesia
- Dalmia Cement Bharat India
- Straits Asia Resources Limited - Singapore
- Sinarmas Energy and Mining - Indonesia
- Bayan Resources Tbk. - Indonesia
- Barasentosa Lestari - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Malabar Cements Ltd - India
- Toyota Tsusho Corporation, Japan
- Metalloyd Limited - United Kingdom
- Sree Jayajothi Cements Limited - India
- Kaltim Prima Coal - Indonesia
- Ind-Barath Power Infra Limited - India
- Electricity Authority, New Zealand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Globalindo Alam Lestari - Indonesia
- Coalindo Energy - Indonesia
- Iligan Light & Power Inc, Philippines
- Baramulti Group, Indonesia
- Standard Chartered Bank - UAE
- Bukit Asam (Persero) Tbk - Indonesia
- Thai Mozambique Logistica
- Central Electricity Authority - India
- Essar Steel Hazira Ltd - India
- LBH Netherlands Bv - Netherlands
- Chettinad Cement Corporation Ltd - India
- Parliament of New Zealand
- Merrill Lynch Commodities Europe
- Kideco Jaya Agung - Indonesia
- Simpson Spence & Young - Indonesia
- International Coal Ventures Pvt Ltd - India
- Parry Sugars Refinery, India
- South Luzon Thermal Energy Corporation
- Interocean Group of Companies - India
- Medco Energi Mining Internasional
- Madhucon Powers Ltd - India
- Latin American Coal - Colombia
- Anglo American - United Kingdom
- TNB Fuel Sdn Bhd - Malaysia
- The Treasury - Australian Government
- Rashtriya Ispat Nigam Limited - India
- Aditya Birla Group - India
- Wilmar Investment Holdings
- Kepco SPC Power Corporation, Philippines
- Rio Tinto Coal - Australia
- Coastal Gujarat Power Limited - India
- Posco Energy - South Korea
- Petron Corporation, Philippines
- Jindal Steel & Power Ltd - India
- Minerals Council of Australia
- Samtan Co., Ltd - South Korea
- Mercator Lines Limited - India
- Deloitte Consulting - India
- Power Finance Corporation Ltd., India
- Banpu Public Company Limited - Thailand
- Siam City Cement PLC, Thailand
- Mercuria Energy - Indonesia
- Bukit Baiduri Energy - Indonesia
- Altura Mining Limited, Indonesia
- London Commodity Brokers - England
- Offshore Bulk Terminal Pte Ltd, Singapore
- Global Business Power Corporation, Philippines
- Semirara Mining Corp, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Energy Development Corp, Philippines
- San Jose City I Power Corp, Philippines
- Marubeni Corporation - India
- PNOC Exploration Corporation - Philippines
- Cement Manufacturers Association - India
- Semirara Mining and Power Corporation, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Vedanta Resources Plc - India
- ASAPP Information Group - India
- Maheswari Brothers Coal Limited - India
- Alfred C Toepfer International GmbH - Germany
- Star Paper Mills Limited - India
- Commonwealth Bank - Australia
- White Energy Company Limited
- SMG Consultants - Indonesia
- GMR Energy Limited - India
- Ministry of Finance - Indonesia
- Directorate Of Revenue Intelligence - India
- Port Waratah Coal Services - Australia
- Mintek Dendrill Indonesia
- Australian Coal Association
- Lanco Infratech Ltd - India
- Indogreen Group - Indonesia
- Binh Thuan Hamico - Vietnam
- Economic Council, Georgia
- Carbofer General Trading SA - India
- Bharathi Cement Corporation - India
- Thiess Contractors Indonesia
- Coal and Oil Company - UAE
- Vizag Seaport Private Limited - India
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