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