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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, 27 July 10
DRY BULK SPOT CARGO DEMAND SHARPLY UP, TRIGGERING RISE IN RATES
Hot on the heels of the dry bulk market’s first weekly gain in almost two months, Monday began on a similar note, with the Baltic Dry Index (B ...
Tuesday, 27 July 10
KANGAROO RESOURCES INKS 297MT COAL RESOURCE FOR TANUR JAYA PROJECT
Kangaroo Resources has reported JORC Code compliant open cut Coal Resources totalling 297 million tonnes for the Tanur Jaya Coal Project in East Kal ...
Monday, 26 July 10
INDONESIAN COAL PRICE REFERENCE FOR JULY 2010 IS US$ 96.65 PER TON FOB VESSEL
COALspot.com: The Directorate General of Mineral, Coal and Geothermal of Indonesia has been publishing a monthly coal price reference (HBA) since Fe ...
Monday, 26 July 10
BHATIA INTERNATIONAL, MIGHT GRAB THE MAJORITY OF COAL SUPPLY ORDER FROM MAHAGENCO
COALspot.com: Maharashtra State Power Generation Co., a provider of electricity to India’s commercial hub Mumbai, has received price bids from ...
Monday, 26 July 10
CEMENT MAKERS EXPLORE NEW FUELS TO REPLACE COAL - ECONOMIC TIMES
Economic Times reported that, As the cement industry reels under high raw material costs and reduced coal linkages, companies are exploring alternat ...
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- Bukit Asam (Persero) Tbk - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Coalindo Energy - Indonesia
- Bhoruka Overseas - Indonesia
- Riau Bara Harum - Indonesia
- GAC Shipping (India) Pvt Ltd
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Global Green Power PLC Corporation, Philippines
- The State Trading Corporation of India Ltd
- Georgia Ports Authority, United States
- Bhushan Steel Limited - India
- Bukit Baiduri Energy - Indonesia
- Sree Jayajothi Cements Limited - India
- Borneo Indobara - Indonesia
- Baramulti Group, Indonesia
- Straits Asia Resources Limited - Singapore
- Kartika Selabumi Mining - Indonesia
- Coastal Gujarat Power Limited - India
- Holcim Trading Pte Ltd - Singapore
- The Treasury - Australian Government
- Trasteel International SA, Italy
- Mjunction Services Limited - India
- LBH Netherlands Bv - Netherlands
- Kumho Petrochemical, South Korea
- Energy Development Corp, Philippines
- Parry Sugars Refinery, India
- IHS Mccloskey Coal Group - USA
- Maharashtra Electricity Regulatory Commission - India
- Agrawal Coal Company - India
- Eastern Coal Council - USA
- Vijayanagar Sugar Pvt Ltd - India
- Deloitte Consulting - India
- Gujarat Electricity Regulatory Commission - India
- Lanco Infratech Ltd - India
- Iligan Light & Power Inc, Philippines
- Vedanta Resources Plc - India
- Timah Investasi Mineral - Indoneisa
- Global Coal Blending Company Limited - Australia
- Intertek Mineral Services - Indonesia
- Africa Commodities Group - South Africa
- Offshore Bulk Terminal Pte Ltd, Singapore
- CNBM International Corporation - China
- Asmin Koalindo Tuhup - Indonesia
- Ind-Barath Power Infra Limited - India
- Oldendorff Carriers - Singapore
- GVK Power & Infra Limited - India
- Madhucon Powers Ltd - India
- Bangladesh Power Developement Board
- Latin American Coal - Colombia
- Maheswari Brothers Coal Limited - India
- SN Aboitiz Power Inc, Philippines
- Eastern Energy - Thailand
- Ambuja Cements Ltd - India
- Economic Council, Georgia
- Sakthi Sugars Limited - India
- Aditya Birla Group - India
- Orica Mining Services - Indonesia
- London Commodity Brokers - England
- Bukit Makmur.PT - Indonesia
- Mercator Lines Limited - India
- Singapore Mercantile Exchange
- Antam Resourcindo - Indonesia
- Banpu Public Company Limited - Thailand
- Altura Mining Limited, Indonesia
- Marubeni Corporation - India
- Karbindo Abesyapradhi - Indoneisa
- Meenaskhi Energy Private Limited - India
- Chamber of Mines of South Africa
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Directorate Of Revenue Intelligence - India
- Bulk Trading Sa - Switzerland
- Larsen & Toubro Limited - India
- Malabar Cements Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Manunggal Multi Energi - Indonesia
- Bhatia International Limited - India
- Kideco Jaya Agung - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Mercuria Energy - Indonesia
- Australian Coal Association
- GN Power Mariveles Coal Plant, Philippines
- Directorate General of MIneral and Coal - Indonesia
- VISA Power Limited - India
- Coal and Oil Company - UAE
- Medco Energi Mining Internasional
- Therma Luzon, Inc, Philippines
- Videocon Industries ltd - India
- Cigading International Bulk Terminal - Indonesia
- ASAPP Information Group - India
- Mintek Dendrill Indonesia
- New Zealand Coal & Carbon
- Wood Mackenzie - Singapore
- Port Waratah Coal Services - Australia
- Ceylon Electricity Board - Sri Lanka
- Anglo American - United Kingdom
- GMR Energy Limited - India
- Meralco Power Generation, Philippines
- Standard Chartered Bank - UAE
- Sojitz Corporation - Japan
- Thiess Contractors Indonesia
- Neyveli Lignite Corporation Ltd, - India
- The University of Queensland
- Grasim Industreis Ltd - India
- Barasentosa Lestari - Indonesia
- European Bulk Services B.V. - Netherlands
- Chettinad Cement Corporation Ltd - India
- Planning Commission, India
- Indonesian Coal Mining Association
- PowerSource Philippines DevCo
- PNOC Exploration Corporation - Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Bayan Resources Tbk. - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Kepco SPC Power Corporation, Philippines
- Carbofer General Trading SA - India
- CIMB Investment Bank - Malaysia
- Orica Australia Pty. Ltd.
