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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, 23 July 10
THE PANAMAX MARKET HAS CONTINUED ITS SLOW CLIMB - FEARNLEYS
Handy
Continued flat Atlantic markets and over-supply of tonnage across all segments on spot basis. Nevertheless there is more fresh enquiry on Co ...
Friday, 23 July 10
KPMG INDIA FACES COAL DEFICIT OF 50% OF EXPECTED POWER PLANT DEMAND, SAYS - BLOOMBERG
Bloomberg reported that, India may face a coal shortfall of 189 million metric tons a year by 2015, about 50 percent of the power sector’s exp ...
Thursday, 22 July 10
BERAUS IPO NEXT MONTH CAN BECOME THE LARGEST THIS YEAR - THE JAKARTA POST
The Jakarta Post reported that, Indonesia’s fifth largest coal miner PT Berau Coal Energy Tbk will launch its initial public offering (IPO) ne ...
Thursday, 22 July 10
DRY BULK MARKET EDGES HIGHER, BUT RECOVERY IS SLOW
The dry bulk market’s recovery, which started last Friday has sustained its momentum thus far, but the pace of it seems to be an agonizing one ...
Wednesday, 21 July 10
CHARTER RATES FOR BIG SHIPS GO INTO FREEFALL
It is reported that concerns over the slowdown in the mainland construction sector posturing over ore price negotiations and a general summer slowdo ...
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- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Africa Commodities Group - South Africa
- MS Steel International - UAE
- Coalindo Energy - Indonesia
- Indonesian Coal Mining Association
- Bayan Resources Tbk. - Indonesia
- Ind-Barath Power Infra Limited - India
- Miang Besar Coal Terminal - Indonesia
- Merrill Lynch Commodities Europe
- Gujarat Mineral Development Corp Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Rio Tinto Coal - Australia
- Metalloyd Limited - United Kingdom
- Borneo Indobara - Indonesia
- McConnell Dowell - Australia
- Cigading International Bulk Terminal - Indonesia
- Baramulti Group, Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Mercuria Energy - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Georgia Ports Authority, United States
- Sarangani Energy Corporation, Philippines
- Leighton Contractors Pty Ltd - Australia
- Petron Corporation, Philippines
- Chamber of Mines of South Africa
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Interocean Group of Companies - India
- Agrawal Coal Company - India
- Economic Council, Georgia
- Romanian Commodities Exchange
- CNBM International Corporation - China
- Therma Luzon, Inc, Philippines
- Bukit Baiduri Energy - Indonesia
- Maheswari Brothers Coal Limited - India
- Ceylon Electricity Board - Sri Lanka
- Sindya Power Generating Company Private Ltd
- Karbindo Abesyapradhi - Indoneisa
- Bhoruka Overseas - Indonesia
- Global Coal Blending Company Limited - Australia
- TeaM Sual Corporation - Philippines
- Goldman Sachs - Singapore
- Manunggal Multi Energi - Indonesia
- Jindal Steel & Power Ltd - India
- Dalmia Cement Bharat India
- Deloitte Consulting - India
- Bukit Asam (Persero) Tbk - Indonesia
- Tata Chemicals Ltd - India
- Heidelberg Cement - Germany
- Holcim Trading Pte Ltd - Singapore
- Price Waterhouse Coopers - Russia
- Coastal Gujarat Power Limited - India
- Bulk Trading Sa - Switzerland
- Australian Coal Association
- Thai Mozambique Logistica
- Chettinad Cement Corporation Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Binh Thuan Hamico - Vietnam
- Kohat Cement Company Ltd. - Pakistan
- Electricity Authority, New Zealand
- International Coal Ventures Pvt Ltd - India
- Indian Energy Exchange, India
- Lanco Infratech Ltd - India
- Star Paper Mills Limited - India
- IEA Clean Coal Centre - UK
- White Energy Company Limited
- Renaissance Capital - South Africa
- European Bulk Services B.V. - Netherlands
- Siam City Cement - Thailand
- Toyota Tsusho Corporation, Japan
- Kobexindo Tractors - Indoneisa
- Latin American Coal - Colombia
- Power Finance Corporation Ltd., India
- Orica Australia Pty. Ltd.
