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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, 24 July 10
INDONESIAS BUKIT ASAM H1 2010, SALES RAISED 10% TO 6.44 MILLION TONS
COALspot.com: PT Tambang Batubara Bukit Asam (PTBA), Indonesian state owned mining company’s H1 2010, sales raised 10% to 6.44 million tons. T ...
Saturday, 24 July 10
INDONESIAN COAL MINERS ARE REQUIRED TO SUPPLY 64.96 MLN TONS OF COAL TO DOMESTIC MARKET IN 2010
COALspot.com : Minister of Energy and Mineral Resources of Indonesia has issued a ministerial degree related to Domestic market obligation (DMO) for ...
Saturday, 24 July 10
THE BDI SEEMS TO BE RECOVERING AND WAS UP BY ABOUT 6 PCT - CAPT. REDDY
COALspot.com: "The BDI seems to be recovering and was up by about 6 pct this week after losing for almost last 7 weeks", said Capt. Reddy, ...
Saturday, 24 July 10
ANALYSIS - GROWTH IN VESSEL SUPPLY PRESSURES OCEAN FREIGHT RATES
It's common to use global shipping rate trends as a proxy of global economic health. If demand for goods and raw materials are strong, so should it ...
Friday, 23 July 10
KOWEPO TO IMPORT ADDITIONAL 1.2 MILLION TONS OF INDONESIAN COAL WITHIN 5 MONTHS
Korea Western Power Company Limited has finalized around 1.2 million tonnes of Indonesian origin of coal last week. According to K ...
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- Bhushan Steel Limited - India
- Indian Energy Exchange, India
- Commonwealth Bank - Australia
- Altura Mining Limited, Indonesia
- Electricity Generating Authority of Thailand
- Oldendorff Carriers - Singapore
- Wilmar Investment Holdings
- Africa Commodities Group - South Africa
- Karbindo Abesyapradhi - Indoneisa
- Directorate General of MIneral and Coal - Indonesia
- Ministry of Finance - Indonesia
- Siam City Cement - Thailand
- Thai Mozambique Logistica
- Uttam Galva Steels Limited - India
- Bhoruka Overseas - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Gujarat Mineral Development Corp Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Asmin Koalindo Tuhup - Indonesia
- Mercator Lines Limited - India
- Indika Energy - Indonesia
- Bulk Trading Sa - Switzerland
- GMR Energy Limited - India
- Star Paper Mills Limited - India
- Iligan Light & Power Inc, Philippines
- Merrill Lynch Commodities Europe
- Meenaskhi Energy Private Limited - India
- Toyota Tsusho Corporation, Japan
- Wood Mackenzie - Singapore
- Trasteel International SA, Italy
- Videocon Industries ltd - India
- Sojitz Corporation - Japan
- VISA Power Limited - India
- London Commodity Brokers - England
- Karaikal Port Pvt Ltd - India
- Makarim & Taira - Indonesia
- Petron Corporation, Philippines
- Gujarat Sidhee Cement - India
- McConnell Dowell - Australia
- Malabar Cements Ltd - India
- Semirara Mining Corp, Philippines
- Jaiprakash Power Ventures ltd
- Bukit Baiduri Energy - Indonesia
- Intertek Mineral Services - Indonesia
- Interocean Group of Companies - India
- Sical Logistics Limited - India
- Borneo Indobara - Indonesia
- Indian Oil Corporation Limited
- The University of Queensland
- AsiaOL BioFuels Corp., Philippines
- Gujarat Electricity Regulatory Commission - India
- Pendopo Energi Batubara - Indonesia
- Global Green Power PLC Corporation, Philippines
- Jindal Steel & Power Ltd - India
- Semirara Mining and Power Corporation, Philippines
- PTC India Limited - India
- Riau Bara Harum - Indonesia
- Ministry of Mines - Canada
- Salva Resources Pvt Ltd - India
- The Treasury - Australian Government
- Mintek Dendrill Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Maharashtra Electricity Regulatory Commission - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Planning Commission, India
- PetroVietnam Power Coal Import and Supply Company
- Kaltim Prima Coal - Indonesia
- Bharathi Cement Corporation - India
- Xindia Steels Limited - India
- GAC Shipping (India) Pvt Ltd
- Eastern Coal Council - USA
- White Energy Company Limited
- Manunggal Multi Energi - Indonesia
- Kobexindo Tractors - Indoneisa
- Aboitiz Power Corporation - Philippines
- Metalloyd Limited - United Kingdom
- Timah Investasi Mineral - Indoneisa
- Kideco Jaya Agung - Indonesia
- Siam City Cement PLC, Thailand
- Vizag Seaport Private Limited - India
- ICICI Bank Limited - India
- Directorate Of Revenue Intelligence - India
- New Zealand Coal & Carbon
- Agrawal Coal Company - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- IEA Clean Coal Centre - UK
- South Luzon Thermal Energy Corporation
- Bayan Resources Tbk. - Indonesia
- SMC Global Power, Philippines
- Romanian Commodities Exchange
- Parliament of New Zealand
