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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, 14 September 10
MID HIGH TEENS FROM WCI, AND HIGH TEENS FROM ECI TO CHINA - BRS
A fairly flat market for the dry bulk segments this week, although the Panamaxes jumped on the back of strong grain exports in the Atlantic. It ...
Tuesday, 14 September 10
HIGH CHARTERING ACTIVITY NEEDS TO KEEP UP FOR DRY BULK RATES TO REMAIN HIGH
Last week’s increase of spot chartering activity pushed dry bulk freight rates to new highs, after a less than lackluster summer. As a result, ...
Monday, 13 September 10
GLENCORE BUYS STAKE IN MINER BUMI
The Jakarta globe reported that, Switzerland-based Glencore International, the world’s largest commodities trader, has quietly acquired a $200 ...
Monday, 13 September 10
IT'S JAI INDONESIA FOR OUR POWER FIRMS
Indian power producers have been compelled to look abroad for fuel to run upcoming facilities, as domestic generation is unlikely to be able to meet ...
Monday, 13 September 10
CIL IN TALKS WITH SHIPPING CORP TO FORM JV FOR COAL IMPORTS
Shipping Corporation of India, the largest domestic shipping liner, may form a joint venture with Coal India for coal imports, a top company officia ...
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- Riau Bara Harum - Indonesia
- Petron Corporation, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Marubeni Corporation - India
- Ind-Barath Power Infra Limited - India
- Indo Tambangraya Megah - Indonesia
- Bhoruka Overseas - Indonesia
- Planning Commission, India
- International Coal Ventures Pvt Ltd - India
- Karaikal Port Pvt Ltd - India
- Ministry of Finance - Indonesia
- The University of Queensland
- Borneo Indobara - Indonesia
- Savvy Resources Ltd - HongKong
- Independent Power Producers Association of India
- Georgia Ports Authority, United States
- Manunggal Multi Energi - Indonesia
- GAC Shipping (India) Pvt Ltd
- SMC Global Power, Philippines
- Standard Chartered Bank - UAE
- Kobexindo Tractors - Indoneisa
- Posco Energy - South Korea
- Simpson Spence & Young - Indonesia
- Australian Commodity Traders Exchange
- Karbindo Abesyapradhi - Indoneisa
- SMG Consultants - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Aditya Birla Group - India
- Gujarat Electricity Regulatory Commission - India
- Commonwealth Bank - Australia
- Neyveli Lignite Corporation Ltd, - India
- Orica Australia Pty. Ltd.
- Australian Coal Association
- Krishnapatnam Port Company Ltd. - India
- Thai Mozambique Logistica
- OPG Power Generation Pvt Ltd - India
- Deloitte Consulting - India
- Merrill Lynch Commodities Europe
- Mercator Lines Limited - India
- Kalimantan Lumbung Energi - Indonesia
- CNBM International Corporation - China
- Anglo American - United Kingdom
- Agrawal Coal Company - India
- CIMB Investment Bank - Malaysia
- Attock Cement Pakistan Limited
- Madhucon Powers Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Meenaskhi Energy Private Limited - India
- Sindya Power Generating Company Private Ltd
- Leighton Contractors Pty Ltd - Australia
- Meralco Power Generation, Philippines
- Central Electricity Authority - India
- Parry Sugars Refinery, India
- Wood Mackenzie - Singapore
- Port Waratah Coal Services - Australia
- Gujarat Sidhee Cement - India
- Ambuja Cements Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Miang Besar Coal Terminal - Indonesia
- Wilmar Investment Holdings
- MS Steel International - UAE
- The State Trading Corporation of India Ltd
- Rashtriya Ispat Nigam Limited - India
- Singapore Mercantile Exchange
- Rio Tinto Coal - Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bayan Resources Tbk. - Indonesia
- Malabar Cements Ltd - India
- Sojitz Corporation - Japan
- Gujarat Mineral Development Corp Ltd - India
- Central Java Power - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- PTC India Limited - India
- Aboitiz Power Corporation - Philippines
- Indian Oil Corporation Limited
- Lanco Infratech Ltd - India
- Barasentosa Lestari - Indonesia
- Bulk Trading Sa - Switzerland
- Global Coal Blending Company Limited - Australia
- Latin American Coal - Colombia
- Vedanta Resources Plc - India
- Sinarmas Energy and Mining - Indonesia
- Altura Mining Limited, Indonesia
- South Luzon Thermal Energy Corporation
- Videocon Industries ltd - India
- IHS Mccloskey Coal Group - USA
- Dalmia Cement Bharat India
- ASAPP Information Group - India
- Sakthi Sugars Limited - India
- Price Waterhouse Coopers - Russia
- Siam City Cement - Thailand
- Parliament of New Zealand