- TNB Fuel Sdn Bhd - Malaysia
- Energy Link Ltd, New Zealand
- Australian Commodity Traders Exchange
- India Bulls Power Limited - India
- Posco Energy - South Korea
- Bank of Tokyo Mitsubishi UFJ Ltd
- Price Waterhouse Coopers - Russia
- TeaM Sual Corporation - Philippines
- Ministry of Finance - Indonesia
- Sical Logistics Limited - India
- Kobexindo Tractors - Indoneisa
- Parliament of New Zealand
- Krishnapatnam Port Company Ltd. - India
- Makarim & Taira - Indonesia
- Indian Energy Exchange, India
- SMG Consultants - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Central Java Power - Indonesia
- Sarangani Energy Corporation, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Cement Manufacturers Association - India
- Thai Mozambique Logistica
- SMC Global Power, Philippines
- Tata Chemicals Ltd - India
- Commonwealth Bank - Australia
- Rashtriya Ispat Nigam Limited - India
- Kaltim Prima Coal - Indonesia
- Attock Cement Pakistan Limited
- McConnell Dowell - Australia
- Toyota Tsusho Corporation, Japan
- Interocean Group of Companies - India
- Indika Energy - Indonesia
- Vizag Seaport Private Limited - India
- Rio Tinto Coal - Australia
- Electricity Authority, New Zealand
- Tamil Nadu electricity Board
- Sinarmas Energy and Mining - Indonesia
- Gujarat Sidhee Cement - India
- Metalloyd Limited - United Kingdom
- Jindal Steel & Power Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Siam City Cement - Thailand
- Globalindo Alam Lestari - Indonesia
- Global Business Power Corporation, Philippines
- Heidelberg Cement - Germany
- Kohat Cement Company Ltd. - Pakistan
- Semirara Mining Corp, Philippines
- Power Finance Corporation Ltd., India
- ICICI Bank Limited - India
- Indo Tambangraya Megah - Indonesia
- Siam City Cement PLC, Thailand
- Leighton Contractors Pty Ltd - Australia
- AsiaOL BioFuels Corp., Philippines
- Kalimantan Lumbung Energi - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- South Luzon Thermal Energy Corporation
- PTC India Limited - India
- MS Steel International - UAE
- Salva Resources Pvt Ltd - India
- Sindya Power Generating Company Private Ltd
- Romanian Commodities Exchange
- Binh Thuan Hamico - Vietnam
- Indogreen Group - Indonesia
- Minerals Council of Australia
- Edison Trading Spa - Italy
- White Energy Company Limited
- Central Electricity Authority - India
- Renaissance Capital - South Africa
- Karaikal Port Pvt Ltd - India
- OPG Power Generation Pvt Ltd - India
- Essar Steel Hazira Ltd - India
- Pendopo Energi Batubara - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Ministry of Mines - Canada
- Uttam Galva Steels Limited - India
- Semirara Mining and Power Corporation, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Aboitiz Power Corporation - Philippines
- Simpson Spence & Young - Indonesia
- Xindia Steels Limited - India
- Star Paper Mills Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Formosa Plastics Group - Taiwan
- Merrill Lynch Commodities Europe
- Savvy Resources Ltd - HongKong
- Bharathi Cement Corporation - India
- Goldman Sachs - Singapore
- Petron Corporation, Philippines
- International Coal Ventures Pvt Ltd - India
- Dalmia Cement Bharat India
- IEA Clean Coal Centre - UK
- Kapuas Tunggal Persada - Indonesia
- San Jose City I Power Corp, Philippines
- Electricity Generating Authority of Thailand
- Indian Oil Corporation Limited
- Ministry of Transport, Egypt
- Jaiprakash Power Ventures ltd
- Samtan Co., Ltd - South Korea
- Wilmar Investment Holdings
- Independent Power Producers Association of India
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