- Posco Energy - South Korea
- Ind-Barath Power Infra Limited - India
- Coalindo Energy - Indonesia
- Coal and Oil Company - UAE
- CIMB Investment Bank - Malaysia
- Billiton Holdings Pty Ltd - Australia
- Australian Coal Association
- Marubeni Corporation - India
- Anglo American - United Kingdom
- Grasim Industreis Ltd - India
- Thiess Contractors Indonesia
- Chettinad Cement Corporation Ltd - India
- Central Java Power - Indonesia
- Chamber of Mines of South Africa
- MS Steel International - UAE
- Economic Council, Georgia
- Binh Thuan Hamico - Vietnam
- Kohat Cement Company Ltd. - Pakistan
- Minerals Council of Australia
- CNBM International Corporation - China
- Latin American Coal - Colombia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Parry Sugars Refinery, India
- Baramulti Group, Indonesia
- Cement Manufacturers Association - India
- Central Electricity Authority - India
- Petrochimia International Co. Ltd.- Taiwan
- Standard Chartered Bank - UAE
- Banpu Public Company Limited - Thailand
- Rashtriya Ispat Nigam Limited - India
- Dalmia Cement Bharat India
- Leighton Contractors Pty Ltd - Australia
- Sarangani Energy Corporation, Philippines
- Cigading International Bulk Terminal - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Larsen & Toubro Limited - India
- Maheswari Brothers Coal Limited - India
- GVK Power & Infra Limited - India
- European Bulk Services B.V. - Netherlands
- Therma Luzon, Inc, Philippines
- Medco Energi Mining Internasional
- Electricity Authority, New Zealand
- Sree Jayajothi Cements Limited - India
- Aditya Birla Group - India
- Kalimantan Lumbung Energi - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Independent Power Producers Association of India
- Indonesian Coal Mining Association
- Essar Steel Hazira Ltd - India
- Tamil Nadu electricity Board
- Krishnapatnam Port Company Ltd. - India
- Georgia Ports Authority, United States
- Attock Cement Pakistan Limited
- Global Coal Blending Company Limited - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kepco SPC Power Corporation, Philippines
- Formosa Plastics Group - Taiwan
- Sinarmas Energy and Mining - Indonesia
- Energy Link Ltd, New Zealand
- IHS Mccloskey Coal Group - USA
- Mercuria Energy - Indonesia
- Kartika Selabumi Mining - Indonesia
- Madhucon Powers Ltd - India
- Ambuja Cements Ltd - India
- Meralco Power Generation, Philippines
- Bukit Makmur.PT - Indonesia
- Ministry of Transport, Egypt
- Antam Resourcindo - Indonesia
- Sindya Power Generating Company Private Ltd
- Global Business Power Corporation, Philippines
- SMG Consultants - Indonesia
- Singapore Mercantile Exchange
- Eastern Energy - Thailand
- Tata Chemicals Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- TeaM Sual Corporation - Philippines
- Orica Mining Services - Indonesia
- Price Waterhouse Coopers - Russia
- Indo Tambangraya Megah - Indonesia
- Bhatia International Limited - India
- Renaissance Capital - South Africa
- Power Finance Corporation Ltd., India
- OPG Power Generation Pvt Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Jorong Barutama Greston.PT - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Alfred C Toepfer International GmbH - Germany
- SN Aboitiz Power Inc, Philippines
- Bangladesh Power Developement Board
- LBH Netherlands Bv - Netherlands
- Sakthi Sugars Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- International Coal Ventures Pvt Ltd - India
- Coastal Gujarat Power Limited - India
- Vedanta Resources Plc - India
- Simpson Spence & Young - Indonesia
- PNOC Exploration Corporation - Philippines
- Globalindo Alam Lestari - Indonesia
- Port Waratah Coal Services - Australia
- Bahari Cakrawala Sebuku - Indonesia
- Heidelberg Cement - Germany
- Rio Tinto Coal - Australia
- Indogreen Group - Indonesia
- India Bulls Power Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- PowerSource Philippines DevCo
- Orica Australia Pty. Ltd.
- Kumho Petrochemical, South Korea
- Samtan Co., Ltd - South Korea
- Savvy Resources Ltd - HongKong
- Carbofer General Trading SA - India
- Bukit Asam (Persero) Tbk - Indonesia
- Deloitte Consulting - India
- The State Trading Corporation of India Ltd
- Straits Asia Resources Limited - Singapore
- Edison Trading Spa - Italy
- San Jose City I Power Corp, Philippines
- Australian Commodity Traders Exchange
- ASAPP Information Group - India
- Holcim Trading Pte Ltd - Singapore
- Energy Development Corp, Philippines
- Lanco Infratech Ltd - India
- Mjunction Services Limited - India
- Barasentosa Lestari - Indonesia
- Goldman Sachs - Singapore
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