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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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Friday, 28 January 11
MPM SEEKS 40K TONS OF INDONESIAN COAL
An Indian paper producer Mysore Paper Mills Ltd., based in Bangalore is looking for 40,000 metric tons of non-coking coal of Indonesian o ...
Friday, 28 January 11
TRADING PERMIT DELAYS THREATEN EXPORTS - THE JAKARTA GLOBE
The Jakarta Globe reported that, an ongoing wrangle over licenses for mining traders could hurt investment, a coal mining association chief said on ...
Friday, 28 January 11
DRY BULK MARKET CLOSING IN TOWARDS CRISIS LEVELS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The trials and tribulations of the dry bulk market seem to have no end during the first month of 2011, as the industry’s benchmark, the Baltic ...
Wednesday, 26 January 11
ADANI TO SET-UP RAIL, PORT AND POWER PROJECTS IN INDONESIA - MONEYCONTROL
Moneycontrol reported that, Adani Enterprises, the flagship company of India’s infrastructure conglomerate the Adani Group, today announced th ...
Wednesday, 26 January 11
DRY BULK MARKET TAKES YET ANOTHER NOSEDIVE, CAPESIZES LOOK RATHER UNATTRACTIVE AT THE MOMENT - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The downturn of the dry bulk market sees no boundariers, disproving even those who thought that at least for the capesize market, the worst had pass ...
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- Asmin Koalindo Tuhup - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Romanian Commodities Exchange
- Merrill Lynch Commodities Europe
- Maheswari Brothers Coal Limited - India
- Binh Thuan Hamico - Vietnam
- European Bulk Services B.V. - Netherlands
- Eastern Coal Council - USA
- Sakthi Sugars Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Indian Oil Corporation Limited
- Neyveli Lignite Corporation Ltd, - India
- Barasentosa Lestari - Indonesia
- Vizag Seaport Private Limited - India
- Essar Steel Hazira Ltd - India
- Semirara Mining Corp, Philippines
- Coalindo Energy - Indonesia
- Holcim Trading Pte Ltd - Singapore
- SMC Global Power, Philippines
- OPG Power Generation Pvt Ltd - India
- VISA Power Limited - India
- Medco Energi Mining Internasional
- Ceylon Electricity Board - Sri Lanka
- Marubeni Corporation - India
- New Zealand Coal & Carbon
- Malabar Cements Ltd - India
- Salva Resources Pvt Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Indika Energy - Indonesia
- Attock Cement Pakistan Limited
- Planning Commission, India
- Semirara Mining and Power Corporation, Philippines
- Iligan Light & Power Inc, Philippines
- Jindal Steel & Power Ltd - India
- Latin American Coal - Colombia
- Karaikal Port Pvt Ltd - India
- Altura Mining Limited, Indonesia
- Kepco SPC Power Corporation, Philippines
- Meenaskhi Energy Private Limited - India
- GMR Energy Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Global Coal Blending Company Limited - Australia
- Jaiprakash Power Ventures ltd
- PetroVietnam Power Coal Import and Supply Company
- Parliament of New Zealand
- Bharathi Cement Corporation - India
- Straits Asia Resources Limited - Singapore
- Gujarat Electricity Regulatory Commission - India
- Ind-Barath Power Infra Limited - India
- Sarangani Energy Corporation, Philippines
- South Luzon Thermal Energy Corporation
- Energy Link Ltd, New Zealand
- Sree Jayajothi Cements Limited - India
- Goldman Sachs - Singapore
- Savvy Resources Ltd - HongKong
- Timah Investasi Mineral - Indoneisa
- Bhatia International Limited - India
- India Bulls Power Limited - India
- SN Aboitiz Power Inc, Philippines
- Coal and Oil Company - UAE
- Deloitte Consulting - India
- Posco Energy - South Korea
- Ministry of Transport, Egypt
- Trasteel International SA, Italy
- Borneo Indobara - Indonesia
- Chamber of Mines of South Africa
- Alfred C Toepfer International GmbH - Germany
- Indian Energy Exchange, India
- San Jose City I Power Corp, Philippines
- London Commodity Brokers - England
- Cement Manufacturers Association - India
- Kobexindo Tractors - Indoneisa
- McConnell Dowell - Australia
- Maharashtra Electricity Regulatory Commission - India
- Dalmia Cement Bharat India
- CIMB Investment Bank - Malaysia
- PNOC Exploration Corporation - Philippines
- Global Business Power Corporation, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Chettinad Cement Corporation Ltd - India
- Carbofer General Trading SA - India
- Central Electricity Authority - India
- Miang Besar Coal Terminal - Indonesia
- Directorate Of Revenue Intelligence - India