- Carbofer General Trading SA - India
- Xindia Steels Limited - India
- Interocean Group of Companies - India
- Banpu Public Company Limited - Thailand
- Directorate General of MIneral and Coal - Indonesia
- Timah Investasi Mineral - Indoneisa
- Kaltim Prima Coal - Indonesia
- Bharathi Cement Corporation - India
- London Commodity Brokers - England
- Uttam Galva Steels Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Medco Energi Mining Internasional
- Coastal Gujarat Power Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Formosa Plastics Group - Taiwan
- Sical Logistics Limited - India
- Bhushan Steel Limited - India
- Coal and Oil Company - UAE
- Kartika Selabumi Mining - Indonesia
- Globalindo Alam Lestari - Indonesia
- Economic Council, Georgia
- White Energy Company Limited
- Bukit Makmur.PT - Indonesia
- Larsen & Toubro Limited - India
- TeaM Sual Corporation - Philippines
- PowerSource Philippines DevCo
- Coalindo Energy - Indonesia
- Therma Luzon, Inc, Philippines
- New Zealand Coal & Carbon
- Sarangani Energy Corporation, Philippines
- European Bulk Services B.V. - Netherlands
- LBH Netherlands Bv - Netherlands
- Antam Resourcindo - Indonesia
- Mercuria Energy - Indonesia
- Electricity Authority, New Zealand
- Jaiprakash Power Ventures ltd
- Kumho Petrochemical, South Korea
- Oldendorff Carriers - Singapore
- Salva Resources Pvt Ltd - India
- Heidelberg Cement - Germany
- Star Paper Mills Limited - India
- Edison Trading Spa - Italy
- Renaissance Capital - South Africa
- Holcim Trading Pte Ltd - Singapore
- Bangladesh Power Developement Board
- Energy Development Corp, Philippines
- Straits Asia Resources Limited - Singapore
- Mjunction Services Limited - India
- Tamil Nadu electricity Board
- PetroVietnam Power Coal Import and Supply Company
- Cigading International Bulk Terminal - Indonesia
- Energy Link Ltd, New Zealand
- Chettinad Cement Corporation Ltd - India
- Power Finance Corporation Ltd., India
- Chamber of Mines of South Africa
- Bank of Tokyo Mitsubishi UFJ Ltd
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Siam City Cement PLC, Thailand
- TNB Fuel Sdn Bhd - Malaysia
- Kideco Jaya Agung - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kapuas Tunggal Persada - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Makarim & Taira - Indonesia
- Electricity Generating Authority of Thailand
- Indonesian Coal Mining Association
- Ministry of Mines - Canada
- Petrochimia International Co. Ltd.- Taiwan
- Pendopo Energi Batubara - Indonesia
- Maheswari Brothers Coal Limited - India
- San Jose City I Power Corp, Philippines
- Semirara Mining Corp, Philippines
- Romanian Commodities Exchange
- Indogreen Group - Indonesia
- Bukit Baiduri Energy - Indonesia
- Indian Energy Exchange, India
- Grasim Industreis Ltd - India
- Metalloyd Limited - United Kingdom
- Cement Manufacturers Association - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bukit Asam (Persero) Tbk - Indonesia
- GMR Energy Limited - India
- Baramulti Group, Indonesia
- Eastern Energy - Thailand
- McConnell Dowell - Australia
- Eastern Coal Council - USA
- Global Business Power Corporation, Philippines
- Goldman Sachs - Singapore
- ICICI Bank Limited - India
- Essar Steel Hazira Ltd - India
- VISA Power Limited - India
- Global Green Power PLC Corporation, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Indika Energy - Indonesia
- Jindal Steel & Power Ltd - India
- The Treasury - Australian Government
- Directorate Of Revenue Intelligence - India
- Thiess Contractors Indonesia
- Orica Mining Services - Indonesia
- Bhatia International Limited - India
- Toyota Tsusho Corporation, Japan
- SN Aboitiz Power Inc, Philippines
- Intertek Mineral Services - Indonesia
- Mintek Dendrill Indonesia
- Kepco SPC Power Corporation, Philippines
- GVK Power & Infra Limited - India
- Ministry of Transport, Egypt
- India Bulls Power Limited - India
- Ceylon Electricity Board - Sri Lanka
- Africa Commodities Group - South Africa
- Trasteel International SA, Italy
- PNOC Exploration Corporation - Philippines
- Iligan Light & Power Inc, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Sree Jayajothi Cements Limited - India
- Alfred C Toepfer International GmbH - Germany
- IEA Clean Coal Centre - UK
- Vizag Seaport Private Limited - India
- Tata Chemicals Ltd - India
- Minerals Council of Australia
- Binh Thuan Hamico - Vietnam
- Samtan Co., Ltd - South Korea
- Semirara Mining and Power Corporation, Philippines
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