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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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Saturday, 22 January 11
POSSIBLE COAL EXPORT RESTRICTIONS ON INDONESIA UNLIKELY TO AFFECT CHURCHILL MINING - PROACTIVE INVESTORS
Proactive Investors reported that, Churchill Mining moved to reassure investors after a fall in its share price, stating that from talks with the au ...
Thursday, 20 January 11
INDONESIA MAY BAN LOW-QUALITY COAL EXPORTS FROM 2014 - BLOOMBERG
Bloomberg reported that, The Indonesian government plans to ban exports of coal with an energy value of less than 5,600 kilocalories a kilogram star ...
Thursday, 20 January 11
SUPRAS ARE DOING USD 7- 8K FOR INDONESIA-INDIA - FEARNBULK
Handy
Negative sentiment for forward positions in the Atlantic market due to lack of cargo availability and too many ballasters from the East. Con ...
Thursday, 20 January 11
ITMG TARGETS TO PRODUCE 25 MILLION TONS OF COAL THIS YEAR - BISNIS INDONESIA
Bisnis Indonesia reported that, Coal producer PT Indo Tambangraya Megah Tbk (ITMG) targets to produce 25 million tons of coal this year, a 13. ...
Thursday, 20 January 11
DRY BULK MARKETS FALL SEES NO END - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
Pundits indicating that the dry bulk market’s sentiment remains weak were justified, as the industry’s benchmark, the Baltic Dry Index ( ...
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- SMC Global Power, Philippines
- Aditya Birla Group - India
- Jorong Barutama Greston.PT - Indonesia
- San Jose City I Power Corp, Philippines
- Alfred C Toepfer International GmbH - Germany
- Merrill Lynch Commodities Europe
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- The University of Queensland
- Energy Development Corp, Philippines
- South Luzon Thermal Energy Corporation
- Petrochimia International Co. Ltd.- Taiwan
- Economic Council, Georgia
- Altura Mining Limited, Indonesia
- Eastern Coal Council - USA
- Thai Mozambique Logistica
- Indo Tambangraya Megah - Indonesia
- Baramulti Group, Indonesia
- Indian Oil Corporation Limited
- Latin American Coal - Colombia
- IHS Mccloskey Coal Group - USA
- Georgia Ports Authority, United States
- Globalindo Alam Lestari - Indonesia
- Central Electricity Authority - India
- Directorate General of MIneral and Coal - Indonesia
- Posco Energy - South Korea
- Indonesian Coal Mining Association
- Kobexindo Tractors - Indoneisa
- Rio Tinto Coal - Australia
- Makarim & Taira - Indonesia
- Aboitiz Power Corporation - Philippines
- Chettinad Cement Corporation Ltd - India
- Singapore Mercantile Exchange
- Vizag Seaport Private Limited - India
- Essar Steel Hazira Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Ind-Barath Power Infra Limited - India
- Kepco SPC Power Corporation, Philippines
- Sinarmas Energy and Mining - Indonesia
- Indogreen Group - Indonesia
- Energy Link Ltd, New Zealand
- Formosa Plastics Group - Taiwan
- Kalimantan Lumbung Energi - Indonesia
- Global Coal Blending Company Limited - Australia
- Parliament of New Zealand
- Kideco Jaya Agung - Indonesia
- Tata Chemicals Ltd - India
- Mjunction Services Limited - India
- Timah Investasi Mineral - Indoneisa
- Wilmar Investment Holdings
- Semirara Mining Corp, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Wood Mackenzie - Singapore
- Iligan Light & Power Inc, Philippines
- Port Waratah Coal Services - Australia
- GMR Energy Limited - India
- Standard Chartered Bank - UAE
- Agrawal Coal Company - India
- Intertek Mineral Services - Indonesia
- Simpson Spence & Young - Indonesia
- Sakthi Sugars Limited - India
- Indian Energy Exchange, India
- Holcim Trading Pte Ltd - Singapore
- Toyota Tsusho Corporation, Japan
- Semirara Mining and Power Corporation, Philippines
- IEA Clean Coal Centre - UK
- Gujarat Electricity Regulatory Commission - India
- Ministry of Mines - Canada
- Savvy Resources Ltd - HongKong
- ICICI Bank Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Lanco Infratech Ltd - India
- Jaiprakash Power Ventures ltd
- Antam Resourcindo - Indonesia
- New Zealand Coal & Carbon
- Pipit Mutiara Jaya. PT, Indonesia
- PowerSource Philippines DevCo
- Australian Coal Association
- Jindal Steel & Power Ltd - India
- Sindya Power Generating Company Private Ltd
- Goldman Sachs - Singapore
- Coalindo Energy - Indonesia
- Ambuja Cements Ltd - India
- Trasteel International SA, Italy
- Bukit Baiduri Energy - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Mercator Lines Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Xindia Steels Limited - India
- Bangladesh Power Developement Board
- Asia Pacific Energy Resources Ventures Inc, Philippines
- White Energy Company Limited
- GVK Power & Infra Limited - India
- Directorate Of Revenue Intelligence - India
- Central Java Power - Indonesia
- ASAPP Information Group - India
- Global Green Power PLC Corporation, Philippines
- Siam City Cement PLC, Thailand
- Bhoruka Overseas - Indonesia
- Orica Australia Pty. Ltd.