- Uttam Galva Steels Limited - India
- Africa Commodities Group - South Africa
- Indogreen Group - Indonesia
- Billiton Holdings Pty Ltd - Australia
- White Energy Company Limited
- Interocean Group of Companies - India
- Videocon Industries ltd - India
- Meralco Power Generation, Philippines
- Thai Mozambique Logistica
- ICICI Bank Limited - India
- Heidelberg Cement - Germany
- ASAPP Information Group - India
- Price Waterhouse Coopers - Russia
- AsiaOL BioFuels Corp., Philippines
- Global Green Power PLC Corporation, Philippines
- Xindia Steels Limited - India
- IEA Clean Coal Centre - UK
- Energy Development Corp, Philippines
- LBH Netherlands Bv - Netherlands
- Thiess Contractors Indonesia
- Bulk Trading Sa - Switzerland
- Riau Bara Harum - Indonesia
- Aditya Birla Group - India
- Larsen & Toubro Limited - India
- Krishnapatnam Port Company Ltd. - India
- Indo Tambangraya Megah - Indonesia
- CNBM International Corporation - China
- Kideco Jaya Agung - Indonesia
- Sindya Power Generating Company Private Ltd
- The Treasury - Australian Government
- Mercuria Energy - Indonesia
- Wood Mackenzie - Singapore
- Bangladesh Power Developement Board
- Orica Mining Services - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Electricity Generating Authority of Thailand
- Mercator Lines Limited - India
- Globalindo Alam Lestari - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Ministry of Mines - Canada
- Power Finance Corporation Ltd., India
- Formosa Plastics Group - Taiwan
- Tamil Nadu electricity Board
- Rio Tinto Coal - Australia
- Eastern Energy - Thailand
- Oldendorff Carriers - Singapore
- Agrawal Coal Company - India
- Bukit Makmur.PT - Indonesia
- Kumho Petrochemical, South Korea
- IHS Mccloskey Coal Group - USA
- Sojitz Corporation - Japan
- Independent Power Producers Association of India
- Orica Australia Pty. Ltd.
- Australian Commodity Traders Exchange
- Makarim & Taira - Indonesia
- Madhucon Powers Ltd - India
- Wilmar Investment Holdings
- GVK Power & Infra Limited - India
- Intertek Mineral Services - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Star Paper Mills Limited - India
- Economic Council, Georgia
- Renaissance Capital - South Africa
- MS Steel International - UAE
- Bayan Resources Tbk. - Indonesia
- Kapuas Tunggal Persada - Indonesia
- PTC India Limited - India
- Sical Logistics Limited - India
- Lanco Infratech Ltd - India
- Standard Chartered Bank - UAE
- Bhoruka Overseas - Indonesia
- Ambuja Cements Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Antam Resourcindo - Indonesia
- Bhushan Steel Limited - India
- Tata Chemicals Ltd - India
- International Coal Ventures Pvt Ltd - India
- Bukit Baiduri Energy - Indonesia
- GAC Shipping (India) Pvt Ltd
- Vedanta Resources Plc - India
- Bahari Cakrawala Sebuku - Indonesia
- Grasim Industreis Ltd - India
- Kaltim Prima Coal - Indonesia
- Mjunction Services Limited - India
- Australian Coal Association
- The State Trading Corporation of India Ltd
- Coastal Gujarat Power Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Pipit Mutiara Jaya. PT, Indonesia
- Minerals Council of Australia
- TeaM Sual Corporation - Philippines
- Simpson Spence & Young - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- SMG Consultants - Indonesia
- The University of Queensland
- Georgia Ports Authority, United States
- Bank of Tokyo Mitsubishi UFJ Ltd
- Therma Luzon, Inc, Philippines
- Pendopo Energi Batubara - Indonesia
- Mintek Dendrill Indonesia
- Siam City Cement PLC, Thailand
- Samtan Co., Ltd - South Korea
- Metalloyd Limited - United Kingdom
- Baramulti Group, Indonesia
- Ministry of Finance - Indonesia
- Manunggal Multi Energi - Indonesia
- Banpu Public Company Limited - Thailand
- Kartika Selabumi Mining - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Singapore Mercantile Exchange
- Sinarmas Energy and Mining - Indonesia
- Central Java Power - Indonesia
- Siam City Cement - Thailand
- Vijayanagar Sugar Pvt Ltd - India
- Indonesian Coal Mining Association
- Cigading International Bulk Terminal - Indonesia
- Edison Trading Spa - Italy
- Petron Corporation, Philippines
- Port Waratah Coal Services - Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Electricity Authority, New Zealand
- Toyota Tsusho Corporation, Japan
- Commonwealth Bank - Australia
- Gujarat Sidhee Cement - India
- Leighton Contractors Pty Ltd - Australia
- Aboitiz Power Corporation - Philippines
- Anglo American - United Kingdom
- PowerSource Philippines DevCo
- Parry Sugars Refinery, India
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