- Semirara Mining Corp, Philippines
- Madhucon Powers Ltd - India
- Global Green Power PLC Corporation, Philippines
- Rashtriya Ispat Nigam Limited - India
- Timah Investasi Mineral - Indoneisa
- Petrochimia International Co. Ltd.- Taiwan
- Indogreen Group - Indonesia
- Straits Asia Resources Limited - Singapore
- Indo Tambangraya Megah - Indonesia
- OPG Power Generation Pvt Ltd - India
- Kartika Selabumi Mining - Indonesia
- Trasteel International SA, Italy
- Energy Development Corp, Philippines
- Pendopo Energi Batubara - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Eastern Coal Council - USA
- Jaiprakash Power Ventures ltd
- Edison Trading Spa - Italy
- Kepco SPC Power Corporation, Philippines
- Orica Mining Services - Indonesia
- Formosa Plastics Group - Taiwan
- SMG Consultants - Indonesia
- ICICI Bank Limited - India
- Mintek Dendrill Indonesia
- Attock Cement Pakistan Limited
- GN Power Mariveles Coal Plant, Philippines
- Malabar Cements Ltd - India
- Sakthi Sugars Limited - India
- Indian Oil Corporation Limited
- Uttam Galva Steels Limited - India
- India Bulls Power Limited - India
- Bangladesh Power Developement Board
- Minerals Council of Australia
- Karaikal Port Pvt Ltd - India
- PTC India Limited - India
- Oldendorff Carriers - Singapore
- Meenaskhi Energy Private Limited - India
- Indika Energy - Indonesia
- Carbofer General Trading SA - India
- Port Waratah Coal Services - Australia
- Singapore Mercantile Exchange
- Aboitiz Power Corporation - Philippines
- Intertek Mineral Services - Indonesia
- Ambuja Cements Ltd - India
- Posco Energy - South Korea
- SMC Global Power, Philippines
- Cement Manufacturers Association - India
- Salva Resources Pvt Ltd - India
- Coal and Oil Company - UAE
- Sical Logistics Limited - India
- VISA Power Limited - India
- Grasim Industreis Ltd - India
- Larsen & Toubro Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- New Zealand Coal & Carbon
- Mjunction Services Limited - India
- Krishnapatnam Port Company Ltd. - India
- Sojitz Corporation - Japan
- Xindia Steels Limited - India
- Makarim & Taira - Indonesia
- Videocon Industries ltd - India
- Bharathi Cement Corporation - India
- Marubeni Corporation - India
- Standard Chartered Bank - UAE
- Wood Mackenzie - Singapore
- Banpu Public Company Limited - Thailand
- Alfred C Toepfer International GmbH - Germany
- Tamil Nadu electricity Board
- TNB Fuel Sdn Bhd - Malaysia
- Jorong Barutama Greston.PT - Indonesia
- Kideco Jaya Agung - Indonesia
- The University of Queensland
- GMR Energy Limited - India
- The State Trading Corporation of India Ltd
- Altura Mining Limited, Indonesia
- South Luzon Thermal Energy Corporation
- IHS Mccloskey Coal Group - USA
- Thiess Contractors Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Asmin Koalindo Tuhup - Indonesia
- Meralco Power Generation, Philippines
- London Commodity Brokers - England
- Semirara Mining and Power Corporation, Philippines
- Iligan Light & Power Inc, Philippines
- Kapuas Tunggal Persada - Indonesia
- Eastern Energy - Thailand
- Bahari Cakrawala Sebuku - Indonesia
- PNOC Exploration Corporation - Philippines
- Essar Steel Hazira Ltd - India
- Commonwealth Bank - Australia
- Independent Power Producers Association of India
- Central Electricity Authority - India
- Kumho Petrochemical, South Korea
- Barasentosa Lestari - Indonesia
- Electricity Generating Authority of Thailand
- Vedanta Resources Plc - India
- Ministry of Finance - Indonesia
- Directorate Of Revenue Intelligence - India
- AsiaOL BioFuels Corp., Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Simpson Spence & Young - Indonesia
- Mercator Lines Limited - India
- Bhushan Steel Limited - India
- Sree Jayajothi Cements Limited - India
- CIMB Investment Bank - Malaysia
- Ministry of Mines - Canada
- Parliament of New Zealand
- Bukit Makmur.PT - Indonesia
- San Jose City I Power Corp, Philippines
- Vizag Seaport Private Limited - India
- Wilmar Investment Holdings
- Gujarat Electricity Regulatory Commission - India
- Gujarat Sidhee Cement - India
- Savvy Resources Ltd - HongKong
- Maharashtra Electricity Regulatory Commission - India
- Central Java Power - Indonesia
- Anglo American - United Kingdom
- Globalindo Alam Lestari - Indonesia
- ASAPP Information Group - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Sinarmas Energy and Mining - Indonesia
- SN Aboitiz Power Inc, Philippines
- Energy Link Ltd, New Zealand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- LBH Netherlands Bv - Netherlands
- GAC Shipping (India) Pvt Ltd
- Ministry of Transport, Egypt
- Planning Commission, India
- Medco Energi Mining Internasional
- Antam Resourcindo - Indonesia
- Riau Bara Harum - Indonesia
- Parry Sugars Refinery, India
- Bhatia International Limited - India
- GVK Power & Infra Limited - India
- The Treasury - Australian Government
- Australian Commodity Traders Exchange
- Samtan Co., Ltd - South Korea
- Aditya Birla Group - India
- PowerSource Philippines DevCo
- Siam City Cement PLC, Thailand
- Global Business Power Corporation, Philippines
- Kaltim Prima Coal - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
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