- Electricity Generating Authority of Thailand
- Sarangani Energy Corporation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sical Logistics Limited - India
- Deloitte Consulting - India
- Krishnapatnam Port Company Ltd. - India
- India Bulls Power Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Price Waterhouse Coopers - Russia
- The State Trading Corporation of India Ltd
- Kartika Selabumi Mining - Indonesia
- Cement Manufacturers Association - India
- Mintek Dendrill Indonesia
- Maheswari Brothers Coal Limited - India
- Edison Trading Spa - Italy
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Anglo American - United Kingdom
- Miang Besar Coal Terminal - Indonesia
- Binh Thuan Hamico - Vietnam
- Samtan Co., Ltd - South Korea
- Marubeni Corporation - India
- MS Steel International - UAE
- Planning Commission, India
- Bharathi Cement Corporation - India
- SN Aboitiz Power Inc, Philippines
- TeaM Sual Corporation - Philippines
- Salva Resources Pvt Ltd - India
- Ministry of Finance - Indonesia
- CIMB Investment Bank - Malaysia
- Orica Mining Services - Indonesia
- Heidelberg Cement - Germany
- International Coal Ventures Pvt Ltd - India
- Minerals Council of Australia
- Ceylon Electricity Board - Sri Lanka
- Straits Asia Resources Limited - Singapore
- Kapuas Tunggal Persada - Indonesia
- Kumho Petrochemical, South Korea
- GN Power Mariveles Coal Plant, Philippines
- VISA Power Limited - India
- Madhucon Powers Ltd - India
- Africa Commodities Group - South Africa
- Interocean Group of Companies - India
- AsiaOL BioFuels Corp., Philippines
- The Treasury - Australian Government
- Uttam Galva Steels Limited - India
- Karaikal Port Pvt Ltd - India
- Videocon Industries ltd - India
- Leighton Contractors Pty Ltd - Australia
- Billiton Holdings Pty Ltd - Australia
- Australian Commodity Traders Exchange
- Medco Energi Mining Internasional
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Siam City Cement - Thailand
- London Commodity Brokers - England
- Manunggal Multi Energi - Indonesia
- Borneo Indobara - Indonesia
- Coastal Gujarat Power Limited - India
- OPG Power Generation Pvt Ltd - India
- Banpu Public Company Limited - Thailand
- McConnell Dowell - Australia
- Thiess Contractors Indonesia
- Carbofer General Trading SA - India
- Bhushan Steel Limited - India
- Oldendorff Carriers - Singapore
- Meenaskhi Energy Private Limited - India
- Sree Jayajothi Cements Limited - India
- Renaissance Capital - South Africa
- Pendopo Energi Batubara - Indonesia
- GAC Shipping (India) Pvt Ltd
- Bulk Trading Sa - Switzerland
- Neyveli Lignite Corporation Ltd, - India
- Chamber of Mines of South Africa
- Grasim Industreis Ltd - India
- Therma Luzon, Inc, Philippines
- Cigading International Bulk Terminal - Indonesia
- Sojitz Corporation - Japan
- CNBM International Corporation - China
- Metalloyd Limited - United Kingdom
- Commonwealth Bank - Australia
- European Bulk Services B.V. - Netherlands
- Barasentosa Lestari - Indonesia
- Parry Sugars Refinery, India
- Kaltim Prima Coal - Indonesia
- Independent Power Producers Association of India
- Coal and Oil Company - UAE
- Mercuria Energy - Indonesia
- Global Business Power Corporation, Philippines
- PTC India Limited - India
- Indika Energy - Indonesia
- Romanian Commodities Exchange
- Bhatia International Limited - India
- Bukit Makmur.PT - Indonesia
- Power Finance Corporation Ltd., India
- Meralco Power Generation, Philippines
- Attock Cement Pakistan Limited
- Ministry of Transport, Egypt
- Asmin Koalindo Tuhup - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Tamil Nadu electricity Board
- Star Paper Mills Limited - India
- Riau Bara Harum - Indonesia
- Electricity Authority, New Zealand
- Bayan Resources Tbk. - Indonesia
- PNOC Exploration Corporation - Philippines
- Malabar Cements Ltd - India
- SMG Consultants - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- LBH Netherlands Bv - Netherlands
- Dalmia Cement Bharat India
- Eastern Energy - Thailand
- Vedanta Resources Plc - India
- Kohat Cement Company Ltd. - Pakistan
- Petron Corporation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Gujarat Sidhee Cement - India
- Bahari Cakrawala Sebuku - Indonesia
- Larsen & Toubro Limited - India
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